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Item 1A. Risk Factors

2024-02-20 compared with 2023-03-09 · 291 added, 248 removed, 729 unchanged (43% of the section changed)

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Risks Related to our Financial Position and Need for Additional Capital

The License Agreement and the transactions contemplated thereby represent a significant change in the Company’s strategic focus, may not achieve intended results and could increase the number of our outstanding shares or amount of outstanding debt.

As the Company previously announced, on September 28, 2022, we determined that we would seek partners or a divestiture of ridinilazole, our lead product candidate for treating patients suffering from CDI, as the path forward for the clinical development of the asset.

As a result of this determination, we discontinued our only active study for ridinilazole, a pediatric clinical trial evaluating ridinilazole for treating adolescent patients with CDI.

We are currently involved in activities related to closeout of ridinilazole clinical trials.

On December 5, 2022 we entered into the License Agreement with Akeso pursuant to which Akeso granted the Company an in-license to its breakthrough bispecific antibody, ivonescimab, in the Licensed Territory.

The entry into the License Agreement and potential partnership or divestiture of ridinilazole represents a significant change in the Company’s strategy.

All prior development and marketing activities relating to ridinilazole are being terminated and our future operations will be heavily dependent on the License Agreement and other future activities as the Company determines.

The success of this transaction will depend, in part, on the clinical success of ivonescimab as well as the success of our collaboration with Akeso.

This transaction may not result in the realization of the full benefit of any anticipated growth opportunities or these benefits may not be realized within the expected time frames.

Our Company has no prior history of a successful product candidate and, as discussed above, we determined that we would seek partners or a divestiture for our prior lead product candidate, ridinilazole, and will continue to pursue partnerships for further development of SMT-738.

We will also require significant additional financing to fund the clinical development plan and certain payments contemplated by the License Agreement that could result in an increase in the number of our outstanding shares or the aggregate amount of our debt.

If we are unable to raise capital to fund these additional payments, it may cause a material adverse effect on our business.

Given the License Agreement that we entered into in December 2022 and shift in focus to oncology, the Company decided it will cease further investment in the Discuva platform and evaluate further options for the use of the Discuva Platform.

We do not currently have sufficient working capital to fund our planned operations, including fulfilling our debt obligations, for the next twelve months.

There is uncertainty regarding our ability to raise additional capital and as such, there is substantial doubt regarding our ability to continue as a going concern.

Our financial statements have been prepared under the assumption that we would continue as a going concern.

However, we have concluded that there is substantial doubt about our ability to continue as a going concern, because without additional sources of funding, our cash and cash equivalents at December 31, 2023 is not sufficient for us to fund our working capital needs for the next twelve months after the date that the financial statements included in this Annual Report on Form 10-K are issued.

Management’s plans concerning these matters, including raising additional capital, are described in Item 2 – Liquidity and Capital Resources – Sources of Liquidity of our financial statements included within this Annual Report on Form 10-K.

However, we cannot guarantee that we will be able to obtain any or sufficient additional funding or that such funding, if available, will be obtainable on terms satisfactory to us.

If we cannot continue as a going concern, our stockholders would likely lose most or all of their investment in us.

Worldwide economic social, and geopolitical instability could adversely affect our operations, revenue, financial condition, or results of operations.

Generally, worldwide economic conditions remain uncertain, particularly due to the effects of the conflict between Russia and Ukraine and the conflicts in the Middle East, including those in Gaza and Yemen, and disruptions in the banking system and financial markets, lingering COVID-19 pandemic, increased inflation and rising interest rates.

The general economic and capital market conditions, both in the U.S.

and worldwide, have been volatile in the past and at times have adversely affected the Company’s access to capital and increased the cost of capital.

The capital and credit markets may not be available to support future capital raising activity on favorable terms.

If economic conditions decline, the Company’s future cost of equity or debt capital and access to the capital markets could be adversely affected.

In addition, adverse economic conditions, such as recent supply chain disruptions and labor shortages and persistent inflation, may negatively impact our business.

These economic conditions make it more difficult for us to accurately forecast and plan our future business activities.

We depend heavily on the success of ivonescimab.

If we are unable to successfully commercialize ivonescimab, or experience significant delays in doing so, we may extend the period in which we will incur significant financial losses as an organization.

If we are unable to successfully develop or commercialize ivonescimab, or experience significant delays in doing so, we may extend the period in which we will incur significant financial losses as an organization.

We plan to invest a significant portion of our efforts and financial resources in the development of ivonescimab, which is still in clinical development.

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The success of this product candidate will depend on a number of factors, including the following:

• Ability to use data of patients from Akeso’s clinical trials in China in seeking regulatory approval;

• successful completion of clinical development;

• receipt of marketing approvals from applicable regulatory authorities;

• Ability to use preclinical data and data of patients from Akeso’s clinical trials in China supporting registration studies and regulatory approval;

• successful completion of global clinical development;

• receipt of clinical trial approvals and future marketing approvals from applicable regulatory authorities in all the countries where we intend to conduct clinical trials and/or seek marketing approval;

• establishing supply chain and commercial manufacturing arrangements with third-party manufacturers;

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• effectively competing with other therapies;

• maintaining a continued acceptable safety profile of ivonescimab, following approval.

• maintaining an acceptable safety profile of ivonescimab during development and following approval.

If we do not achieve one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to successfully commercialize ivonescimab, which would materially harm our business.

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During the year ended December 31, 2023, we incurred a net loss of $614.9 million, and cash flows used in operating activities was $76.8 million.

As of December 31, 2022 we had an accumulated deficit of $378.3 million, cash and cash equivalents of $348.6 million, restricted cash of $300,000, research and development tax credits of $5.8 million and accounts receivable of $0.3 million.

As of December 31, 2023 we had an accumulated deficit of $993.3 million, cash and cash equivalents of $71.4 million, short-term investments in U.S.

treasury securities of $114.8 million, and current and long-term research and development tax credits receivable of $1.8 million.

These losses could continue for the next several years as we invest in clinical development of ivonescimab.

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We will need substantial additional capital to fund our operations and to make payments under the License Agreement and the Note Purchase Agreement and if we fail to obtain necessary financing, we could be forced to delay, reduce or eliminate the development and commercialization of our product candidates.

Conducting preclinical testing and clinical trials is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product sales.

In addition, our product candidates, if approved, may not achieve commercial success.

Our commercial revenues, if any, will be derived from sales of products that we are not planning to have commercially available for several years, if at all.

Accordingly, we will need to continue to rely on additional financing to achieve our business objectives.

In addition, we may

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

we will need to continue to rely on additional financing to achieve our business objectives.

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

Additional financing may not be available to us on acceptable terms, or at all.

We expect our research and development expenses to increase substantially in connection with our ongoing activities, particularly in connection with the License Agreement.

In addition, if we obtain marketing approval these potential future product candidates where we retain commercial rights or any other product candidates we develop, we expect to incur significant commercialization expenses related to product sales, marketing, distribution and manufacturing.

In addition, if we obtain marketing approval for our potential future product candidates where we retain commercial rights or any other product candidates we develop, we expect to incur significant commercialization expenses related to product sales, marketing, distribution and manufacturing.

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

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We may anticipate the need for further capital raises to repay the remaining $100 million principal balance under the Note Purchase Agreement.

We also anticipate further capital raises to repay the remaining borrowings under the Note Purchase Agreement.

We do not have any committed external sources of funds with respect to SMT112.

We therefore expect to raise additional capital via issuances of equity or debt.

Raising additional capital may cause dilution to our investors, restrict our operations or require us to relinquish rights to our technologies or product candidates.

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We have substantial indebtedness and may require additional indebtedness in the future.

As of March 7, 2023, we had a total of $100 million of indebtedness outstanding under the Note Purchase Agreement.

As of February 19, 2024, we had a total of $100 million of indebtedness outstanding under the Note Purchase Agreement.

Further, the License Agreement calls for certain additional future payment obligations and we may require additional indebtedness to fund those obligations.

Our existing and future indebtedness will require interest payments and need to be repaid or refinanced and could require us to divert funds identified for other purposes to service our debt, could result in cash demands and impair our liquidity position and could result in financial risk for us.

Our existing and future indebtedness will require interest payments and need to be repaid or refinanced and could require us to divert funds identified for other purposes to service our debt.

Our debt obligations could also result in cash demands and impair our liquidity position, causing financial risk for us.

Diverting funds identified for other purposes for debt service may adversely affect our growth prospects.

If we cannot generate sufficient cash flow from operations to service our debt, we may need to refinance our debt, dispose of assets, or issue equity to obtain necessary funds.

If we cannot generate sufficient cash flow from operations to service our debt, we will need to refinance our debt, dispose of assets, or issue equity to obtain necessary funds.

We do not know whether we would be able to take any of these actions on a timely basis, on terms satisfactory to us, or at all.

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Upon the occurrence of any event of default under the Note Purchase Agreement, the outstanding balance on the corresponding Note will, at the option of such lender, become immediately and automatically due and payable in cash and a default interest rate of an additional 2% per annum will apply on all outstanding obligations during the occurrence and continuance of an event of default.

We may not be able to maintain compliance with these repayment obligations and covenants in the future and, if we fail to do so, that we may not able to obtain waivers from the lenders and/or amend the covenants.

Our failure to comply with the repayment obligations and covenants described above could result in an event of default, which, if not cured or waived, and if lender accelerates, would result in us being required to repay these borrowings before their due date.

We may not be able to maintain compliance with these repayment obligations and covenants in the future and, if we fail to do so, we may not be able to obtain waivers from the lender and/or amend the covenants.

Our failure to comply with the repayment obligations and covenants described above could result in an event of default, which, if not cured or waived, and if the lender accelerates, would result in us being required to repay these borrowings before their due date.

If we are forced to refinance these borrowings on less favorable terms or if we are unable to refinance these borrowings, our business, financial condition, and results of operations could be materially adversely affected.

Risks Related to the Development and Commercialization of our Product Candidates

Clinical development involves a lengthy and expensive process with an uncertain outcome, and results of earlier studies and trials, as well any interim results, may not be predictive of future trial results.

Clinical development can take several years to complete and is an expensive process with inherent uncertainty in outcomes.

Failure can occur at any time during the clinical trial process.

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

Similarly, initial or interim results of a clinical trial may not be predictive of the final results and results for one indication may not be predictive of the success in additional indications.

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

Several factors can lead to significant variability in safety and/or efficacy results between different trials of the same drug candidate, including changes in trial procedures set forth in protocols, differences in the size and type of the patient populations, including genetic differences, patient adherence to the dosing regimen and other trial protocol elements and the rate of dropout among clinical trial participants.

In the case of any trials we conduct, results may differ from earlier trials due to the larger number of clinical trial sites and additional countries involved in such later trials.

In multi-regional trials results may differ across regions and countries, Our future clinical trial results may not be favorable.

If future clinical trial results prove unfavorable, we may incur additional product development costs, experience delays and/or become unable to obtain regulatory approval of ivonescimab, thereby adversely affecting our business.

If we experience delays or difficulties in the enrollment of patients in our clinical trials, our receipt of necessary marketing approvals could be delayed or prevented.

We may not be able to initiate or continue clinical trials for our product candidates for several factors including inability to get required regulatory approvals to initiate clinical trials in all the planned countries, as well as inability to locate and enroll a sufficient number of eligible patients to participate in these clinical trials.

For our clinical trials of ivonescimab, we need to identify potential patients, potentially test them for specific diagnoses and enroll them.

In addition, our competitors in NSCLC have ongoing clinical trials for product candidates that could be competitive with our product candidates, and patients who would otherwise be eligible for our clinical trials may instead enroll in clinical trials of our competitors’ product candidates or choose not to enroll in any clinical trials for various reasons, including due to fears of contagious diseases, illnesses or side effects.

Patient enrollment is affected by several factors, including, but not limited to, :

• severity of the disease under investigation;

• eligibility criteria for the clinical trial in question;

• perceived risks and benefits of the product candidate under study;

• competition for patients, time and resources at clinical trials sites from other investigational therapies in clinical trials that target the same patient population;

• changes in the standard of care, including new clinical trial data;

• approval of other therapies to treat the indication that is being investigated in the clinical trial;

• efforts to facilitate timely enrollment in clinical trials;

• patient referral practices of physicians;

• the ability to monitor patients adequately during and after treatment;

• proximity and availability of clinical trial sites for prospective patients.

Enrollment delays in our clinical trials may result in increased development costs for our product candidates, which would cause the value of our company to decline and limit our ability to obtain additional financing.

Our inability to enroll a sufficient number of patients in our planned clinical trials of ivonescimab or any other planned clinical trials would result in significant delays, may generate a limited data set from which no meaningful conclusions could be made, or may require us to abandon one or more clinical trials altogether.

If clinical trials of our product candidates fail to demonstrate safety and efficacy to the satisfaction of the U.S.

Food and Drug Administration, or the FDA, or the European Medicines Agency, or the EMA, or do not otherwise produce favorable results, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of ivonescimab or any other product candidate.

In connection with obtaining marketing approval from regulatory authorities for the sale of ivonescimab, or any other product candidate, we must complete preclinical development and then conduct extensive clinical trials to demonstrate the safety and efficacy of our product candidates in humans.

Clinical testing is expensive, difficult to design and implement, can take many years to complete and is inherently uncertain as to outcome.

A failure of one or more clinical trials can occur at any stage of testing.

The outcome of preclinical testing and early clinical trials may not be predictive of the success of later clinical trials, and interim results of a clinical trial do not necessarily predict final results.

In particular, due to the small number of patients in our early clinical trials, results from such trials may not be predictive of the outcome of later clinical trials.

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

We have limited experience in designing clinical trials and may be unable to design and execute a clinical trial to support marketing approval.

Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing approval of their products.

To date, we have not conducted a clinical trial for ivonescimab and cannot predict the results of such trials.

Regulatory requirements and timelines may affect the scope and timeline of our trials and the potential market for our product candidates.

As we expand into additional countries and sites for our current and/or additional clinical trials, we are required to obtain the regulatory approval of the applicable clinical trial applications with the respective regulatory authorities and approvals from central or local institutional review boards.

We may decide to modify our plans to enter certain regions or countries based on the timelines and requirements from the respective regulatory regions.

If the process to obtain regulatory approvals in a given region or country places onerous requirements on the Company or if the Company cannot reasonably obtain such approvals without material delays to its plans, we may choose not to enter certain regions or countries for our clinical trials, which may delay the development of our product in those countries and/or impact the scope of our dataset and market for our products.

If we experience any number of possible unforeseen events in connection with our clinical trials, potential marketing approval or commercialization of our product candidates could be delayed or prevented.

We may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent our ability to complete the clinical trials and receive marketing approval for or commercialize our product candidates, including:

• clinical trials of our product candidates may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs;

• the number of patients required for clinical trials of our product candidates may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate or participants may drop out of these clinical trials at a higher rate than we anticipate for various reasons, including due to contagious diseases or illnesses;

• our ability to combine data from different regions and countries may be limited due to lack of consistency in data in these regions and/or countries, potentially delaying or preventing marketing approval for our product

• In our multi-regional trials, we may experience delays in enrollment across one or more countries and/or regions, which may lead to variability in data and/or trial missing the required endpoints resulting in lack of approval from regulatory authorities

• we may be unable to enroll a sufficient number of patients in our clinical trials to ensure adequate statistical power to detect any statistically significant treatment effects;

• our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all;

• regulators, institutional review boards or independent ethics committees may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site;

• we may have delays in reaching or fail to reach agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites;

• we may have to suspend or terminate clinical trials of our product candidates for various reasons, including a finding that the participants are being exposed to unacceptable health risks;

• regulators, institutional review boards or independent ethics committees may require that we or our investigators materially modify the terms of our clinical research in order to meet additional requirements for receiving marketing approval, including by requiring that we enlarge our trials, broaden the scope of our research, or perform studies in addition to those we currently anticipate, which may delay our ability to obtain marketing approval or impose additional costs;

• regulators, institutional review boards or independent ethics committees may require that we or our investigators suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks;

• the cost of clinical trials of our product candidates may be greater than we anticipate;

• the supply or quality of our product candidates, comparator drugs or other materials necessary to conduct clinical trials of our product candidates in adolescent patients may be insufficient or inadequate, which may occur if, for example, enrollment for our clinical trial programs are delayed and the clinical supply of ivonescimab or related comparator drug manufactured for such trials was not utilized prior to its expiration and needed to be replaced, or if there were disruptions in our supply chain due to weather conditions, natural disasters or contagious diseases or illnesses, such as the novel coronavirus;

• our product candidates may have undesirable side effects or other unexpected characteristics, causing us or our investigators, regulators, institutional review boards or independent ethics committees to suspend or terminate the clinical trials.

Our product development costs will increase as we experience delays in testing or marketing approvals.

We do not know whether any preclinical tests or clinical trials will begin as planned, will need to be restructured or will be completed on schedule, or at all.

Significant preclinical or clinical trial delays also could shorten any periods during which we may have the

exclusive right to commercialize our product candidates or allow our competitors to bring products to market before we do and impair our ability to successfully commercialize our product candidates and may harm our business and results of operations.

Global economic uncertainty, changes in geopolitical conditions and political instability, changes in trade agreements and disputes, such as the conflict between Russia and Ukraine, conflict in the Middle East and other macroeconomic factors, could adversely affect our business and results of operations.

Our operations and performance depend on ongoing stability of global, regional and U.S.

economic and geopolitical conditions.

General worldwide economic conditions have experienced significant instability in recent years, including due to recent global economic uncertainty and turbulent financial market conditions.

The ongoing geopolitical conflicts in various parts of the world, including but not limited to Russia, Ukraine and Middle East, are difficult to predict and could adversely affect our business in our licensed territories as well as our ability to enroll patients and supply ivonescimab to various clinical sites in the world, resulting in adverse effects on our business and financial condition.

If serious adverse or inappropriate side effects are identified during the development of ivonescimab or any other product candidate, we may need to abandon or limit our development of that product candidate.

All of our product candidates are in clinical or early-stage development and their risk of failure is high.

It is impossible to predict when or if any of our product candidates will prove effective or safe in humans or will receive marketing approval.

If our product candidates are associated with undesirable side effects or have characteristics that are unexpected, we may need to abandon their development or limit development to certain uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective.

Many compounds that initially showed promise in clinical or earlier stage testing have later been found to cause side effects or other safety issues that prevented further development of the compound.

If we elect or are forced to suspend or terminate any clinical trial of our product candidates, the commercial prospects of such product candidate will be harmed and our ability to generate product revenues from such product candidate will be delayed or eliminated.

Any of these occurrences could materially harm our business.

Even if ivonescimab or any other product candidate receives marketing approval, it may fail to achieve the degree of market acceptance by physicians, patients, third-party payors and others in the medical community necessary for commercial success.

If ivonescimab or any of our other product candidates receive marketing approval, such products may nonetheless fail to gain sufficient market acceptance by physicians, patients, third-party payors and others in the medical community.

If these products do not achieve an adequate level of acceptance, it could make it more difficult to enter into third-party partnership arrangements, and we may not generate significant product revenues or revenue from collaboration agreements or any income from operations.

The degree of market acceptance of our product candidates, if approved for commercial sale, will depend on a number of factors, including:

• the efficacy and potential advantages compared to alternative treatments or competitive products;

• the prevalence and severity of any side effects;

• the ability to offer our product candidates for sale at competitive prices;

• convenience and ease of administration compared to alternative treatments;

• the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;

• the strength of marketing and distribution support;

• the availability of third-party coverage and adequate reimbursement;

• the timing of any such marketing approval in relation to other product approvals;

• support from patient advocacy groups;

• any restrictions on concomitant use of other medications.

The ability to negotiate, secure and maintain third-party coverage and reimbursement may be affected by political, economic and regulatory developments in the United States, the European Union and other jurisdictions.

Governments continue to impose cost containment measures, and third-party payors are increasingly challenging prices charged for medicines and examining their cost effectiveness, in addition to their safety and efficacy.

These and other similar developments could significantly limit the degree of market acceptance of ivonescimab or any of our other product candidates that receive marketing approval.

If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to market and sell our product candidates, we may not be successful in commercializing a product candidate if and when such product candidates are approved.

We do not have a sales or marketing infrastructure and have no experience as a company in the sale or marketing of pharmaceutical products, although certain employees do have experience in the sale and marketing of pharmaceutical products.

To achieve commercial success for any approved product, we must either develop a sales and marketing organization or outsource these functions to third parties.

If ivonescimab receives marketing approval, we may seek commercialization partners in some parts of the Licensed Territory.

There are risks involved with establishing our own sales and marketing capabilities and entering into arrangements with third parties to perform these services.

For example, recruiting and training a sales force is expensive and time-consuming and could delay any product launch.

If the commercial launch of a product candidate for which we recruit a sales force and establish marketing capabilities is delayed or does not occur for any reason, we would have prematurely or unnecessarily incurred these commercialization expenses.

This may be costly, and our investment would be lost if we cannot retain or reposition our sales and marketing personnel.

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

• our inability to recruit, train and retain adequate numbers of effective sales and marketing personnel;

• the inability of sales personnel to obtain access to or persuade adequate numbers of physicians to prescribe any future products;

• the lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with more extensive product lines;

• unforeseen costs and expenses associated with creating an independent sales and marketing organization.

If we enter into arrangements with third parties to perform sales and marketing services, our product revenues or the profitability of these product revenues to us are likely to be lower than if we were to market and sell any products that we develop ourselves.

In addition, we may not be successful in entering into arrangements with third parties to sell and market our product candidates or may be unable to do so on terms that are acceptable to us.

We likely will have little control over such third parties, and any of them may fail to devote the necessary resources and attention to sell and market our products

If we do not establish sales and marketing capabilities successfully, either on our own or in collaboration with third parties, we will not be successful in commercializing our product candidates.

Biologics, such as ivonescimab, carry unique risks and uncertainties, which could have a negative impact on our business.

The successful development, manufacturing and sale of biologics is a long, expensive and uncertain process.

There are unique risks and uncertainties with biologics.

For example, access to and supply of necessary biological materials, such as cell lines, may be limited and governmental regulations restrict access to and regulate the transport and use of such materials.

In addition, the development, manufacturing and sale of biologics is subject to regulations that are often more complex and extensive than the regulations applicable to other pharmaceutical products.

Manufacturing biologic, especially in large quantities, is often complex and may require the use of innovative technologies.

Such manufacturing also requires facilities specifically designed and validated for this purpose and sophisticated quality assurance and quality control procedures.

Biologics are also frequently costly to manufacture.

Failure to successfully, develop, manufacture and sell ivonescimab could adversely affect our business.

We may expend our limited resources to pursue a particular product candidate and fail to capitalize on product candidates that may be more profitable or for which there is a greater likelihood of success.

Notwithstanding our large investment to date and anticipated future expenditures in proprietary technologies, we have not yet developed, and may never successfully develop, any marketed drugs.

As a result of pursuing the development of product candidates using our proprietary technologies, we may fail to develop product candidates or address indications based on other scientific approaches that may offer greater commercial potential or for which there is a greater likelihood of success.

Research programs to identify new product candidates require substantial technical, financial and human resources.

These research programs may initially show promise in identifying potential product candidates, yet fail to yield product candidates for clinical development.

If we do not accurately evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable rights to that product candidate through collaboration, licensing or other royalty arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights to such product candidate.

Risks Related to our Financial and Intellectual Property Dependencies on Third Parties

We depend on our relationship with, and the comprehensiveness of the intellectual property licensed from, Akeso, and termination of the License Agreement, any of the licenses under the License Agreement, or issues as to intellectual property could have a material adverse effect on our business.

We depend on the know-how and other intellectual property licensed from Akeso through the License Agreement for the development and, if approved, commercialization of product candidates with the use of Akeso’s bispecific antibody, ivonescimab.

We depend on our relationship with, and the comprehensiveness of the intellectual property licensed from, Akeso, and termination of the License Agreement, or issues related to intellectual property could have a material adverse effect on our business.

We depend on the know-how and other intellectual property licensed from Akeso through the License Agreement for the development and, if approved, commercialization of the bispecific antibody, ivonescimab.

If the License Agreement is terminated, or found to be unenforceable, it could result in the loss of significant rights and could harm our ability to commercialize ivonescimab.

The License Agreement imposes certain obligations on us, including obligations to use diligent efforts to meet development thresholds, funding requirements, payment obligations, patent prosecution and commercialization.

If we are unable to meet our obligations, some or all of our rights under the agreement may be restricted or terminated.

Our primary product candidate, ivonescimab, is subject to a license from Akeso, which is revocable in certain circumstances, including in the event we do not achieve certain payment deadlines.

Without the license, we will not be able to continue to develop ivonescimab.

The License Agreement may be terminated by Akeso in the event of a material breach by us or if we default in the performance of any of our material obligations under the License Agreement, and such default continues for 90 days, or with respect to any breach of any undisputed payment obligations, for 60 days, or with respect to any breach of a supply requirement, for 30 days after written notice thereof.

Akeso may also terminate the agreement upon written notice upon the Company’s bankruptcy.

We may not continue to be able to make the various payment obligations under the License Agreement, including certain significant payments due upon satisfaction of pre-commercialization milestones.

If the License Agreement were to be terminated by Akeso for any reason, we would lose our most significant asset and primary product candidate, and would likely not be able to develop ivonescimab, which would have a material adverse effect on our operations.

If we are unable to meet our obligations, some or all of our rights under the License Agreement may be restricted or terminated.

Our primary product candidate, ivonescimab, is subject to the License Agreement from Akeso, which is revocable in certain circumstances, including in the event we do not achieve certain payment deadlines.

Without the patents under the License Agreement, we will not be able to continue to develop ivonescimab.

The License Agreement may be terminated by Akeso in the event of a material breach by Summit or if we default in the performance of any of our material obligations under the License Agreement, and such default continues for 90 days, or with respect to any breach of any undisputed payment obligations, for 60 days, or with respect to any breach of a supply requirement, for 30 days after written notice thereof.

Additionally, the ability of Summit to realize the full potential of the License Agreement may be severely limited by factors involving intellectual property rights including:

• whether and to what extent our technology and processes infringe on intellectual property rights of Akeso or other third parties that are not subject to the License Agreement;

• whether Akeso had the right to grant the licenses under the License Agreement;

• whether and to what extent our technology and processes infringe on intellectual property rights of other third parties that are not subject to the License Agreement;

• whether third parties are entitled to compensation or equitable relief, such as an injunction, for our use of intellectual property without their authorization;

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• ownership of specific intellectual property;

• our involvement in and ability to align on the prosecution and enforcement of the licensed patents and patent applications and Akeso’s overall patent prosecution, intellectual property protection and enforcement strategies;

• the impact on payments and costs associated with commercialization if there is blocking intellectual property in or costs associated with prosecution, maintenance and enforcement under the License Agreement.

These issues, if they arise, could narrow what we believe to be the scope of our rights to the relevant intellectual property or technology, increase what we believe to be our financial or other obligations under the relevant agreement, or increase our costs to develop, manufacture and commercialize products under the License Agreement.

We will be reliant on Akeso for knowledge transfer relating to manufacturing of our product candidate.

The loss of any of the knowledge transferred relating to ivonescimab from Akeso may cause us to incur additional transition costs or result in delays in the manufacturing and delivery of our product candidate.

We have entered into the License Agreement and will enter into a Supply Agreement with Akeso for information and drug substance that we will rely on to be used in our product candidate, and the termination or Akeso’s breach of these agreements could have a material adverse effect on our business.

Further, failure of Akeso to adequately transfer knowledge to the Company to continue to produce ivonescimab could have a material adverse effect on our business.

We have entered into the License Agreement and will enter into a Supply Agreement with Akeso for manufacturing of drug substance and or drug product that we will rely on to be used in our product candidate, and the termination or Akeso’s breach of these agreements could have a material adverse effect on our business.

Akeso’s drug substance and/or drug product may not comply with FDA quality requirements and/or have sufficient stability for commercialization which may require additional investment and delay our development, approval and commercialization plans

Further, failure of Akeso to adequately transfer knowledge to Summit to produce ivonescimab could have a material adverse effect on our business.

Manufacturing of biological compounds is inherently complex and establishing new manufacturing relationships with a third party manufacturer may take longer, resulting in higher costs and potential inventory issues.

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The product may not comply with the FDA quality requirements and/or have sufficient stability for commercialization, which may require additional manufacturing development and delays.

As Summit is relying initially on supply from Akeso, any delays in obtaining import or export licenses may delay start of clinical trials.

As Summit is relying initially on supply from Akeso, any delays in obtaining import or export licenses may delay development.

We depend on collaborations with third parties for the development and commercialization of some of our product candidates.

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Our likely future collaborators for any marketing, distribution, development, licensing or broader collaboration arrangements include large and mid-size pharmaceutical companies, regional and national pharmaceutical companies and biotechnology companies.

Under our license and commercialization agreement with Eurofarma we have, and under any such arrangements we enter into with any third parties in the future we will likely have, limited control over the amount and timing of resources that our collaborators dedicate to the development or commercialization of our product candidates.

Under our license and commercialization agreements we have, and under any such arrangements we enter into with any third parties in the future we will likely have, limited control over the amount and timing of resources that our collaborators dedicate to the development or commercialization of our product candidates.

Our ability to generate revenues from these arrangements will depend on our collaborators’ abilities and efforts to successfully perform the functions assigned to them in these arrangements.

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

Use of third parties to manufacture our product candidates may increase the risk that we will not have sufficient quantities of our product candidates or products or such quantities at an acceptable cost, which could delay, prevent or impair our development or commercialization efforts.

Use of third parties, including Akeso, to manufacture our product candidates may increase the risk that we will not have sufficient quantities of our product candidates or products or such quantities at an acceptable time and cost, which could delay, prevent or impair our development or commercialization efforts.

We do not own or operate manufacturing facilities for the production of clinical or commercial supplies of our product candidates.

We have limited personnel with experience in drug manufacturing and lack the resources and the capabilities to manufacture any of our product candidates on a clinical or commercial scale.

We currently rely on third parties for supply of the active pharmaceutical ingredients, or API, in our product candidates.

We currently rely on third parties for supply of the active pharmaceutical ingredients (API), drug substance or drug product, in our product candidates.

Our strategy is to outsource all manufacturing of our product candidates and products to third parties.

We have agreements with third-party manufacturers for the long-term clinical or commercial supply of our product candidates.

We have supply agreements with Akeso for supply of ivonescimab for use in clinical trials as well as for commercial supply.

We have agreements with third-party manufacturers for development, validation and manufacturing of ivonescimab to secure the long-term clinical or commercial supply of our product candidates.

We are in the process of setting up agreements with third party manufacturers for the long-term clinical and commercial supply of ivonescimab.

The third-party manufacturers may not successfully carry out their contractual duties or obligations, the occurrence of which could substantially increase our costs and limit our supply of such product candidates.

We may be unable to conclude agreements for commercial supply with third-party manufacturers, or may be unable to do so on acceptable terms.

Even if we are able to establish and maintain arrangements with third-party manufacturers, reliance on third-party manufacturers entails additional risks, including:

We may be unable to conclude agreements for commercial supply with third-party manufacturers, or may be unable to do so on acceptable terms The third-party manufacturers may not successfully carry out their contractual duties or obligations, the occurrence of which could substantially increase our costs and limit our supply of such product candidates.

The demand for third-party manufacturer’s services is very high, and such manufacturers could be subject to market transactions including mergers, acquisitions and other market consolidation transactions that limit their ability to provide products and services to us thereby increasing the time and cost it could take us to manufacture our product.

Even if we are able to establish and maintain arrangements with third-party manufacturers, reliance on third-party manufacturers, including Akeso, entails additional risks, including:

• reliance on the third party for regulatory compliance and quality assurance;

• the possible breach of the manufacturing agreement by the third party;

• the possible diversion of manufacturing capacity to other customers by the third party;

• the possible misappropriation of our proprietary information, including our trade secrets and know-how;

• the possible termination or nonrenewal of the agreement by the third party at a time that is costly or inconvenient for us.

Third-party manufacturers may not be able to comply with current good manufacturing practice, or cGMP, regulations or similar regulatory requirements outside the United States.

Our failure, or the failure of our third-party manufacturers, to comply with applicable regulations could result in sanctions being imposed on us, including fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of product candidates or products, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect supplies of our product candidates.

• the possible termination or non-renewal of the agreement by the third party at a time that is costly or inconvenient for us.

Third-party manufacturers, including Akeso, may not be able to comply with current good manufacturing practice (cGMP), regulations or similar regulatory requirements outside the United States.

Our failure, or the failure of our third-party manufacturers, including Akeso,, to comply with applicable regulations could result in sanctions being imposed on us,

including fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of product candidates or products, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect supplies of our product candidates.

Our product candidates and any products that we may develop may compete with other product candidates and products for access to manufacturing facilities.

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In addition, in order to conduct late-stage clinical trials of our product candidates, we will need to have them manufactured in large quantities.

Our third-party manufacturers may be unable to successfully increase the manufacturing capacity for any of our product candidates in a timely or cost-effective manner, or at all.

Moreover, if our third-party manufacturers are unable to successfully scale up the manufacture of our product candidates in sufficient quality and quantity, the development, testing and clinical trials of that product candidate may be delayed or infeasible, and regulatory approval or commercial launch of that product candidate may be delayed or not obtained, which could significantly harm our business.

If the third parties that we engage to manufacture product for our preclinical tests and clinical trials should cease to continue to do so for any reason, including due to the novel coronavirus or another outbreak, we likely would experience delays in advancing these clinical trials while we identify and qualify replacement suppliers, and we may be unable to obtain replacement supplies on terms that are favorable to us.

Our third-party manufacturers, including Akeso, may be unable to successfully increase the manufacturing capacity for any of our product candidates in a timely or cost-effective manner, or at all.

Moreover, if our third-party manufacturers, including Akeso, are unable to successfully scale up the manufacture of our product candidates in sufficient quality and quantity, the development, testing and clinical trials of that product candidate may be delayed or infeasible, and regulatory approval or commercial launch of that product candidate may be delayed or not obtained, which could significantly harm our business.

If the third parties, including Akeso, that we engage to manufacture product for our preclinical tests and clinical trials should cease to continue to do so for any reason, including due to the novel coronavirus or another outbreak, we likely would experience delays in advancing these clinical trials while we identify and qualify replacement suppliers, and we may be unable to obtain replacement supplies on terms that are favorable to us.

In addition, if we are not able to obtain adequate supplies of our product candidates or the drug substances used to manufacture them, it will be more difficult for us to develop our product candidates and compete effectively.

We rely on third parties to manufacture our product candidates.

If our third party manufacturers divert their capacity and/or supply of materials needed for our product candidates, our ability to complete our clinical trials or eventually bring our product candidates to market may be compromised.

We rely on third-party manufacturers for the capability to manufacture ivonescimab and/or other product candidates.

Large pharmaceutical companies with greater resources, either through acquisitions, market consolidation or otherwise, may be able to obtain privileged access to manufacturing capacity and/or supply of material needed for the manufacture of ivonescimab or other similar competing drugs.

If our competitors are able to use their resources to secure preferential access to the supply capacity of third party manufacturers, or if third party manufacturers elect to terminate their contracts with us in favor of exclusive contracts with other larger pharmaceutical companies, our ability to obtain a supply of ivonescimab or any other future product candidates may be impacted resulting in significant delays and higher costs for development and commercialization of our products.

We may not be able to complete our clinical trials or market our products at scale without stable partnerships with third party manufacturers who produce ivonescimab or other drug compounds necessary for our product candidates.

Shifting manufacturing relationship to another third-party manufacturer takes significant time and resources, and could delay development and commercialization of our product.

We rely on third parties to conduct our clinical trials and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such clinical trials.

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For example, we remain responsible for ensuring that each of our clinical trials is conducted in accordance with the general investigational plan and protocols for the clinical trial.

Moreover, the FDA requires us to comply with standards, commonly referred to as Good Clinical Practice, or GCP, for conducting, recording and reporting the results of clinical trials to assure that data and reported results are credible and accurate and that the rights, integrity of data and confidentiality of clinical trial participants are protected.

The EMA imposes similar requirements on us for products that are the subject of clinical trials in the European Union, including the United Kingdom.

Moreover, the FDA requires us to comply with standards, commonly referred to as Good Clinical Practice (GCP), for conducting, recording and reporting the results of clinical trials to assure that data and reported results are credible and accurate and that the rights, integrity of data and confidentiality of clinical trial participants are protected.

The European Medicines Agency (EMA) and Pharmaceutical and Medical Devices agency (PDMA) impose similar requirements on us for products that are the subject of clinical trials in the European Union, including the United Kingdom, and Japan.

Furthermore, third parties that we rely on for our clinical development activities may also have relationships with other entities, some of which may be our competitors.

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NSCLC treatment regimens vary due to several factors, including genetic mutations and progression of disease.

Several medications have been approved by FDA for these treatments, including, but not limited to pembrolizumab, atezolizumab, nivolumab and durvalumab.

In addition several potential therapeutics are in various stages of development and clinical trials for treatment of NSCLC.

Several medications have been approved by FDA for these treatments, including, but not limited to pembrolizumab, atezolizumab, nivolumab, durvalumab and ipilmumab.

There are anti-angiogenic therapies which are approved for the treatment of certain lung cancers, including bevacizumab and ramucirumab.

In addition, there are several targeted therapies that have also been approved, including, but not limited to, osimertinib, adagrasib, and alectinib.

Beyond currently approved therapies, several potential therapeutics are in various stages of development and clinical trials for the treatment of NSCLC, including late-stage candidates which have recently released Phase III clinical trial data in

NSCLC in 2023, such as Daiichi Sankyo and AstraZeneca’s datopotamab deruxetecan and Johnson & Johnson’s amivantamab and lazertinib.

Finally, there are candidates in various stages of ongoing clinical trials for NSCLC, including Daiichi Sankyo and Merck with patritumab deruxtecan and AstraZeneca’s volrustomig, each currently enrolling in Phase III clinical trials.

Potential competitors also include academic institutions, government agencies and other public and private research organizations that conduct research, seek patent protection and establish collaborative arrangements for research, development, manufacturing and commercialization.

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

Inadequate funding for the FDA, the SEC, and other government agencies, including from government shutdowns, or other disruptions to these agencies’ operations, could hinder their ability to hire and retain key leadership and other personnel, prevent new products and services from being developed or commercialized in a timely manner or otherwise prevent those agencies from performing normal business functions on which the operation of our business may rely, which could negatively impact our business.

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

Average review times at the agency have fluctuated in recent years as a result.

If a prolonged government shutdown occurs, if the FDA is required to furlough review staff or necessary employees, or if the agency operations are otherwise impacted, it could significantly affect the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our ability to successfully develop and commercialize ivonescimab or any other product candidate in our pipeline.

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

We may complete a future acquisition that may not achieve intended results or could increase the number of our outstanding shares or amount of outstanding debt or result in a change of control.

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Evaluating potential transactions and integrating completed ones may divert the attention of our management from ordinary operating matters.

success of the underlying business or intellectual property that we acquire or otherwise obtain rights to.

The success of these potential transactions will depend, in part, on our ability to realize the anticipated growth opportunities through the successful integration of the businesses we acquire with our existing business, as well as the success of the underlying business or intellectual property that we acquire or otherwise obtain rights to.

Even if we are successful in integrating the acquired businesses, these integrations may not result in the realization of the full benefit of any anticipated growth opportunities or these benefits may not be realized within the expected time frames.

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If we complete an acquisition, investment or other strategic transaction, we may require additional financing that could result in an increase in the number of our outstanding shares or the aggregate amount of our debt.

Risks Related to the Development and Commercialization of our Product Candidates

If clinical trials of our product candidates fail to demonstrate safety and efficacy to the satisfaction of the U.S.

Clinical testing is expensive, difficult to design and implement, can take many years to complete and is inherently uncertain as to outcome.

A failure of one or more clinical trials can occur at any stage of testing.

In particular, due to the small number of patients in our early clinical trials, results from such trials may not be predictive of the outcome of later clinical trials.

We have limited experience in designing clinical trials and may be unable to design and execute a clinical trial to support marketing approval.

To date, we have not conducted a clinical trial for ivonescimab and cannot predict the results of such trials.

We may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent our ability to receive marketing approval for or commercialize our product candidates, including: