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Item 1A. Risk Factors

2023-04-14 compared with 2022-03-29 · 202 added, 128 removed, 948 unchanged (26% of the section changed)

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Investing in our securities involves a high degree of risk.

Before you make a decision to buy our securities, in addition to the risks and uncertainties discussed above under “Special Note Regarding Forward-Looking Statements,”

you should carefully consider the risks and uncertainties described below together with all of the other information contained in this Form 10-K, including our financial statements and related notes included at the end of this Form 10-K and in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Before you make a decision to buy our securities, in addition to the risks and uncertainties discussed above under “

Special Note Regarding Forward-Looking Statements, ”

you should carefully consider the risks and uncertainties described below together with all of the other information contained in this Annual Report, including our financial statements and related notes included at the end of this Annual Report and in the section titled “

Management ’

s Discussion and Analysis of Financial Condition and Results of Operations.

If any of the events or developments described below were to occur, our business, prospects, operating results and financial condition could suffer materially, the trading price of our securities could decline and you could lose all or part of your investment.

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Importantly, this summary does not address all of the risks and uncertainties that we face.

You should carefully consider the full risk factor disclosure outlined in this Form 10-K, in addition to the other information herein, including the section of this report titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations”

You should carefully consider the full risk factor disclosure outlined in this Annual Report, in addition to the other information herein, including the section of this report titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations”

and our financial statements and related notes.

We are a clinical-stage biopharmaceutical company and have incurred significant losses since our

Although we realized net income in the fiscal year ended December 31, 2021, we may incur

losses for the foreseeable future and may not be able to generate sufficient revenue to maintain

profitability.

Our limited operating history makes future forecasting difficult.

Our product candidates are in preclinical or early-stage clinical development.

We our highly dependent on the success of our product candidates and if we are unable to successfully complete clinical development, obtain regulatory approval for or commercialize one or more of our product candidates, or if we experience delays in doing so, our business will be materially harmed.

The regulatory approval processes of the FDA and comparable foreign authorities are lengthy, time consuming

and inherently unpredictable, and if we are ultimately unable to obtain regulatory approval for our product candidates, our business will be substantially harmed.

Regulatory approval for the genetic modification of animals, including those from which antibodies are

isolated for injection into human patients, requires the approval of a New Animal Drug Application, and if we are ultimately unable to obtain such approval, our business will be substantially harmed

The future commercial success of our product candidates will depend on the degree of market acceptance of our potential products among physicians, patients, healthcare payers, and the medical community.

We have received awards from the U.S.

Government in multiple projects over the course of operations, including but not limited to, Government Purpose Rights, Government Limited Rights and rights of publication, and are subject to the obligations, restrictions and covenants in connection with such awards.

Failure to successfully identify, develop and commercialize additional products or product candidates could impair our ability to grow.

We are a clinical-stage biopharmaceutical company and have incurred significant losses since our inception.

We may incur losses for the foreseeable future and may not be able to generate sufficient revenue to maintain profitability.

The successful development of pharmaceutical products is highly uncertain. 

All of our product candidates are in preclinical or clinical development.

Clinical drug development is expensive, time consuming and uncertain, and we may ultimately not be able to obtain regulatory approvals for the commercialization of some or all of our product candidates.

Regulatory approval for the genetic modification of animals, including those from which antibodies are isolated for injection into human patients, requires the approval of a New Animal Drug Application, which can be a lengthy and expensive process with uncertain outcomes, delays to which could substantially harm our business.

If we encounter difficulties enrolling patients in clinical trials, clinical trials of our product candidates may be delayed or otherwise adversely affected.

Our business is highly dependent on the success of our product candidates.

If we are unable to successfully complete clinical development, obtain regulatory approval for or commercialize one or more of our product candidates, or if we experience delays in doing so, our business will be materially harmed.

The regulatory approval processes of the FDA is lengthy, time-consuming and inherently unpredictable, and if we are ultimately unable to obtain regulatory approval for our product candidates, our business will be substantially harmed.

We may never obtain FDA approval for any product candidates in the United States, and even if we do, we may never obtain approval for or commercialize any product candidates in any other jurisdiction, which would limit our ability to realize their full market potential.

If our clinical trials fail to replicate positive results from earlier preclinical studies or clinical trials conducted by us or third parties, we may be unable to successfully develop, obtain regulatory approval for or commercialize our product candidates.

If our competitors develop more effective competing product candidates our business will be substantially harmed.

We depend upon senior management and senior scientific staff, and their loss or unavailability could put us at a competitive disadvantage.

We expect to rely on third parties to assist in conducting our clinical trials and manufacturing commercial supply of our products and if they do not perform satisfactorily, we may not be able to obtain regulatory approval or commercialize our product candidates, or such approval or commercialization may be delayed, and our business could be substantially harmed.

We are subject to manufacturing risks that could substantially increase the costs and limit supply of product candidates or prevent us from achieving a commercially viable production process.

Outbreaks of livestock diseases and other events affecting the health of our bovine herd can adversely impact our ability to conduct our operations and production of our product candidates.

If we do not achieve our projected development and commercialization goals in the timeframes we announce and expect, the development and commercialization of our product candidates may be delayed, and our business and results of operations may be harmed.

Our product candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval, limit the commercial profile of an approved label, or result in significant negative consequences following regulatory approval, if obtained.

Our current and future relationships with customers and third party payors in the United States and elsewhere may be subject, directly or indirectly, to applicable anti-kickback, fraud and abuse, false claims, transparency, health information privacy and security and other healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm, administrative burdens and diminished profits and future earnings.

Regulatory approval for any approved product is limited by the FDA to those specific indications and conditions for which clinical safety and efficacy have been demonstrated.

Current and future legislation may increase the difficulty and cost for us to obtain marketing approval of and commercialize any product candidates we or our collaborators develop and may adversely affect the prices for such product candidates.

We depend upon our senior management and senior scientific staff, and their loss or unavailability could put us at a competitive disadvantage.

We rely on third parties to perform some of our research and preclinical studies and we plan to rely on third parties to conduct our clinical trials.

If these third parties do not satisfactorily carry out their contractual duties or fail to meet expected deadlines, our development programs may be delayed or subject to increased costs, each of which may have an adverse effect on our business and prospects.

We intend to rely on third parties to produce commercial supplies of our product candidates.

If we fail to successfully operate our animal production facility, it may adversely affect our clinical trials and the commercial viability of our product candidates.

We have not entered into long term manufacturing and supply agreements with any producers.

Cyber-attacks or other failures in our telecommunications or information technology systems, or those of our collaborators, CROs, third-party logistics providers, distributors or other contractors or consultants, could result in information theft, data corruption and significant disruption of our business operations.

Collaborations with third parties may be important to our business.

If these collaborations are not successful, our business could be adversely affected.

We have historically relied on awards from, and contracts with, the U.S.

Government to fund our business and operations, and will need to find new and alternative sources of funding following the discontinuance of certain such arrangements.

We are subject to stringent environmental regulation and potentially subject to environmental litigation, proceedings, and investigations.

Security breaches, loss of data and other disruptions could compromise sensitive information related to our business or prevent us from accessing critical information and expose us to liability, which could adversely affect our business and reputation.

Interruptions resulting from the COVID-19 outbreak or similar public health crises could cause a disruption of the development of our product candidates and adversely impact our business.

Our success may depend on our ability to maintain the proprietary nature of our technology.

We may become involved in litigation to protect or enforce our patents or the patents of our collaborators or licensors, which could be expensive and time-consuming.

If patent laws or the interpretation of patent laws change, our competitors may be able to develop and commercialize our discoveries.

We may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and stock price, which could cause you to lose some or all of your investment.

We might not be able to comply with the continued listing standards of Nasdaq.

Insiders have substantial influence over the Company, which could limit your ability to affect the outcome of key transactions, including a change of control.

We may issue additional shares common stock (including upon the exercise of warrants or conversion of preferred stock) which would increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders.

We may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.

We incur costs and demands as a result of complying with the laws and regulations affecting public companies, which could adversely affect our business, financial condition, and results of operations.

We are an “emerging growth company,”

and our election to comply with the reduced disclosure requirements as a public company may make our common stock less attractive to investors.

If we or any contract manufacturers and suppliers we engage 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 may, now or in the future, be required to reimburse our counterparties in connection with costs incurred during performance of our contractual arrangements.

Our success depends on our ability to maintain the proprietary nature of our technology.

We have third party collaborators that might claim rights in or to our technology and/or assets.

We incur increased costs and demands upon management as a result of complying with the laws and regulations affecting public companies, which could adversely affect our business, financial condition, and results of operations.

If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired.

We have identified a material weakness in our internal control over financial reporting and determined that our disclosure controls and procedures were ineffective as of December 31, 2022.

In the future, we may identify additional material weaknesses or otherwise fail to maintain an effective system of internal control over financial reporting or adequate disclosure controls and procedures, which may result in material errors in our financial statements or cause us to fail to meet our period reporting obligations, and adversely affect the trading price of our common stock. 

Our warrants are accounted for as liabilities and changes in value of the warrants could have a material effect on our financial results.

The market price of our securities may be volatile, which could cause the value of any investment in our securities to decline.

An investment in our common stock is extremely speculative and there can be no assurance of any return on any such investment.

There can be no assurance that we will be able to comply with the continued listing standards of Nasdaq.

Our failure to meet the continuing listing requirements of Nasdaq could result in a de-listing of our securities.

Future sales and issuances of our common stock or rights to purchase common stock, including pursuant to our equity plans, could result in additional dilution of the percentage ownership of our stockholders and could cause our stock price to fall.

We have a significant number of warrants which are currently exercisable for shares of our common stock, and the exercise thereof would increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders.

Unstable market and economic conditions may have serious adverse consequences on our business, financial condition and stock price.

We may be subject to securities litigation, which is expensive and could divert management attention.

Our ability to continue to operate as a going concern depends on our ability to obtain adequate financing in the future.

Changes in tax laws and regulations or exposure to additional tax liabilities could adversely affect our financial results.

Risks Related to Our Business and Operations

We are a clinical-stage biopharmaceutical company and have incurred significant losses since our inception.

Although we realized net income in the fiscal year ended December 31, 2021, we may incur losses for the foreseeable future and may not be able to generate sufficient revenue to maintain profitability.

We realized net losses in the fiscal years ended December 31, 2022 and 2021, we expect to continue to incur net losses for the foreseeable future, and we may never achieve or maintain profitability in the future.

We are a clinical-stage biopharmaceutical company.

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We expect that our operating expenses will continue to increase significantly, including as we:

continue the research and development of our clinical- and preclinical-stage product candidates and discovery stage programs, including the clinical trials of SAB-185 and SAB-176;

continue the research and development of our clinical- and preclinical-stage product candidates and discovery stage programs, including further pre-clinical and clinical development of SAB-176, SAB-195 and SAB-142;

advance our preclinical-stage product candidates into clinical development;

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In addition, even if we were to obtain marketing approval, regulatory authorities may approve any of our product candidates for fewer or more limited indications than we request (including failing to approve the most commercially promising indications), may require a REMS that restricts prescribing or distribution of our therapeutic biological product candidates, may grant approval contingent on the performance of costly post-marketing clinical studies, or may approve a product candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that product candidate.

Regulatory approval for the genetic modification of animals, including those from which antibodies are isolated for injection into human patients, requires the approval of a New Animal Drug Application (NADA), which can be a lengthy and expensive process with uncertain outcomes, delays to which could substantially harm our business.

We cannot commercialize our therapeutic biological product candidates in the United States without first obtaining a regulatory approval for our animal drug candidates, i.e., the genomic modifications to our Tc Bovine, in the form of a NADA.

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If we do receive regulatory approval of our animal drug candidates, then we will have ongoing responsibilities including registration, recordkeeping, filing supplements, and periodic reporting, which could reveal additional complications and threaten the ongoing approval of our animal drug candidates.

Further, as our polyclonal antibody product candidates are regulated as biological products, such product candidates will also require the submission and approval of a BLA prior to marketing.

Further, as our polyclonal antibody product candidates are regulated as biological products, such product candidates will also require the submission and approval of a BLA prior to marketing.

In general, to commercialize any of our product candidates, we must obtain marketing authorization for both the therapeutic antibody product and the altered animal genomic DNA that enables production of the polyclonal antibodies.

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restrictions on our ability to conduct clinical trials, including full or partial clinical holds on ongoing or planned trials;

restrictions on the products’

marketing, promotion, distribution or manufacturing processes;

restrictions on the products’ marketing, promotion, distribution or manufacturing processes;

warning letters or untitled letters alleging violations;

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perceptions as to the potential advantages and side effects of the drug candidate being studied in relation to other available therapies, including any new drugs or treatments that may be approved for the indications we are investigating;

our ability to obtain and maintain patient consents;

travel restrictions and other potential limitations by federal, state, or local governments affecting the workforce or affecting clinical research site policies implemented in response to the COVID-19 pandemic or similar public health emergencies that may arise in the future;

delays in or temporary suspension of the enrollment of patients in our anticipated clinical trials due to the COVID-19 pandemic or similar public health emergencies that may arise in the future;

proximity and availability of clinical trial sites for prospective patients;

the risk that patients enrolled in clinical trials will not complete a clinical trial;

travel restrictions and other potential limitations by federal, state, or local governments affecting the workforce or affective clinical research policies implemented in response to the COVID-19 pandemic or similar public health emergencies that may arise in the future;

delays in or temporary suspension of the enrollment of patients in our anticipated clinical trials due to the COVID-19 pandemic or similar public health emergencies that may arise in the future;

proximity and availability of clinical trial sites for prospective patients;

the risk that patients enrolled in clinical trials will not complete a clinical trial;

the availability of approved therapies that are similar in mechanism to our product candidates.

If we experience delays or difficulties in the enrollment of subjects in our anticipated clinical trials, such clinical trials may be delayed or terminated.

If we experience delays or difficulties in the enrollment of subjects in our anticipated clinical trials, such clinical trials may be delayed or terminated.

Even if we are able to enroll a sufficient number of subjects in our future clinical trials, if the pace of enrollment is slower than we expect, the development costs for our product candidates may increase and the completion of such trials may be delayed, or the trials could become too expensive to complete.

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Our future success and ability to generate revenue from our product candidates, which we do not expect will occur for several years, if ever, is dependent on our ability to successfully develop, obtain regulatory approval for and commercialize one or more of our product candidates.

Our lead product candidate, SAB-185, was evaluated as part of the ACTIV-2 master protocol, funded and conducted by the National Institute of Allergy and Infectious Diseases, part of the U.S.

National Institutes of Health (the NIH) in collaboration with the AIDS Clinical Trials Group.

As the impacts of the COVID-19 pandemic evolves, in March 2022, the NIH determined to discontinue the Activ-2 Trial as a result of declining patient hospitalizations from COVID.

We are currently planning for the next phase of our development for SAB-185 and are considering a number of courses of action, including the potential to focus on identifying COVID patient groups who continue to be subject to serious illness and death.

We cannot make any assurance that the NIH or any other party, will fund such course of action.

Our lead product candidate, SAB-176, was evaluated in a Phase 2a challenge study in healthy volunteers that were challenged with the 2009 pandemic H1N1 influenza A strain and showed significant reduction of viral load, reduction of influenza systems at day 4 post challenge and a shorter period of viral shedding in SAB-176 treated patients compared to placebo controls. 

There is no guarantee that similar results will be seen in naturally infected patients with high risk of developing severe influenza symptoms in future anticipated Phase 2b or Phase 3 clinical trials or that the company will have sufficient financial resources to conduct these trials.

All of our other product candidates are in earlier stages of development and will require substantial additional investment for clinical development, regulatory review and approval in one or more jurisdictions.

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product-related adverse events experienced by subjects in our clinical trials, including unexpected toxicity results, or by individuals using drugs or therapeutic biologics similar to our product candidates;

delays in submitting an INAD or IND 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, or hold, of a clinical trial once commenced;

delays in submitting an INAD or IND 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, or hold, of a clinical trial once commenced;

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

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the results of our clinical trials may not meet the level of statistical significance required by the FDA or comparable foreign regulatory authorities for approval;

we may be unable to demonstrate that our product candidates’

clinical and other benefits outweigh their safety risks;

we may be unable to demonstrate that our product candidates’ clinical and other benefits outweigh their safety risks;

the data collected from clinical trials of our product candidates may not be sufficient to the satisfaction of the FDA or comparable foreign regulatory authorities to support the submission of a NADA, BLA or other comparable submissions in foreign jurisdictions or to obtain regulatory approval in the United States or elsewhere;

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To obtain the requisite regulatory approvals to commercialize any of our product candidates, we must demonstrate through extensive preclinical studies and clinical trials that our product candidates are safe and effective in humans.

We may experience delays in completing our clinical trials or preclinical studies and initiating or completing additional clinical trials or preclinical studies, including as a result of regulators not allowing or delay in allowing clinical trials to proceed under an INAD or IND, or not approving or delaying approval for any clinical trial grant or similar approval we need to initiate a clinical trial.

We may experience delays in completing our clinical trials or preclinical studies and initiating or completing additional clinical trials or preclinical studies, including as a result of regulators not allowing or delay in allowing clinical trials to proceed under an INAD or IND, or not approving or delaying approval for any clinical trial grant or similar approval we need to initiate a clinical trial.

We may also experience numerous unforeseen events during our clinical trials that could delay or prevent our ability to receive marketing approval or commercialize the product candidates we develop, including:

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We currently have no marketing, sales or distribution capabilities.

We intend to establish a sales and marketing organization, either on our own or in collaboration with third parties, with technical expertise and supporting distribution capabilities to commercialize SAB-185, SAB 176 and our other product candidates that may receive regulatory approval in key territories.

We intend to establish a sales and marketing organization, either on our own or in collaboration with third parties, with technical expertise and supporting distribution capabilities to commercialize SAB176 and our other product candidates that may receive regulatory approval in key territories.

These efforts will require substantial additional resources, some or all of which may be incurred in advance of any approval of the product candidate.

Any failure or delay in the development of our or third parties’

internal sales, marketing and distribution capabilities would adversely impact the commercialization of SAB-185, SAB 176 and our other product candidates and other future product candidates.

internal sales, marketing and distribution capabilities would adversely impact the commercialization of SAB 176 and our other product candidates and other future product candidates.

Factors that may inhibit our efforts to commercialize our product candidates on our own include:

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however, the use of our product candidates by us and any collaborators in clinical trials, and the sale of these product candidates, if approved, in the future, may expose us to liability claims.

We face an inherent risk of product liability lawsuits related to the use of our product candidates in patients, and will face an even greater risk if product candidates are approved by regulatory authorities and introduced commercially.

We face an inherent risk of product liability lawsuits related to the use of our product candidates in patients and will face an even greater risk if product candidates are approved by regulatory authorities and introduced commercially.

Product liability claims may be brought against us by participants enrolled in our clinical trials, patients, health care providers, pharmaceutical companies, our collaborators or others using, administering or selling any of our future approved products.

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federal civil and criminal false claims laws and civil monetary penalty laws, including the federal False Claims Act, which impose criminal and civil penalties, including civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, including the Medicare and Medicaid programs, claims for payment that are false or fraudulent, making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government, or the knowing retention of an overpayment from government health care programs;

the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;

HIPAA, which imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;

HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, and their respective implementing regulations, which impose obligations on covered healthcare providers, health plans, and healthcare clearinghouses, as well as their business associates that create, receive, maintain or transmit individually identifiable health information for or on behalf of a covered entity, with respect to safeguarding the privacy, security and transmission of individually identifiable health information;

made to physicians, which is defined to include doctors, dentists, optometrists, podiatrists and chiropractors, and certain teaching hospitals and applicable manufacturers to report annually to CMS ownership and investment interests held by the physicians and their immediate family members.

the federal Physician Payments Sunshine Act, which requires manufacturers of certain drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to the Centers for Medicare & Medicaid Services, or CMS, information related to “payments or other transfers of value” made to physicians, which is defined to include doctors, dentists, optometrists, podiatrists and chiropractors, and certain teaching hospitals and applicable manufacturers to report annually to CMS ownership and investment interests held by the physicians and their immediate family members.

Beginning in 2022, applicable manufacturers also will be required to report such information regarding payments and transfers of value provided during the previous year to physician assistants, nurse practitioners, clinical nurse specialists, anesthesiologist assistants, certified nurse anesthetists and certified nurse-midwives;

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Additionally, on April 15, 2021, the FDA issued a guidance document in which the FDA described its plans to conduct voluntary remote interactive evaluations of certain drug manufacturing facilities and clinical research sites.

According to the guidance, the FDA intends to request such remote interactive evaluations in situations where an in-person inspection would not be prioritized, deemed mission-critical, or where direct inspection is otherwise limited by travel restrictions, but where the FDA determines that remote evaluation would be appropriate.

In November 2021, FDA reported that it is developing a plan for fiscal year 2022 inspections of medical product facilities using the agency’s established risk models and that facility inspections postponed due to the pandemic will be reprioritized.

As of early 2022, the FDA has resumed inspections of domestic and foreign facilities to ensure timely reviews of applications for all products lines.

However, the FDA may not be able to continue its current pace and review timelines could be extended, including where a pre-approval inspection or an inspection of clinical sites is required.

On January 30, 2023, the Biden administration announced that it will end the public health emergency declarations related to COVID-19 on May 11, 2023.

On January 31, 2023, the FDA indicated that it would soon issue a Federal Register notice describing how the termination of the public health emergency will impact the agency’s COVID-19 related guidance.

Regulatory authorities outside the United States may adopt similar restrictions or other policy measures in response to the pandemic related to COVID-19 and its variants.

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The loss or unavailability of any of these individuals for any significant period of time could have a material adverse effect on our business, prospects, financial condition and results of operations.

Our employees and independent contractors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could negatively impact our business, prospects, financial condition and operating results.

Our employees and indep endent contractors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could negatively impact our business, prospects, financial condition and operating results.

We are exposed to the risk that our employees, independent contractors, consultants, commercial partners, suppliers and distributors may engage in fraudulent or illegal activity.

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We do not have the ability to conduct all aspects of our preclinical studies or future clinical trials ourselves.

As a result, we are, and expect to remain, dependent on third parties to perform some of our research and preclinical studies and any future clinical trials of our product candidates, including but not limited to governmental agencies and university laboratories, contract manufacturers, contract research organizations (CROs), distribution and supply (logistics) services organizations, contract testing organizations (CTOs), consultants or consultant organization with specialized knowledge based expertise.

As a result, we are, and expect to remain, dependent on third parties to perform some of our research and preclinical studies and any future clinical trials of our product candidates, including but not limited to governmental agencies and university laboratories, contract manufacturers, CROs, distribution and supply (logistics) services organizations, contract testing organizations (CTOs), consultants or consultant organization with specialized knowledge based expertise.

The timing of the initiation and completion of our current and planned preclinical studies and clinical trials will therefore be partially controlled by such third parties and may result in delays to our development programs.

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If any strategic collaborator does not commit adequate resources to the marketing and distribution of our product candidates, it could limit our potential revenues.

Any of these events could lead to clinical trial delays or failure to obtain regulatory approval, or impact our ability to successfully commercialize our current or any future product candidates once approved.

Any of these events could lead to clinical trial delays or failure to obtain regulatory approval or impact our ability to successfully commercialize our current or any future product candidates once approved.

Some of these events could be the basis for FDA action, including injunction, request for recall, seizure, or total or partial suspension of production.

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In addition, we could incur higher manufacturing costs if manufacturing processes or standards change and we could need to replace, modify, design or build and install equipment, all of which would require additional capital expenditures.

We have not entered into long term manufacturing and supply agreements with any producers.

We have not entered into definitive long term manufacturing and supply agreements with any producers.

On October 26, 2022, we entered into a Manufacturing Option Agreement (the “Emergent Manufacturing Agreement”) and Right of First Refusal Agreement (the “Emergent RoFR Agreement,”

and together with the Emergent Manufacturing Agreement, the “Emergent Agreements”) with Emergent BioSolutions Canada, Inc., a wholly-owned subsidiary of Emergent BioSolutions Inc.

(“Emergent”).

The Emergent Agreements contemplate that we will enter into one or more binding Master Manufacturing Services Agreements, whereby Emergent will provide contract development and manufacturing services to produce our fully-human polyclonal antibody products.

Under the Emergent Manufacturing Agreement, we granted Emergent an exclusive option for the exclusive commercial manufacture of commercial stage product utilizing our humanized polyclonal antibodies.

Pursuant to the terms of our arrangement, we will notify Emergent in advance of our first commercial manufacturing needs for any product and each additional product, and Emergent may then exercise the exclusive manufacturing option with respect to such product.

Under the Emergent RoFR Agreement, we granted Emergent an exclusive right of first refusal to license and develop our products, developed using humanized polyclonal antibodies based on our platform to treat (i) botulism anti-toxin, (ii) pandemic influenza, or (iii) anti-fungal diseases.

Any definitive manufacturing arrangement will be determined at the time any Master Manufacturing Services Agreement is entered into with Emergent, and there is no guarantee we will do so.

We intend to pursue agreements with contract manufacturers to produce the components and drug products that we will use in the future for the commercialization of products that make using of our technology, as well as for labeling and finishing services.

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We may not achieve the manufacturing productivity (“yield”) required to achieve a commercially viable cost of goods.

Low productivities may result in a cost of goods which is too high to allow profitable commercialization, or give rise to the need for additional manufacturing process optimization which would require additional funding and time.

Low productivities may result in a cost of goods which is too high to allow profitable commercialization or give rise to the need for additional manufacturing process optimization which would require additional funding and time.

Additionally, the process of manufacturing biologics, such as our product candidates, is extremely susceptible to product loss due to contamination, equipment failure or improper installation or operation of equipment, vendor or operator error, inconsistency in yields, variability in product characteristics and difficulties in scaling the production process.

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If our lab facilities were to be damaged or destroyed by fire, flood, other natural disaster or other occurrences of any kind, it would have a material adverse effect on our ability to produce product candidates and on our business, financial condition and results of operations.

We must comply with applicable current Good Manufacturing Practice, or cGMP, regulations and guidelines.

We must comply with applicable cGMP, regulations and guidelines.

We may encounter difficulties in achieving quality control and quality assurance and may experience shortages in qualified personnel.

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collaborators may not perform their obligations as expected;

strategic focus or available funding, or external factors, such as an acquisition, that divert resources or create competing priorities;

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

collaborators may decide not to continue the development of collaboration products and could independently develop, or develop with third parties, products that compete directly or indirectly with our products or product candidates if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours;

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If one of our 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 are party to a contracting agreement with the US federal government which could be subject to revision or termination at the discretion of the US federal government.

We are executing on an award agreement (Project Agreement No.

MCDC1902-007) with the U.S.

federal Government (USG) that is structured as a cost reimbursement agreement that includes a defined scope and budget and represents the substantial majority of our revenues.

The USG has the right to discontinue the agreement and wind-down or change the scope of the projects within the agreement.

In the event the USG stops or alters the scope of the project, such action could have a material impact on our financial performance.

Further, the agreement contains general purpose and limited purpose rights of USG, which include the sharing of certain types of information and a right to negotiate reasonable access to physical assets that have been funded by USG.

We have historically relied on awards from, and contracts with, the U.S.

Government to fund our business and operations, and will need to find new and alternative sources of funding following the discontinuance of certain such arrangements. 

We have historically relied on awards from, and contracts with, the U.S.

Government to fund our business and operations, but we have recently mutually agreed with the U.S.

federal Government (USG) to discontinue Project Agreement No.

MCDC1902-007, an award agreement which represented a substantial majority of our revenues.

We therefore need to secure new and alternative sources of funding for our projects.

There is no guarantee that we will find such other sources of funding on favorable terms or at all, which could have a direct adverse effect on our financial condition and ability to operate.

We operate in a highly competitive industry.

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There can be no assurance that these and other efforts by potential competitors will not be successful, or that other methods will not be developed to compete with our technology.

There are specific products and technologies that compete with current product pipeline and that may outperform or be more competitive than our products.

For example, there are multiple animal-derived sources for ATG, that may be competitive with SAB-142 for transplant such as Thymoglobulin (Sanofi Genzyme) and Atgam (Pfizer), SAB-142 for T1D such as teplizumab (Provention), otelixizumab (Tolerx/GSK);

there are industry standard human sources of IgG that may compete with SAB-181 such as Hizentra (CSL Behring) and other commercially available human-derived IVIG’s;

there are other antibody technologies that may compete with Our anti-influenza product, SAB-176 such as VIR-2482 (Vir), DAS-181 (Ansun), VIS410 (Visterra), FLU-IGIV (Emergent Biosolutions);

there are multiple COVID-19 products that may compete with SAB-185 such as BRII-196/BRII-198 (Brii), AZD-7442 (AstraZeneca), LY-CoV555 (Eli Lilly/Abcellera), BMS-986414/BMS-986413 (BMS/Rockefeller University), VIR-7831 (Vir/GSK), REGEN-CoV (Regeneron), ADG-20 (Adagio), GIGA-2050 (Grifols).

There are specific products and technologies that compete with our current product pipeline and that may outperform or be more competitive than our products.

For example, there are multiple products that may be competitive with SAB-142 for T1D such as animal-derived polyclonal biologics Thymoglobulin (Sanofi Genzyme) and Atgam (Pfizer), and monoclonal antibody treatments such as teplizumab (Tzield), , Alefacept, and Orencia;

there are other antibody technologies that may compete with our anti-influenza product, SAB-176 such as VIR-2482 (Vir), DAS-181 (Ansun) and FLU-IVIG (Emergent Biosolutions) and with our SAB-195 (anti- C.diff ) such as bezlotoxumab (Zinplava).

We have no sales and marketing experience.

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We do not carry specific biological waste or hazardous waste insurance coverage, workers compensation or property and casualty and general liability insurance policies that include coverage for damages and fines arising from biological or hazardous waste exposure or contamination.

Anti-takeover provisions contained in our certificate of incorporation as well as provisions of Delaware law, could impair a takeover attempt.

Our certificate of incorporation contains provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests.

We are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control.

Together these provisions may make more difficult the removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.

These provisions include:

the right of our board of directors to issue shares of preferred stock and to fix the terms of such shares;

no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;

a classified board of directors with three-year staggered terms, which could delay the ability of stockholders to change the membership of a majority of our board of directors;

the right of our board of directors to elect a director to fill a vacancy created by the expansion of our board of directors or the resignation, death or removal of a director in certain circumstances, which prevents stockholders from being able to fill vacancies on our board of directors;

a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders;

requirement that a meeting of stockholders may only be called by members of our board of directors and the ability of our stockholders to call a special meeting is specifically denied, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors.

These provisions, alone or together, could delay hostile takeovers and changes in control or changes in our board of directors and management.

As a Delaware corporation, we are also subject to provisions of Delaware law, including Section 203 of the DGCL, which prevents some stockholders holding more than 15% of outstanding our common stock from engaging in certain business combinations without approval of the holders of substantially all of our common stock.

Any provision of our certificate of incorporation, bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of common stock and could also affect the price that some investors are willing to pay for our common stock.

We may, now or in the future, be required to reimburse our counterparties in connection with costs incurred during performance of our contractual arrangements.

On August 3, 2022, we received notice from the DoD to terminate the Department of Defense, Joint Program Executive Office for Chemical, Biological, Radiological and Nuclear Defense Enabling Biotechnologies (“JPEO”) Rapid Response contract, dated as of August 7, 2019 with the DoD most recently amended as of September 14, 2021, relating to a prototype research and development of a Rapid Response Antibody Program and advanced clinical development through licensure and commercial manufacturing for SAB-185 (the "JPEO Rapid Response Contract Termination").

A termination and settlement proposal (the “TSP”) was submitted the DoD on September 9, 2022;

we submitted a final invoice on December 15, 2022; and received payment from the DoD on or about January 12, 2023.

The terms of the arrangement provide for a cost-reimbursable structure, and state that the parties will work in good faith equitable reimbursement for work performed toward accomplishment of the tasks provided in the agreement.

At this time, other than 

certain deferred obligations potentially payable to the DoD solely due to subsequent negotiations with our third-party vendors , we believe and have been advised there is a reasonable, good faith basis for the position that no present or future obligations exist by us in favor of our counterparties.

However, if an alternative determination is made, we may become liable for costs incurred during the termination of the JPEO Rapid Response contract, which could have an adverse effect on our business and results of operations.

Risks Related to Our Intellectual Property

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This can be expensive, particularly for a company of our size, and time-consuming.

In addition, in an infringement proceeding, a court may decide that a patent of ours is not valid or is unenforceable, or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover our technology.

In addition, in an infringement proceeding, a court may decide that a patent of ours is not valid or is unenforceable or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover our technology.

An adverse determination of any litigation or defense proceeding could put one or more of our patents at risk of being invalidated or interpreted narrowly and could put our patent applications at the risk of not issuing.

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

These products may compete with our products in and our patents or other intellectual property rights may not be effective or sufficient to prevent such competition.

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

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions.

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If such claims are successful, our business, financial condition, and results of operations could be harmed, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and harm our business, financial condition, and results of operations.

We are an “emerging growth company,”

and our election to comply with the reduced disclosure requirements as a public company may make our common stock less attractive to investors.

We are an “

emerging growth company, ”

 as well as a "smaller reporting company," and our election to comply with the reduced disclosure requirements as a public company may make our common stock less attractive to investors.

For so long as we remain an “emerging growth company”

as defined in the JOBS Act, we may take advantage of certain exemptions from various requirements that are applicable to public companies that are not “emerging growth companies,”

as defined in the Tax Cuts and Jobs Act of 2017 (the "JOBS Act"), we may take advantage of certain exemptions from various requirements that are applicable to public companies that are not “emerging growth companies,”

including not being required to comply with the independent auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley-Act), reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, being required to provide fewer years of audited financial statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

We may lose our emerging growth company status and become subject to the SEC’s internal control over financial reporting management and auditor attestation requirements.

If we are unable to certify the effectiveness of our internal controls, or if our internal controls have a material weakness, we could be subject to regulatory scrutiny and a loss of confidence by stockholders, which could harm our business and adversely affect the market price of our common stock.

We will cease to be an “emerging growth company”

upon the earliest to occur of:

(i) the last day of the fiscal year in which we have more than $1.07 billion in annual revenue;

(ii) the date we qualify as a large accelerated filer, with at least $700 million of equity securities held by non-affiliates;

(iii) the date on which we have, in any three-year period, issued more than $1.0 billion in non-convertible debt securities;

and (iv) December 31, 2026 (the last day of the fiscal year following the fifth anniversary of becoming a public company).

As an emerging growth company, we may choose to take advantage of some but not all of these reduced reporting burdens.

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It is possible that some investors will find our common stock less attractive as a result, which may result in a less active trading market for our common stock and higher volatility in our stock price.

We may lose our emerging growth company status and become subject to the SEC’s internal control over financial reporting management and auditor attestation requirements.

We will cease to be an “emerging growth company”

upon the earliest to occur of:

(i) the last day of the fiscal year in which we have more than $1.235 billion in annual revenue;

(ii) the date we qualify as a large accelerated filer, with at least $700 million of equity securities held by non-affiliates;

(iii) the date on which we have, in any three-year period, issued more than $1.0 billion in non-convertible debt securities;

and (iv) December 31, 2026 (the last day of the fiscal year following the fifth anniversary of becoming a public company).

We are also a “smaller reporting company”

as defined under the Securities Act and the Exchange Act.

We may continue to be a smaller reporting company so long as either (i) the market value of shares of our common stock held by non-affiliates is less than $250 million or (ii) our annual revenue was less than $100 million during the most recently completed fiscal year and the market value of shares of our common stock held by non-affiliates is less than $700 million.

If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies.

Specifically, as a smaller reporting company, we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Reports on Form 10-K and have reduced disclosure obligations regarding executive compensation, and, similar to emerging growth companies, if we are a smaller reporting company under the requirements of (ii) above, we would not be required to obtain an attestation report on internal control over financial reporting issued by our independent registered public accounting firm.

Investors may find our common stock less attractive because we may rely on these exemptions.

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

We are not currently required to comply with the SEC rules that implement Section 404 of the Sarbanes-Oxley Act and are therefore not required to make a formal assessment of the effectiveness of our internal control over financial reporting for that purpose.

As a public company, we will be required to provide an annual management report on the effectiveness of our internal control over financial reporting commencing with our Form 10-K.

Our independent registered public accounting firm is not required to formally attest to the effectiveness of our internal control over financial reporting until after we are no longer an “emerging growth company”

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Any failure to maintain effective disclosure controls and internal control over financial reporting could have an adverse effect on our business and results of operations and could cause a decline in the price of our common stock.

We have identified a material weakness in our internal control over financial reporting and determined that our disclosure controls and procedures were ineffective as of December 31, 2022.

Under the supervision and with participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2022, and we have concluded that our internal controls over financial reporting were not effective as of December 31, 2022, due to the existence of material weaknesses in such controls.

We have also concluded that our disclosure controls and procedures were not effective as of December 31, 2022, all as described in Item 9A, “Controls and Procedures,”

of this Annual Report on Form 10-K.

Management is actively engaged in the planning for, and implementation of, remediation efforts to address our material weaknesses.

Continuing costs to remedy these material weaknesses and to address inquiries from regulators may be significant and may require significant attention from our management and other personnel, and we cannot assure you that we will be able to remedy the material weaknesses.

The incurrence of significant additional expense, or the requirement that management and other personnel devote significant time to these matters could reduce the time available to execute on our business strategies and could have a material adverse effect on our business, financial condition and results of operations.

We also cannot assure you that additional material weaknesses in our internal control over financial reporting will not arise or be identified in the future.

If our remediation efforts are insufficient to address the identified deficiencies, or if additional deficiencies in our internal control over financial reporting are discovered or occur in the future, our consolidated financial statements may contain material misstatements and we could be required to restate our financial results and may be unable to make our filings with the SEC on a timely basis.

Moreover, because of the inherent limitations of any control system, material misstatements due to error or fraud may not be prevented or detected on a timely basis, or at all.

If we are unable to provide reliable and timely financial reports in the future, our business and reputation may be further harmed.

Failures in internal controls may negatively affect investor confidence in our management and the accuracy of our financial statements and disclosures or result in adverse publicity and concerns from investors and commercial customers, any of which could have a negative effect on the price of our shares, subject us to regulatory investigations and penalties and/or shareholder litigation, and materially adversely impact our business and financial condition.

Our warrants are accounted for as liabilities and changes in value of the warrants could have a material effect on our financial results.

Prior to the Business Combination, on April 12, 2021, the staff of the SEC issued a Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”) (the “SEC Staff Statement”).

Prior to the Business Combination, on April 12, 2021, the staff of the SEC issued a Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”) (the “SEC Staff Statement”).

The SEC Staff Statement focused on certain accounting and reporting considerations related to warrants of a kind similar to warrants that we issued prior to the Business Combination at the time of our initial public offering and the exercises by the underwriters of their over-allotment options in January 2021.

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As a result, included on our balance sheet are derivative liabilities related to embedded features contained within the warrants.

Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity provides for the remeasurement of the fair value of such derivatives at each balance sheet date, with a resulting non-cash gain or loss related to the change in the fair value being recognized in earnings in the statement of income.

Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 815-40, Derivatives and Hedging —

Contracts in Entity ’

s Own Equity provides for the remeasurement of the fair value of such derivatives at each balance sheet date, with a resulting non-cash gain or loss related to the change in the fair value being recognized in earnings in the statement of income.

As a result of the recurring fair value measurement, our financial statements and results of operations may fluctuate quarterly based on factors which are outside of our control.

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We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as provided in the section titled “

Management’s Discussion and Analysis of Financial Condition and Results of Operations ”

Management ’

s Discussion and Analysis of Financial Condition and Results of Operations ”

The results of these estimates form the basis for making judgments about the carrying values of assets, liabilities, and equity and the amount of revenue and expenses that are not readily apparent from other sources.

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Risks Related to our Common Stock

Anti-takeover provisions contained in our certificate of incorporation as well as provisions of Delaware law, could impair a takeover attempt.

Our certificate of incorporation contains provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests.

We are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control.

These provisions include:

the right of our board of directors to issue shares of preferred stock and to fix the terms of such shares;

no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;

a classified board of directors with three-year staggered terms, which could delay the ability of stockholders to change the membership of a majority of our board of directors;

a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders;

These provisions, alone or together, could delay hostile takeovers and changes in control or changes in our board of directors and management.

As a Delaware corporation, we are also subject to provisions of Delaware law, including Section 203 of the DGCL, which prevents some stockholders holding more than 15% of our outstanding common stock from engaging in certain business combinations without approval of the holders of substantially all of our common stock.

The market price of our securities may be volatile, which could cause the value of any investment in our securities to decline.

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Factors affecting the trading price of our securities may include, but are not solely limited to, the risk factors identified herein.

In addition, the stock market in general, and Nasdaq and 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.

The stock market in general, and Nasdaq and 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.

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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This type of litigation, if instituted, could result in substantial costs and a diversion of management’s attention and resources, which would harm our business, operating results, or financial condition.

In addition, our Business Combination resulted in our merging with a special purpose acquisition company, which can cause additional volatility in the price of our common stock and warrants.

There has also been increased focus by government agencies on transactions such as our Business Combination in the last year, and we expect that increased focus to continue, and we may be subject to increased scrutiny by the SEC, other government agencies and holders of our securities, as a result.

These market and industry factors may materially reduce the market price of our common stock and warrants regardless of our operating performance.

An investment in our common stock is extremely speculative and there can be no assurance of any return on any such investment.

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Investors will be subject to substantial risks involved in an investment in us, including the risk of losing their entire investment.

There can be no assurance that we will be able to comply with the continued listing standards of Nasdaq.

If Nasdaq delists our securities from trading on its exchange for failure to meet their continued listing standards, we and our stockholders could face significant negative consequences including:

Limited availability of market quotations for our securities;

A determination that our common stock is a “penny stock”

which will require brokers trading in our securities to adhere to more stringent rules;

Possibly resulting in a reduced level of trading activity in the secondary trading market for shares of our common stock;

A limited amount of analyst coverage;

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

Our failure to meet the continuing listing requirements of Nasdaq could result in a de-listing of our securities.

On January 23, 2023, we received a written notification (the “Notice Letter”) from Nasdaq indicating that we were not in compliance with Nasdaq Listing Rule 5450(a)(1), as the closing bid price for our common stock was below the $1.00 per share requirement for the last 30 consecutive business days.

The Notice Letter stated that we have 180 calendar days, or until July 24, 2023 (the “Initial Compliance Period”), to regain compliance with the minimum bid price requirement.

In the event that we do not regain compliance with Listing Rule 5450(a)(1) prior to the expiration of the Initial Compliance Period (or additional compliance period, if applicable), we will receive written notification that our securities are subject to delisting.

If we fail to satisfy the continuing listing requirements of Nasdaq, such as minimum closing bid price requirements, as discussed above, the corporate governance, or stockholders’

equity or minimum closing bid price requirements, Nasdaq may take steps to delist our common stock.

Such a delisting would likely have a negative effect on the price of our common stock and would impair our stockholders’

ability to sell or purchase our common stock.

In the event of a delisting, we would likely take actions to restore our compliance with Nasdaq’s listing requirements, but we can provide no assurance that any such action taken by us would allow our common stock to become listed again, stabilize the market price or improve the liquidity of our securities, prevent our common stock from dropping below the Nasdaq minimum bid price requirement or prevent future non-compliance with Nasdaq’s listing requirements.

Because we have no current plans to pay cash dividends on our common stock for the foreseeable future, investors may not receive any return on their investment unless they sell their common stock for a price greater than the price paid.

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We are unable to predict the effect that sales may have on the prevailing market price of our common stock.

Sales of significant number of shares of our common stock may make it more difficult for us to sell equity or equity-related securities in the future at a time and price that it deems reasonable or appropriate, and make it more difficult for you to sell shares of our common stock.

Sales of significant number of shares of our common stock may make it more difficult for us to sell equity or equity-related securities in the future at a time and price that it deems reasonable or appropriate and make it more difficult for you to sell shares of our common stock.

Certain holders of our securities are entitled to rights with respect to the registration of the shares of our common stock under the Securities Act.

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Such sales may also result in material dilution to existing stockholders, and new investors could gain rights, preferences and privileges senior to the holders of our common stock.

On December 7, 2022, we consummated a private placement with certain institutional and accredited investors, whereby we issued an aggregate of 7,363,377 shares of common stock and warrants to purchase up to 7,363,377 shares of common stock (the “PIPE Warrants”), each share and PIPE Warrant sold at a combined purchase price of $1.08.

The PIPE Warrants become exercisable on the six-month anniversary of the date of grant for a price of $1.08 per share and are exercisable for five years from the date of issuance.

We also issued our placement agent, Brookline Capital Markets, PIPE Placement Agent Warrants to purchase up to an aggregate of 210,913 shares of Common Stock (the “PIPE Placement Agent Warrants”). The Placement Agent Warrants have an exercise price equal to $1.35 per share and are exercisable six months from the date of issuance and expires five years from the date of issuance.

The issuance of shares of common stock upon exercise of the PIPE Warrants or PIPE Placement Agent Warrants 

may result in material dilution to existing stockholders.

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

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The exercise price of these warrants is $11.50 per share.

On June 7, 2023, outstanding PIPE Warrants and PIPE Placement Agent Warrants to purchase up to 7,363,377 and 210,913 shares, respectively, of our common stock will become exercisable, in accordance with the terms of the warrant agreement governing those securities.

The respective exercise price of these warrants is $1.08 and $1.35.

To the extent such warrants are exercised, additional shares of our common stock will be issued, which will result in dilution to the holders of shares of our common stock and increase the number of shares eligible for resale in the public market.

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These disruptions can result in severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates and uncertainty about economic stability.

Additionally, in March 2023 the Federal Deposit Insurance Corporation, or the FDIC, took control and was appointed receiver of Silicon Valley Bank, or SVB.

We have no exposure to SVB.

If other banks and financial institutions enter receivership or become insolvent in the future in response to financial conditions affecting the banking system and financial markets, our ability to access our existing cash, cash equivalents and investments may be threatened and could have a material adverse effect on our business and financial condition.

In addition, U.S.

and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the start of the military conflict between Russia and Ukraine.

There can be no assurance that further deterioration in credit and financial markets and confidence in economic conditions will not occur.

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If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly limited.

Our ability to continue to operate as a going concern depends on our ability to obtain adequate financing in the future.

The ability of the Company to continue as a going concern is dependent, among other things, on the Company's ability to raise additional capital resources.

The Company plans to seek additional funding through a combination of equity or debt financings, or other third-party financing, collaborative or other funding arrangements.

Should the Company seek additional financing from outside sources, the Company may not be able to raise such financing on terms acceptable to the Company or at all.

If the Company is unable to raise additional capital when required or on acceptable terms, the Company may be required to scale back or discontinue the advancement of product candidates, reduce headcount, liquidate our assets, file for bankruptcy, reorganize, merge with another entity, or cease operations.

Management believes there is substantial doubt about the Company’s ability to continue as a going concern for the one-year period following the date that the consolidated financial statements for December 31, 2022 were issued.

The consolidated financial statements for December 31, 2022 have been prepared on the basis that the Company will continue as a going concern, and does not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability for the Company to continue as a going concern.

Changes in legislation in U.S.

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or foreign taxation of such activities may increase our worldwide effective tax rate and harm our business, results of operations, and financial condition.

For example, the Biden administration has proposed changes to federal income tax laws that would, among other things, impose a 15% minimum tax on corporate book income for certain taxpayers and strengthen the global intangible low-taxed income regime imposed by the Tax Cuts and Jobs Act of 2017 while eliminating related tax exemptions.

For example, the Biden administration has proposed changes to federal income tax laws that would, among other things, impose a 15% minimum tax on corporate book income for certain taxpayers and strengthen the global intangible low-taxed income regime imposed by the Jobs Act of 2017 while eliminating related tax exemptions.

The impact of future changes to U.S.

and foreign tax law on our business is uncertain and could be adverse, and we will continue to monitor and assess the impact of any such changes.

Changes in tax laws and regulations or exposure to additional tax liabilities could adversely affect our financial results.

Beginning in 2022, the Jobs Act eliminated the option to deduct research and development expenditures and requires taxpayers to amortize them over five years pursuant to IRC Section 174.

Although Congress is considering legislation that would defer the amortization requirement to later years, we have no assurance that the provision will be repealed or otherwise modified.

If the requirement is not modified or deferred, it may materially reduce our cash flows beginning in 2023.

Please refer to Note 15, Income Taxes , for additional information.

Unresolved Staff Comments.

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