What changed in this filing

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Item 1. Legal Proceedings

2025-08-12 compared with 2025-05-13 · 298 added, 169 removed, 1030 unchanged (31% of the section changed)

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The parties filed an Amended Complaint on December 5, 2022, purported to be brought on behalf of stockholders who purchased our common stock from September 8, 2020 through May 2, 2022.

The Amended Complaint generally alleges that the Company and certain of its current and former officers violated Sections 10(b) and/or 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder by making allegedly false and/or misleading statements concerning the New Drug Application (“NDA”) for tebipenem HBr in an effort to lead investors to believe that the drug would receive approval from the FDA.

The Amended Complaint generally alleges that the Company and certain of its current and former officers violated Sections 10(b) and/or 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder by making allegedly false and/or misleading statements concerning the NDA for tebipenem HBr in an effort to lead investors to believe that the drug would receive approval from the FDA.

Plaintiffs seek unspecified damages, interest, attorneys’ fees, and other costs.

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SEC Investigation and Wells Notice

Mahadevia”), and its former Chief Financial Officer and President and Chief Executive Officer, Satyavrat “Sath” Shukla (“Mr.

Shukla”), relating to certain public disclosures by the Company from March 31, 2022 leading up to the Company’s announcement on May 3, 2022 that it had determined to cease commercialization of tebipenem HBr based on feedback from the U.S.

Food and Drug Administration, and whether the Company’s disclosures may have violated the federal securities laws (the “Investigation”).

On January 9, 2025, the Company responded to a “Wells Notice” from the Staff of the SEC regarding its preliminary determination to recommend a civil enforcement action or administrative proceeding against the Company, its former Chief Executive Officer and Chairman of the Board of Directors, Ankit Mahadevia, M.D., and its former Chief Financial Officer and President and Chief Executive Officer, Satyavrat “Sath” Shukla, relating to certain public disclosures by the Company from March 31, 2022 leading up to the Company’s announcement on May 3, 2022 that it had determined to cease commercialization of tebipenem HBr based on feedback from the FDA, and whether the Company’s disclosures may have violated the federal securities laws.

Specifically, the contemplated civil enforcement action, if approved by the SEC Commissioners, could include allegations that the Company violated Section 17(a) of the Securities Act and Sections 10(b) and 13(a) of the Exchange Act and Rules 10b-5, 12b-20, and 13a-1 thereunder;

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Shukla violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rules 10b-5 and 13a-14 thereunder.

The Company, Dr.

Mahadevia and Mr.

Shukla continue to cooperate with the SEC, they have engaged in further dialogue with the staff and maintain that the Company’s disclosures were appropriate.

The Company continues to cooperate with the SEC, has engaged in further dialogue with the Staff and maintains that the Company’s disclosures were appropriate.

A Wells Notice is neither a formal charge of wrongdoing nor a final determination that the recipient has violated any law, but is a preliminary determination by the Staff to recommend to the SEC Commissioners that a civil enforcement action or administrative proceeding be brought against the recipients.

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While the data showed antimicrobial activity associated with SPR720, the interim analysis did not show sufficient separation from placebo and highlighted potential dose limiting safety issues in subjects dosed at 1,000 mg orally once daily, including three cases of reversible grade 3 hepatotoxicity.

In evaluating the totality of both the efficacy and safety data, we have elected to suspend our current development program for SPR720 and continue to evaluate other potential paths forward as the remaining data are collected and analyzed.

In evaluating the totality of both the efficacy and safety data, we elected to suspend our development program for SPR720 and continue to determine next steps.

As a result, we have restructured our operations to focus on supporting the development of tebipenem HBr and other corporate activities while we continue to seek a pathway forward for SPR720.

Further, in March 2025, we announced that we have discontinued development of SPR206.

Further, in March 2025, we announced that we discontinued development of SPR206.

We believe this re-prioritized strategic focus is the best way to optimize our financial and other resources to advance our goal of developing and commercializing product candidates to address the unmet need for solutions to antibiotic resistant pathogens.

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As a result, we are currently substantially dependent on our tebipenem program and our collaboration with GSK.

As described under Note 10 - License, Collaboration and Service Agreements—Tebipenem HBr Agreements, GSK has the right to terminate the GSK License Agreement (1) at any time upon a specified number of days’ notice, (2) upon a material breach by us or (3) upon a bankruptcy of Spero.

As described under Note 10 to our consolidated financial statements, GSK has the right to terminate the GSK License Agreement (1) at any time upon a specified number of days’ notice, (2) upon a material breach by us or (3) upon a bankruptcy of Spero.

Alternatively, in the case of a material breach by Spero, GSK may, in lieu of terminating the GSK License Agreement, elect to reduce any commercial milestone payments to Spero by 50%.

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Enrollment delays in our clinical trials may result in increased development costs for our product candidates, slow down or halt our product candidate development and approval process and jeopardize our ability to seek and obtain the marketing approval required to commence product sales and generate revenue, which would cause the value of our company to decline and limit our ability to obtain additional financing if needed.

Congress also recently amended the Federal Food, Drug, and Cosmetic Act (“FDCA”) to require sponsors of a Phase 3 clinical trial, or other “pivotal study” of a new drug to support marketing authorization, to design and submit a diversity action plan for such clinical trial.

Congress also amended the Federal Food, Drug, and Cosmetic Act (“FDCA”) to require sponsors of a Phase 3 clinical trial, or other “pivotal study” of a new drug to support marketing authorization, to design and submit a diversity action plan (“DAP”) for such clinical trial.

The action plan must describe appropriate diversity goals for enrollment, as well as a rationale for the goals and a description of how the sponsor will meet them.

In the future, we will be required to submit a diversity action plan to the FDA by the time we submit a Phase 3 clinical trial, or pivotal study, protocol to the agency for review, unless we are able to obtain a waiver for some or all of the requirements for a diversity action plan.

It is unknown at this time how the diversity action plan may affect the planning and timing of any future Phase 3 clinical trial for our product candidates.

However, initiation of such trials may be delayed if the FDA objects to our proposed diversity action plans for any future Phase 3 clinical trial for our product candidates, and we may experience difficulties recruiting a diverse population of patients in attempting to fulfill the requirements of any approved diversity action plan.

In the future, we will be required to submit a DAP to the FDA by the time we submit a Phase 3 clinical trial, or pivotal study, protocol to the agency for review, unless we are able to obtain a waiver for some or all of the requirements for a DAP.

It is unknown at this time how the DAP may affect the planning and timing of any future Phase 3 clinical trial for our product candidates.

However, initiation of such trials may be delayed if the FDA objects to our proposed DAPs for any future Phase 3 clinical trial for our product candidates, and we may experience difficulties recruiting a diverse population of patients in attempting to fulfill the requirements of any approved DAP.

In June 2024, as mandated by the FDCA, the FDA issued draft guidance outlining the general requirements for DAPs.

Unlike most guidance documents issued by the FDA, the DAP guidance when finalized will have the force of law because FDORA specifically dictates that the form and manner for submission of DAPs are specified in FDA guidance.

On January 27, 2025, in response to an executive order issued by President Trump on January 21, 2025 on Diversity, Equity and Inclusion programs, the FDA removed the draft DAP guidance from its website.

That action, along with similar actions by the Trump Administration to remove many other healthcare webpages, is currently the subject of ongoing litigation.

On July 3, 2025, the U.S.

District Court for the District of Columbia ruled that the administration’s actions to remove these webpages, including the draft DAP guidance, is unlawful under the Administrative Procedure Act.

The court ordered the restoration of many of these webpages.

In late July 2025, the FDA restored the draft DAP guidance to its website with a statement that “information on this page may be modified and/or removed in the future subject to the terms of the court’s order and implemented consistent with applicable law.” Accordingly, in light of these ongoing actions, there is considerable uncertainty surrounding the draft DAP guidance and how the FDA will consider DAPs in connection with its review of marketing applications.

Analyses of preliminary or interim data from our clinical studies that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.

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Serious adverse events or undesirable side effects or other unexpected properties of any of our product candidates may be identified during development or after approval that could delay, prevent or cause the withdrawal of regulatory approval, limit the commercial potential, or result in significant negative consequences following marketing approval.

imposition of distribution or use restrictions or the delay or denial of regulatory approval by the FDA or comparable foreign regulatory authorities.

Serious adverse events or undesirable side effects caused by, or other unexpected properties of, our product candidates could cause us, an IRB, or regulatory authorities to interrupt, delay or halt our clinical trials and could result in a more restrictive label, the imposition of distribution or use restrictions or the delay or denial of regulatory approval by the FDA or comparable foreign regulatory authorities.

If any of our other product candidates are associated with serious or unexpected adverse events or undesirable side effects, the FDA, the IRBs responsible for overseeing our studies, or a DSMB, could suspend or terminate our clinical trials or the FDA or comparable foreign regulatory authorities could order us to cease clinical trials or deny approval of our product candidates for any or all targeted indications.

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As a result, we may forego or delay pursuit of opportunities with other product candidates or for other indications that may prove to have greater commercial potential.

For example, on October 29, 2024, we announced that we suspended development activities for our SPR720 oral program based on an interim analysis of the Phase 2a proof-of-concept study of SPR720 for the treatment of NTM-PD not meeting its primary endpoint.

In evaluating the totality of both the efficacy and safety data, we elected to suspend our development program for SPR720 and continue to determine next steps.

As a result, we have restructured our

operations to focus on supporting the development of tebipenem HBr and other corporate activities while we continue to seek a pathway forward for SPR720.

Further, in March 2025, we announced that we have discontinued development of SPR206.

Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities.

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Insurers and other third-party payors may also encourage the use of generic products, for example in the fluoroquinolone class.

However, the susceptibility of urinary tract pathogens to the existing treatment alternatives is waning.

However, the susceptibility of urinary tract pathogens to the existing treatment

alternatives is waning.

If tebipenem HBr is approved, the pricing may be at a significant premium over other competitive products.

This may make it difficult for tebipenem HBr to compete with these products.

There are several IV-administered products marketed for the treatment of infections resistant to first-line therapy for Gram-negative infections, including Avycaz (ceftazidime-avibactam) from Allergan plc and Pfizer Inc., Zerbaxa (ceftolozane-tazobactam) from Merck & Co., imipenem/cilastatin and Recarbrio (relebactam) from Merck & Co., Zemdri (plazomicin) from Cipla Therapeutics, Inc., Fetroja (cefiderocol) from Shionogi & Co.

There are several IV-administered products marketed for the treatment of infections resistant to first-line therapy for Gram-negative infections, including Avycaz (ceftazidime-avibactam) from Allergan plc and Pfizer, Zerbaxa (ceftolozane-tazobactam) from Merck & Co., imipenem/cilastatin and Recarbrio (relebactam) from Merck & Co., Zemdri (plazomicin) from Cipla Therapeutics, Inc., Fetroja (cefiderocol) from Shionogi & Co.

Ltd., Xerava (eravacycline) from Innoviva, Inc.

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If resistance to any of our product candidates becomes prevalent, our ability to generate revenue from such product candidates could suffer.

If we are not successful in discovering, developing and commercializing additional product candidates, our ability to expand our business and achieve our strategic objectives would be impaired.

Although a substantial amount of our efforts will focus on our ongoing and planned clinical trials and potential approval of our product candidate, tebipenem HBr, as well as exploring clinical and development pathways forward for SPR720, a key element of our strategy is to discover, develop and commercialize a portfolio of therapeutics to treat drug resistant bacterial infections.

If we are not successful in developing and commercializing additional product candidates, our ability to expand our business and achieve our strategic objectives would be impaired.

Although a substantial amount of our efforts will focus on our ongoing and planned clinical trials and potential approval of our product candidate, tebipenem HBr, as well as determining next steps for SPR720, a key element of our strategy is to develop and commercialize a portfolio of therapeutics to treat drug resistant bacterial infections.

We are exploring, and intend to explore in the future, strategic partnerships for the development of new product candidates.

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There can be no assurance that we will be successful in preventing cyber-attacks or successfully mitigating their effects.

Despite the implementation of security measures, our internal computer systems and those of our contract research organizations and other contractors and consultants are vulnerable to damage or disruption from hacking, computer viruses, malware, including ransomware, software bugs, unauthorized access, natural disasters, terrorism, war, and telecommunication, equipment and electrical failures.

We have measures in place that are designed to prevent, and if necessary, to detect and respond to such cybersecurity incidents and breaches of privacy and security mandates.

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The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that may increase data breach litigation.

Although the CCPA includes exemptions for certain clinical

trials data, and the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) protected health information, the law may increase our compliance costs and potential liability with respect to other personal information we collect about California residents.

Although the CCPA includes exemptions for certain clinical trials data, and the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) protected health information, the law may increase our compliance costs and potential liability with respect to other personal information we collect about California residents.

Additionally in 2020, California voters passed the California Privacy Rights Act (“CPRA”), which went into full effect on January 1, 2023.

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Laws in a number of other U.S.

states took effect, or are set to take effect, in 2025, in 2026, and beyond, and additional U.S.

states took effect, or are set to take effect, in 2025, and beyond, and additional U.S.

states have proposals under consideration, all of which are likely to increase our regulatory compliance costs and risks, exposure to regulatory enforcement action and other liabilities.

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For example, the European Parliament and the Council of the European Union adopted a comprehensive general data privacy framework called the General Data Protection Regulation (“GDPR”), which took effect in May 2018 and governs the collection and use of personal data in the European Union, including by companies outside of the European Union.

The GDPR, which is wide-ranging in scope, imposes several requirements relating to the consent of the individuals to whom the personal data relates, the information provided to the individuals, the security and confidentiality of the personal data, data breach notification and the use of third-party processors in connection with the processing of the personal data.

third-party processors in connection with the processing of the personal data.

The GDPR also imposes strict rules on the transfer of personal data out of the European Union to the United States, enhances enforcement authority and imposes large penalties for noncompliance, including the potential for fines of up to €20 million or 4% of the annual global revenues of the infringer, whichever is greater.

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We have not generated any revenue from the sale of our products and have incurred losses in most years since our inception in 2013.

Our net loss was $13.9 million during the three months ended March 31, 2025.

Our net loss was $1.7 million and $15.6 million during the three and six months ended June 30, 2025, respectively.

All of our product candidates are in development, none have been approved for sale and we may never have a product candidate approved for commercialization.

In accordance with ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205- 40), we have evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that these consolidated financial statements are issued.

Based on our cash and cash equivalents as of March 31, 2025, together with earned and non-contingent development milestone payments from GSK, we believe that our cash runway will be sufficient to fund our operating expenses and required capital expenditures into the second quarter of 2026.

During this period, we plan to prioritize advancing the Phase 3 clinical trial activities for tebipenem HBr under our GSK License Agreement and completing our analysis of the full dataset from the 25 treated patients in the Phase 2a proof-of-concept trial of SPR720.

Beyond this point we will need additional funding, which we expect will primarily consist of raising additional capital through some combination of equity or debt financings, potential new collaborations or additional grant funding.

Based on our cash and cash equivalents as of June 30, 2025, together with earned and non-contingent development milestone payments from GSK, including the final payment under the GSK License Agreement of $23.8 million received in the third quarter of 2025, and the decrease in clinical expense as a result of the PIVOT-PO Phase 3 trial for tebipenem HBr stopping early for efficacy following positive interim analysis results, we believe that our cash runway will be sufficient to fund our operating expenses and required capital expenditures into 2028.

During this period, we plan to prioritize finalizing the Phase 3 clinical trial activities for tebipenem HBr under our GSK License Agreement.

Beyond this point, or in the event we change our current operating plan, we will need additional funding, which we expect will primarily consist of raising additional capital through some combination of equity or debt financings, potential new collaborations or additional grant funding.

If we are not able to secure adequate additional funding, we plan to make further reductions in spending.

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The actions necessary to reduce spending under this plan at a level that mitigates the factors described above is not considered probable, as defined in the accounting standards and therefore, the full extent to which management may extend our funds through these actions may not be considered in management’s assessment of our ability to continue as a going concern.

As a result, management has concluded that substantial doubt exists about our ability to continue as a going concern.

We expect to continue to incur significant expenses and operating losses for the foreseeable future.

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• acquire or in-license other product candidates and technologies.

We currently have no products approved for sale and have historically invested a significant portion of our efforts and financial resources on the development of our product candidates, including tebipenem HBr, SPR206, and SPR720.

Although we have decided to discontinue further development of SPR206 and are exploring strategic options, including potential out-licensing, to maximize the value for the program and allow us to leverage the expertise of strategic partners and have suspended our current development efforts with respect to the SPR720 oral program, although we continue to evaluate other potential paths forward as the remaining data are collected and analyzed, our business remains heavily dependent on the successful development, regulatory approval, and, if approved, commercialization of tebipenem HBr and other future product candidates.

We currently have no products approved for sale and have historically invested a significant portion of our efforts and financial resources in the development of our product candidates, including tebipenem HBr, SPR206, and SPR720.

Although we decided to discontinue further development of SPR206 and are exploring strategic options, including potential out-licensing, to maximize the value for the program and allow us to leverage the expertise of strategic partners and although we have suspended our development efforts with respect to the SPR720 oral program and are continuing to determine next steps, our business remains heavily dependent on the successful development, regulatory approval, and, if approved, commercialization of tebipenem HBr and other future product candidates.

We cannot be certain that any product candidate will receive regulatory approval or will be successfully commercialized even if it receives regulatory approval.

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Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods.

Our prior losses, combined with

expected future losses, have had and will continue to have an adverse effect on our stockholders’ equity and working capital.

Our prior losses, combined with expected future losses, have had and will continue to have an adverse effect on our stockholders’ equity and working capital.

If we are unable to achieve and sustain profitability, the market value of our common stock will likely decline.

Because of the numerous risks and uncertainties associated with developing [biopharmaceutical products], we are unable to predict the extent of any future losses or when, if ever, we will become profitable.

Our expenses could increase if we are required by the FDA, or any comparable foreign regulatory authority to perform studies in addition to those currently expected, or if there are any delays in completing our clinical trials or the development of any of our product candidates.

Our expenses would increase if we are required by the FDA, or any comparable foreign regulatory authority to perform studies in addition to those currently expected, or if there are any delays in completing our clinical trials or the development of any of our product candidates.

We expect that we will need substantial additional funding.

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Developing pharmaceutical products, including conducting preclinical studies and clinical trials, is a time-consuming, expensive and uncertain process that takes years to complete.

Our expenses are likely to increase as we commence and advance our ongoing and planned clinical trials and other studies for our current and future product candidates, as well as explore clinical and development pathways forward for SPR720.

Our expenses are likely to increase as we commence and advance our ongoing and planned clinical trials and other studies for our current and future product candidates, as well as determining next steps for SPR720.

If we obtain marketing approval for any product candidate, we expect to incur significant expenses related to development, product sales, marketing, distribution and manufacturing.

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Our failure to raise capital as and when needed would have a negative effect on our financial condition and our ability to pursue our business strategy.

Based on our cash and cash equivalents as of March 31, 2025, together with earned and non-contingent development milestone payments from GSK, we believe that our cash runway will be sufficient to fund our operating expenses and capital expenditures into the second quarter of 2026.

Based on our cash and cash equivalents as of June 30, 2025, together with earned and non-contingent development milestone payments from GSK, and the decrease in clinical expense as a result of the PIVOT-PO Phase 3 trial for tebipenem HBr stopping early for efficacy following positive interim analysis results, we believe that our cash runway will be sufficient to fund our operating expenses and capital expenditures into 2028.

During this period, we plan to prioritize finalizing the Phase 3 clinical trial activities for tebipenem HBr under our GSK License Agreement.

Beyond this point, or in the event we change our current operating plan, we will

need substantial additional funding to support our continuing operations and pursue our growth strategy.

Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of equity offerings, debt financings, government funding arrangements, collaborations, strategic alliances and marketing, distribution or licensing arrangements.

If we are not able to secure adequate additional funding, we plan to make further reductions in spending.

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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 filed a universal shelf registration statement on Form S-3 (Registration No.

333-254170) with the SEC on March 11, 2021, which was declared effective on March 29, 2021 (the “2021 Form S-3”), and pursuant to which we registered for sale up to $300.0 million of any combination of our common stock,

preferred stock, debt securities, warrants, rights and/or units from time to time and at prices and on terms that we could determine, including up to $75.0 million of our common stock available for issuance pursuant to the Sales Agreement that we entered into with Cantor.

The 2021 Form S-3 expired on March 29, 2024.

We filed the 2024 Form S-3 on March 15, 2024, which became effective on March 22, 2024 and pursuant to which we registered for sale up to $300.0 million of any combination of our common stock, preferred stock, debt securities, warrants, rights and/or units from time to time and at prices and on terms that we may determine, including up to $75.0 million of our common stock available for issuance pursuant to the Sales Agreement with Cantor.

Under the Sales Agreement, Cantor may sell shares of our common stock by any method permitted by law deemed to be an “at-the-market” offering as defined in Rule 415 of the Securities Act, subject to the terms of the Sales Agreement.

While we currently have an effective shelf registration statement, as of the filing of our Annual Report on Form 10-K for the year ended December 31, 2024, our public float was less than $75 million, and under SEC regulations for so long as our public float remains less than $75 million, the amount we can raise through primary public offerings of securities in any twelve-month period using shelf registration statements is limited to an aggregate of one-third of our public float, which is referred to as the baby shelf rules.

As of March 21, 2025, our public float was approximately $45.1 million, based on 54,969,832 shares of outstanding common stock held by non-affiliates and at a price of $0.82 per share, which was the closing price of our common stock on the Nasdaq GS on March 21, 2025.

As a result of our public float being below $75 million, we are limited by the baby shelf rules until such time our public float exceeds $75 million, which means we only have the capacity to sell shares up to one-third of our public float in primary offerings under our shelf registration statement on Form S-3 in any twelve-month period.

Although alternative public and private transaction structures may be available, these may require additional time and cost, may impose operational restrictions on us, and may not be available on attractive terms.

We may seek to raise additional capital at any time.

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

We have a limited operating history and no history of commercializing pharmaceutical products, which may make it difficult to evaluate the prospects for our future viability.

Our operations to date have been limited to financing and staffing our company, and performing research and development activities to advance our product candidates.

Each of our product candidates is either in clinical or preclinical development.

We have not yet demonstrated an ability to successfully obtain marketing approval, manufacture a commercial scale product, or arrange for a third party to do so on our behalf, or conduct sales and marketing activities necessary for successful product commercialization.

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

We expect our financial condition and operating results to continue to fluctuate significantly from quarter to quarter and year to year due to a variety of factors, many of which are beyond our control.

Accordingly, stockholders should not rely upon the results of any quarterly or annual periods as indications of future operating performance

Our ability to use our net operating loss carryforwards may be limited.

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Utilization of these NOLs depends on many factors, including our future income, which cannot be assured.

Aside from the NOLs that can be carried forward indefinitely, the remaining NOLs could expire unused and be unavailable to offset our future income tax liabilities.

In addition, under Section 382 of the Internal Revenue Code of 1986, as amended (the "Code") and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50% change, by value, in its equity ownership by 5% stockholders over a three-year period, the corporation’s ability to use its pre-change NOLs and other pre-change tax attributes to offset its post-change income may be limited.

We recently completed a Section 382 study and concluded that we underwent several ownership changes as defined by the Code, the last of which occurred during the year ended December 31, 2018.

Our NOLs, other than the NOLs that can be carried forward indefinitely, could expire unused and be unavailable to offset our future income tax liabilities.

Any carryforwards that will expire prior to utilization were removed from deferred tax assets, with a corresponding reduction of the valuation allowance.

Future ownership changes may limit our ability to utilize remaining tax attributes.

In addition, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the "Code") and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50% change, by value, in its equity ownership by 5% stockholders over a three-year period, the corporation’s ability to use its pre-change NOLs and other pre-change tax attributes to offset its post-change income may be limited.

We recently completed a Section 382 study and concluded that we underwent several ownership changes as defined by the Code, the last of which occurred during the year ended December 31, 2018.

Future ownership changes, some of which may be beyond our control, may limit our ability to utilize our tax attributes.

Under current U.S.

federal tax legislation, although the treatment of NOLs arising in tax years beginning on or before December 31, 2017 has generally not changed, NOLs arising in tax years beginning after December 31, 2017 may be used to offset only 80% of taxable income.

In addition, net operating losses arising in tax years beginning after December 31, 2017 may be carried forward indefinitely, as opposed to the 20-year carryforward under prior law.

We have a limited operating history and no history of commercializing pharmaceutical products, which may make it difficult to evaluate the prospects for our future viability.

Our operations to date have been limited to financing and staffing our company, and performing research and development activities to advance our product candidates.

Each of our product candidates is either in clinical or preclinical development.

We have not yet demonstrated an ability to successfully obtain marketing approval, manufacture a commercial scale product, or arrange for a

third party to do so on our behalf, or conduct sales and marketing activities necessary for successful product commercialization.

Accordingly, stockholders should not rely upon the results of any quarterly or annual periods as indications of future operating performance.

federal tax legislation, NOLs arising in tax years beginning after December 31, 2017 may be used to offset only 80% of taxable income (although such NOLs may be carried forward indefinitely).

Risks Related to Our Dependence on Third Parties

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We have and may continue to seek third-party collaborators for development and commercialization of certain of our product candidates.

Currently we are party to license and collaboration agreements with third parties as described in Note 10 - License, Collaboration and Service Agreements to our consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

Currently we are party to license and collaboration agreements with third parties as described in Note 10 to our consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

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

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In addition, there have been a significant number of recent business combinations among large pharmaceutical companies that have resulted in a reduced number of potential future collaborators.

If we are unable to reach agreements with suitable collaborators on a timely basis, on acceptable terms, or at all, we may have to curtail the development of a product candidate, reduce or delay its development program or one or more of our other development programs, delay its potential commercialization or reduce the scope of any sales or marketing activities, or increase our expenditures and undertake development or commercialization activities at our own expense.

and undertake development or commercialization activities at our own expense.

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

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Our third-party contract manufacturers are based in Asia.

Recently, our third-party contract manufacturers have been subject to various supply chain disruptions.

In the past, our third-party contract manufacturers have been subject to various supply chain disruptions.

These supply chain disruptions have increased the price of certain materials due to the significant increase in costs of raw materials and shipping costs.

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A disruption resulting from any one of these events could cause significant delays in shipments of our products and the loss of revenue and customers, which could have a material adverse effect on our financial position, results of operations, and cash flows.

Our facilities in Japan and Taiwan are located in seismically-active areas.

Our manufacturer's facilities in Japan are located in seismically-active areas.

If any of our product candidates are approved by any regulatory agency, we intend to enter into agreements with third-party contract manufacturers for the commercial production of those products.

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In addition, our manufacturers are subject to ongoing periodic unannounced inspections by the FDA and corresponding state and foreign agencies for compliance with cGMPs and similar regulatory requirements.

Failure by any of our manufacturers to comply with applicable cGMPs or other regulatory requirements could result in sanctions being imposed on us, including fines, injunctions, civil penalties, delays, suspensions or withdrawals of approvals, operating restrictions, interruptions in supply and criminal prosecutions, any of which could significantly and adversely affect supplies of our product candidates and have a material adverse effect on our business, financial condition and results of operations.

Failure by any of our manufacturers to comply with applicable cGMPs or other regulatory requirements could result in sanctions being imposed on us,

including fines, injunctions, civil penalties, delays, suspensions or withdrawals of approvals, operating restrictions, interruptions in supply and criminal prosecutions, any of which could significantly and adversely affect supplies of our product candidates and have a material adverse effect on our business, financial condition and results of operations.

Our current and anticipated future dependence upon others for the manufacture of our product candidates and potential product candidates may adversely affect our future profit margins and our ability to commercialize any products for which we receive marketing approval on a timely and competitive basis.

If we fail to comply with our obligations in the agreements under which we in-license or out-license acquire development or commercialization rights to products, technology or data from or to third parties, we could lose such rights that are important to our business.

If we fail to comply with our obligations in the agreements under which we in-license or out-license or acquire development or commercialization rights to products, technology or data from or to third parties, we could lose rights that are important to our business.

We are a party to agreements with Meiji and GSK for tebipenem HBr, Vertex Pharmaceuticals for SPR720 and Pfizer, Everest and PBB Distributions Limited for SPR206, and we may enter into additional agreements, including license agreements, with other parties in the future that impose diligence, development and commercialization timelines, milestone payments, royalties, insurance and other obligations on us.

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In exchange for those rights, we are obligated to satisfy diligence requirements, including using commercially reasonable efforts to develop and commercialize tebipenem HBr and to implement a specified development plan, meeting specified development milestones and providing an update on progress on an annual basis.

The Meiji License requires us to pay future milestone payments of up to $1.0 million upon the achievement of specified regulatory milestones and royalties of a low single-digit percentage on net sales on a country-by-country basis.

The Meiji License requires us to pay future milestone payments of up to $1.0 million upon the achievement of specified regulatory milestones and royalties of 1% of net sales on a product-by-product and country-by-country basis.

In addition, pursuant to our GSK License Agreement, we granted GSK an exclusive royalty-bearing license, with the right to grant sublicenses, under our intellectual property and regulatory documents and a sublicense under certain intellectual property of Meiji and Meiji’s regulatory documents to develop, manufacture and commercialize the GSK Licensed Products in the GSK Territory.

Under the terms of the GSK License Agreement, we received an upfront payment of $66.0 million for GSK to secure rights to the medicine, a $30.0 million milestone payment upon achievement of a development milestone in the third quarter of 2023, and are entitled to receive a $95.0 million development milestone that is payable in four equal semi-annual installments, of which we received $23.8 million in February 2024, $23.8 million in August 2024 and $23.8 million in February 2025.

Remaining potential payments under the GSK License Agreement are milestone based and are (i) approximately $25.0 million in payments for GSK's submission of a NDA with the FDA for tebipenem HBr, (ii) up to $150.0 million in commercial milestone payments, (iii) up to $225.0 million in sales milestone payments, and (iv) tiered low single-digit to low double-digit royalties (if sales exceed $1.0 billion) tiered on net sales of GSK Licensed Products in the GSK Territory.

Under the terms of the GSK License Agreement, we received an upfront payment of $66.0 million for GSK to secure rights to tebipenem pivoxil and tebipenem HBr, a $30.0 million milestone payment upon achievement of a development milestone in the third quarter of 2023, and are entitled to receive a $95.0 million development milestone payment that is payable in four equal semi-annual installments, of which we received $23.8 million in the first quarter of 2024, the third quarter of 2024, the first quarter of 2025 and the third quarter of 2025.

Remaining potential payments under the GSK License Agreement are milestone based and are (i) $25.0 million for GSK’s submission of a NDA with the FDA for tebipenem HBr, (ii) up to $101.0 million in commercial milestone payments, and (iii) up to $225.0 million in sales milestone payments.

In addition to the milestones described above, GSK is obligated to pay royalties to us on annual net sales of GSK Licensed Products in the GSK Territory.

Such royalties are 1% for annual sales up to $750.0 million each year and range from high single-digit percentages on annual net sales above $750.0 million each year to low double-digit percentages on annual net sales above $1,000 million each year.

We are responsible for the execution and costs of the follow-up Phase 3 clinical trial of tebipenem HBr.

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Such funding sources may pose risks to us not encountered in other commercial contracts, including significant regulatory compliance risks.

Contracts funded by the United States government and its agencies include provisions that reflect the government’s substantial public policy and compliance requirements, and substantial rights and remedies, many of which are not typically found in commercial contracts, including powers of the government to:

Contracts funded by the U.S.

government and its agencies include provisions that reflect the government’s substantial public policy and compliance requirements, and substantial rights and remedies, many of which are not typically found in commercial contracts, including powers of the government to:

• terminate agreements, in whole or in part, for any reason or no reason;

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Termination-for-convenience provisions generally enable us to recover only our costs incurred or committed and settlement expenses on the work completed prior to termination.

Except for the amount of services received by the government, termination-for-default provisions do not permit these recoveries and would make us liable for excess costs incurred by the United States government in procuring undelivered items from another source.

Except for the amount of services received by the government, termination-for-default provisions do not permit these recoveries and would make us liable for excess costs incurred by the U.S.

government in procuring undelivered items from another source.

Our business is subject to audit by the U.S.

government and other potential sources for grant funding, including under our contracts with BARDA and NIAID and a negative outcome in an audit could adversely affect our business.

United States government agencies such as the Department of Health and Human Services (“DHHS”) and the Defense Contract Audit Agency (the “DCAA”) routinely audit and investigate government contractors.

government agencies such as the Department of Health and Human Services (“DHHS”) and the Defense Contract Audit Agency (the “DCAA”) routinely audit and investigate government contractors.

These agencies review a contractor’s performance under its contracts, cost structure and compliance with applicable laws, regulations and standards.

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• suspension of payments;

• suspension or prohibition from conducting business with the United States government.

• suspension or prohibition from conducting business with the U.S.

In addition, we could suffer serious reputational harm if allegations of impropriety were made against us, which could cause our stock price to decrease.

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Our success depends in large part on our ability to obtain and maintain patent protection in the United States and other countries with respect to our proprietary chemistry technology and product candidates.

If we do not adequately protect our intellectual property, competitors may be able to use our technologies and erode or negate any competitive advantage that we may have, which could harm

our business and ability to achieve profitability.

If we do not adequately protect our intellectual property, competitors may be able to use our technologies and erode or negate any competitive advantage that we may have, which could harm our business and ability to achieve profitability.

To protect our proprietary position, we file patent applications in the United States and abroad related to our novel technologies and product candidates that are important to our business.

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However, as a result of the lag in the publication of patent applications following filing in the United States, we are still not be able to be certain upon filing that we are the first to file for patent protection for any invention.

Moreover, we may be subject to a third-party pre-issuance submission of prior art to the United States Patent and Trademark Office (“USPTO”) or become involved in opposition, derivation, reexamination, inter partes review or interference proceedings, in the United States or elsewhere, challenging our patent rights or the patent rights of others.

Moreover, we may be subject to a third-party pre-issuance submission of prior art to the U.S.

Patent and Trademark Office (“USPTO”) or become involved in opposition, derivation, reexamination, inter partes review or interference proceedings, in the United States or elsewhere, challenging our patent rights or the patent rights of others.

An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate, our patent rights, allow third parties to commercialize our technology or product candidates and compete directly with us, without payment to us, or result in our inability to manufacture or commercialize products without infringing third-party patent rights.

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We have registered our trademarks for our name and logo in the United States and other countries and have a number of pending trademark applications in the United States and other countries.

As of March 31, 2025, we have two registered U.S.

As of June 30, 2025, we have two registered U.S.

trademarks, 23 registered foreign trademarks, and no pending foreign trademark applications.

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In addition, approval policies, regulations, or the type and amount of clinical data necessary to gain approval may change during the course of a product candidate’s clinical development and may vary among jurisdictions.

We have not obtained regulatory approval for any product candidate and it is possible that none of our product candidates we seek to develop in the future will ever obtain regulatory approval.

obtained regulatory approval for any product candidate and it is possible that none of our product candidates we seek to develop in the future will ever obtain regulatory approval.

Neither we nor any future collaborators are permitted to market any of our product candidates in the United States until we or they receive regulatory approval of an NDA from the FDA.

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A fast track designation may not actually lead to a faster development or regulatory review or approval process.

We have received fast track designation for tebipenem HBr for the treatment of cUTIs, including pyelonephritis, in adult patients who have limited oral treatment options, as well as fast track designation for SPR720 for treatment of adult patients with NTM pulmonary disease, and we may seek fast track designation for one or more of our other product candidates in the future.

We have received fast track designation for tebipenem HBr for the treatment of cUTI, including pyelonephritis, as well as fast track designation for SPR720 for treatment of adult patients with NTM-PD, and we may seek fast track designation for one or more of our other product candidates in the future.

If a drug is intended for the treatment of a serious condition and nonclinical or clinical data demonstrate the potential to address unmet medical need for this condition, a drug sponsor may apply for fast track designation by the FDA for the particular indication under study.

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Fast track designation alone does not guarantee qualification for the FDA’s priority review procedures.

Additionally, the FDA has designated tebipenem HBr as a Qualified Infectious Disease Product (“QIDP”) for the treatment of cUTI, community-acquired pneumonia (“CABP”) and diabetic foot infections (“DFI”) under the Generating Antibiotic Incentives Now (“GAIN”) Act.

Among other benefits of a QIDP designation, the first marketing application for the QIDP-designated indication qualifies for priority review by the FDA.

Further, if tebipenem HBr is approved for the treatment of cUTI, CABP or DFI, the FDA’s QIDP designation previously granted to tebipenem HBr for those indications will entitle the drug product to receive a one-time five-year extension to any non-patent exclusivity period awarded to tebipenem HBr in the United States, such as a five-year New Chemical Entity exclusivity granted under the Hatch-Waxman Act, among other possible periods of regulatory exclusivity that would qualify for a GAIN exclusivity extension.

The QIDP designation for tebipenem HBr, however, does not guarantee a faster development process or ensure FDA approval.

Priority review designation by the FDA may not lead to a faster regulatory review or approval process and, in any event, does not assure FDA approval.

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Receiving a priority review designation from the FDA does not guarantee approval of the drug application within the six-month review cycle or any time thereafter.

While we have negotiated a SPA agreement with the FDA relating to our pivotal Phase 3 clinical trial of tebipenem HBr in patients with cUTI, including AP, this agreement does not guarantee approval of tebipenem HBr or any other particular outcome from regulatory review of the clinical trial or the product candidate.

On July 31, 2023, the Company announced that it received written agreement from the FDA, under a special protocol assessment (“SPA”), on the design and size of PIVOT-PO, a pivotal Phase 3 clinical trial of tebipenem HBr in patients with cUTI, including AP.

On June 17, 2025, the FDA announced the creation of a new voucher program to expedite the development and approval of new drug products.

Vouchers issued under the new program, which is known as the Commissioner’s National Priority Voucher (“CNPV”) Program, may reportedly be redeemed by sponsors to shorten the review time of an NDA from approximately 10 to 12 months to one to two months.

The FDA has indicated that the new CNPV process will convene experts from the FDA’s offices for a team-based review rather than using the standard review system of a drug application being sent to numerous FDA offices.

Clinical information will be reviewed by a multidisciplinary team of physicians and scientists who will pre-review the submitted information and convene for a one-day meeting.

Vouchers under this program will reportedly be given to companies aligned with U.S.

national priorities.

As with the FDA’s other programs for expediting review and approval of new drug products, even if we were to avail ourselves of this new program, there is no guarantee it would result in approval of our marketing applications or that such approval, if granted, would be on an expedited basis.

While we have negotiated a SPA agreement with the FDA relating to our pivotal Phase 3 clinical trial of tebipenem HBr in patients with cUTI, including acute pyelonephritis, this agreement does not guarantee approval of tebipenem HBr or any other particular outcome from regulatory review of the clinical trial or the product candidate.

The FDA’s SPA process is designed to allow the FDA to evaluate the proposed design and size of clinical trials that are intended to form the primary basis for determining a drug product’s efficacy, among other eligible protocols.

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However, an SPA agreement does not guarantee approval of a product candidate, and even if the FDA agrees to the design, execution and analysis proposed in protocols reviewed under the SPA process, the FDA may revoke or alter its agreement in certain circumstances.

In particular, an SPA agreement is not binding on the FDA if public health concerns emerge that were unrecognized at

the time of the SPA agreement, if other new scientific concerns regarding product safety or efficacy arise, if the sponsor fails to comply with the agreed upon trial protocols or modifies such protocols without prior FDA agreement, or if the relevant data, assumptions or information provided by the sponsor change or are found to be false or omit relevant facts.

In particular, an SPA agreement is not binding on the FDA if public health concerns emerge that were unrecognized at the time of the SPA agreement, if other new scientific concerns regarding product safety or efficacy arise, if the sponsor fails to comply with the agreed upon trial protocols or modifies such protocols without prior FDA agreement, or if the relevant data, assumptions or information provided by the sponsor change or are found to be false or omit relevant facts.

In addition, even after an SPA agreement is finalized, the SPA agreement may be modified, and such modification will be deemed binding on the FDA review division, except under the circumstances described above, so long as the FDA and the sponsor agree in writing to modify the protocol and such modification is intended to improve the study.

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Regulatory authorities in some jurisdictions, including the United States, may designate drugs for relatively small patient populations as orphan drugs.

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

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

There can be no assurance that the FDA will grant orphan designation for any indication for which we apply.

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In addition, if a product candidate that has orphan drug designation subsequently receives the first FDA approval for the disease for which it has such designation, it is entitled to orphan drug exclusivity, which means that the FDA may not approve any other applications, including an NDA, to market the same drug for the same indication for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan drug exclusivity or where the manufacturer is unable to assure sufficient product quantity.

Even though we have obtained orphan drug designation for SPR720 and may seek orphan drug designation for other product candidates in the future, there is no assurance that we will be the first to obtain marketing approval for NTM infection or for any particular rare indication.

Even though we have obtained orphan drug designation for SPR720 and may seek orphan drug designation for other product candidates in the future, there is no assurance that we or any third party partner we may have in the future will be the first to obtain marketing approval for NTM infection or for any particular rare indication.

Further, even though we have obtained orphan drug designation for SPR720, or even if we obtain orphan drug designation for other product candidates, such designation may not effectively protect us from competition because different drugs can be approved for the same condition and the same drug can be approved for different conditions and potentially used off-label in the orphan indication.

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Orphan drug designation neither shortens the development time or regulatory review time of a drug, nor gives the drug any advantage in the regulatory review or approval process.

The FDA and Congress may further reevaluate the Orphan Drug Act and its regulations and policies.

This may be particularly true in light of a decision from the Court of Appeals for the 11th Circuit in September 2021.

In Catalyst Pharms, Inc.

Becerra (“Catalyst”), it was held that, for the purpose of determining the scope of orphan drug exclusivity, the term “same disease or condition” in the statute means the designated “rare disease or condition” and could not be interpreted by the FDA to mean the “indication or use.” Thus, the court concluded, orphan drug exclusivity applies to the entire designated disease or condition rather than the approved “indication or use.” Although there have been legislative proposals to overrule this decision, they have not been enacted into law.

On January 23, 2023, the FDA announced that, in matters beyond the scope of the Catalyst court order, the FDA will continue to apply its existing regulations tying orphan-drug exclusivity to the uses or indications for which the orphan drug is approved.

More recently however, on February 14, 2025, a federal district court in Washington, D.C.

fully embraced the reasoning of the Catalyst decision in another decision challenging the scope of orphan drug exclusivity.

On April 17, 2025, the FDA appealed this

decision to the U.S.

Court of Appeals for the D.C.

The implications of this decision, and its impact on the FDA’s implementation of the Orphan Drug Act, are unclear at this point.

If approved for commercial marketing in the United States, our product candidates may face generic competition sooner than anticipated.

Even if we are successful in achieving regulatory approval to commercialize a product candidate, it may face competition from generic products earlier or more aggressively than anticipated, depending upon how well our future products perform in the United States prescription drug market.

prescription drug market.

In addition to creating the 505(b)(2) NDA pathway, the Hatch-Waxman Amendments to the FDCA authorized the FDA to approve generic drugs that are the same as drugs previously approved for marketing under the NDA provisions of the statute pursuant to ANDAs.

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Further, in April 2023, the European Commission issued a proposal to revise and replace the existing general pharmaceutical legislation.

On June 4, 2025, after almost two years of negotiations among the EU Member States, the Council of the European Union adopted its position on the proposed overhaul of the EU general pharmaceutical legislative framework, which is known as the new Pharma Package.

If adopted and implemented as currently proposed, these revisions will significantly change several aspects of drug development and approval in the European Union.

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We or our partners may not obtain approvals from regulatory authorities outside the United States on a timely basis or at all.

Further, we could face heightened risks with respect to obtaining marketing authorization in the United Kingdom as a result of the withdrawal of the United Kingdom from the European Union, commonly referred to as Brexit.

The United Kingdom is no longer part of the European Single Market and EU Customs Union.

As of January 1, 2025, the Medicines and Healthcare Products Regulatory Agency (“MHRA”) is responsible for approving all medicinal products destined for the U.K.

market (i.e., Great Britain and Northern Ireland).

On April 28, 2025, the U.K.

Parliament adopted amendments to improve and strengthen the United Kingdom’s clinical trials regulatory regime;

they will take effect on April 28, 2026.

These changes were needed since the current U.K.

requirements are based upon the now-repealed EU Clinical Trials Directive (2001/20/EC), which has been replaced by the European Clinical Trials Regulation (Regulation EU No 536/2014).

Since the United Kingdom left the EU prior to the date on which the EU CTR took effect, the U.K.

legal framework did not benefit from the same revisions as occurred at EU level.

If we receive regulatory approval for any of our product candidates, we will be subject to ongoing obligations and continuing regulatory review, which may result in significant additional expense.

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Recently enacted and future policies and legislation may increase the difficulty and cost for us to obtain marketing approval of and commercialize our product candidates and may affect the reimbursement made for any product candidate for which we receive marketing approval.

The pricing and reimbursement environment may become more challenging due to, among other reasons, policies advanced by the presidential administration, federal agencies, new healthcare legislation passed by the United States Congress or fiscal challenges faced by all levels of government health administration authorities.

Congress or fiscal challenges faced by all levels of government health administration authorities.

Among policy makers and payors in the United States and foreign countries, there is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality and expanding access to healthcare.

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Resulting legislative, administrative, or policy changes from payors may reduce payments for any products for which we obtain marketing approval and could affect future revenues.

The ACA became law in the United States in March 2010 with the goals of broadening access to health insurance, reducing or constraining the growth of healthcare spending, enhancing remedies against fraud and abuse, adding new transparency requirements for the health care and health insurance industries and imposing additional health policy reforms.

The Affordable Care Act (“ACA”) became law in the United States in March 2010 with the goals of broadening access to health insurance, reducing or constraining the growth of healthcare spending, enhancing remedies against fraud and abuse, adding new transparency requirements for the health care and health insurance industries and imposing additional health policy reforms.

Provisions of ACA may negatively affect our future revenues.

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Moreover, there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products.

There have been several United States Congressional inquiries and proposed bills designed to, among other things, bring more transparency to drug pricing, reduce the cost of prescription drugs under Medicare, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drugs.

There have been several U.S.

Congressional inquiries and proposed bills designed to, among other things, bring more transparency to drug pricing, reduce the cost of prescription drugs under Medicare, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drugs.

Individual states in the United States have also become increasingly active in passing legislation and implementing regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

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Supreme Court held unanimously that federal law does not preempt the states’ ability to regulate pharmaceutical benefit managers (“PBMs”) and other members of the health care and pharmaceutical supply chain, an important decision that may lead to further and more aggressive efforts by states in this area.

The Federal Trade Commission in mid-2022 also launched sweeping investigations into the practices of the PBM industry, and published interim reports with its finding in mid-2024 and January 2025, that could lead to additional federal and state legislative or regulatory proposals targeting such entities’ operations, pharmacy networks, or financial arrangements, including in the current 2025-2026 congressional session.

The Federal Trade Commission (“FTC”) in mid-2022 also launched sweeping investigations into the practices of the PBM industry, and published interim reports with its finding in mid-2024 and January 2025, that could lead to additional federal and state legislative or regulatory proposals targeting such entities’ operations, pharmacy networks, or financial arrangements, including in the current 2025-2026 congressional session.

During the previous congressional session, numerous bipartisan PBM reforms were considered in both the Senate and the House of Representatives;

they include diverse legislative proposals such as eliminating rebates;

divorcing service fees from the price of a drug, discount, or rebate;

divorcing service fees from the price of a drug,

discount, or rebate;

prohibiting spread pricing;

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Significant efforts to change the PBM industry as it currently exists in the United States may affect the entire pharmaceutical supply chain and the business of other stakeholders, including biopharmaceutical developers like us.

In September 2023, the Federal Trade Commission (“FTC”) issued a policy statement articulating its view that certain “improper” patent listings by drug developers in FDA’s Orange Book represent an unfair trade practice and indicated that industry should be prepared for potential enforcement actions based on its analysis.

In September 2023, the FTC issued a policy statement articulating its view that certain “improper” patent listings by drug developers in FDA’s Orange Book represent an unfair trade practice and indicated that industry should be prepared for potential enforcement actions based on its analysis.

The FTC followed that action in November 2023 by publicly calling out over 100 “improper” patent listings made by ten large pharmaceutical companies and initiating an FDA administrative process with respect to those patents.

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Additionally, starting for payment year 2026, Centers for Medicare & Medicaid Services (“CMS”) will negotiate drug prices annually for a select number of single source Part D drugs without generic or biosimilar competition.

CMS is negotiating drug prices for a select number of Part B drugs starting for payment year 2028.

If a drug product is selected by CMS for negotiation, it is expected that the revenue generated from such drug will decrease.

CMS has begun to implement these new authorities, entering into agreements to conduct negotiations with the relevant manufacturers of those selected drugs in October 2023 and ultimately announcing the first round of negotiated prices for the first 10 drugs in August 2024;

those negotiated “maximum fair prices” will be effective as of January 1, 2026 (payment year 2026).

CMS is currently engaged in its second round of negotiations and published the next 15 drugs selected for negotiation in January 2025.

However, the impact of this program on the biopharmaceutical industry in the United States remains uncertain, in part because multiple large pharmaceutical companies and other stakeholders (e.g., the U.S.

Chamber of Commerce) have initiated federal lawsuits against CMS arguing the program is unconstitutional for a variety of reasons, among other complaints.

The outcome of such ongoing lawsuits, as well as potential legislative changes enacted by Congress or programmatic changes implemented at CMS by the Trump Administration, may impact the IRA drug price negotiation program in the future.

Legislative and regulatory proposals also have been made to expand post-approval requirements and restrict sales and promotional activities for pharmaceutical products.

We cannot be sure whether additional legislative changes will be enacted, or whether the FDA regulations, guidance or interpretations will be changed, or what the effect of such changes on the marketing approvals of our product candidates, if any, may be.

With passage of the One Big Beautiful Bill Act on July 3, 2025, which was signed into law on July 4, 2025, Congress extended this exemption to drugs and biologics with multiple orphan drug designations.

The first cycle of negotiations for the Medicare Drug Price Negotiation Program commenced in the summer of 2023.

On August 15, 2024, DHHS published the results of the first Medicare drug price negotiations for ten selected drugs that treat a range of conditions, including diabetes, chronic kidney disease, and rheumatoid arthritis.

The prices of these ten drugs will become effective January 1, 2026.

On January 17, 2025, CMS announced its selection of 15 additional drugs covered by Part D for the second cycle of negotiations by February 1, 2025.

While there had been some questions about the Trump administration’s position on this program, CMS issued a public statement on January 29, 2025, declaring that lowering the cost of prescription drugs is a top priority of the new administration and CMS is committed to considering opportunities to bring greater transparency in the negotiation program.

The second cycle of negotiations with participating drug companies will occur during 2025, and any negotiated prices for this second set of drugs will be effective starting January 1, 2027.

On June 6, 2023, Merck & Co.

filed a lawsuit against DHHS and CMS asserting that, among other things, the IRA’s Drug Price Negotiation Program for Medicare constitutes an uncompensated taking in violation of the Fifth Amendment of the Constitution.

Subsequently, a number of other parties, including the U.S.

Chamber of Commerce, Bristol Myers Squibb Company, the PhRMA, Astellas, Novo Nordisk, Janssen Pharmaceuticals, Novartis, AstraZeneca, Boehringer Ingelheim, and Teva also filed lawsuits in various courts with constitutional and Administrative Procedure Act claims against the DHHS and CMS.

There have been various decisions by the courts considering these cases since they were filed.

The DHHS has generally won the substantive disputes in these cases or succeeded in getting claims dismissed for lack of standing.

Most of these cases are now on appeal.

On October 30, 2024, the U.S.

Court of Appeals for the Third Circuit heard oral argument in three of these cases.

In April 2025, the U.S.

Court of Appeals for the Second Circuit and the U.S.

Court of Appeals for the Third Circuit heard argument in an additional three cases.

On May 8, 2025, the Third Circuit rejected AstraZeneca’s challenge to the Medicare price negotiation program, finding that the program did not violate the company’s due process rights under the constitution since there is no protected property interest in selling goods to Medicare beneficiaries at a price higher than what the government is willing to pay in reimbursement.

We expect that litigation involving these and other provisions of the IRA will continue, with unpredictable and uncertain results.

Accordingly, while it is currently unclear how the IRA will be effectuated, we cannot predict with certainty what impact any federal or state health reforms will have on us, but such changes could impose new or more stringent regulatory requirements on our activities or result in reduced reimbursement for our products, any of which could adversely affect our business, results of operations and financial condition.

More recently, on April 15, 2025, President Trump issued an executive order which directs DHHS to take steps to reduce the prices of pharmaceutical products.

The order repeats many of the proposals advanced during the first Trump administration, including directing the FDA to streamline and improve its existing drug importation program so as to make it easier for states to obtain approval without sacrificing the safety or quality of drug products.

Other provisions of the order relate to the 340B program.

Specifically, one provision calls on the Secretary of DHHS to determine the hospital acquisition cost for covered outpatient drugs at hospital outpatient departments and to consider and propose any appropriate adjustments for Medicare payment.

The other provision directs DHHS to condition grant funding to certain health centers on those centers passing through the 340B discounts they receive on insulin and injectable epinephrine products to patients who meet certain requirements.

With respect to the IRA’s Medicare drug pricing program, the order, among other things, calls for alignment in “the treatment of small molecule prescription drugs with that of biological products, ending the distortion that undermines relative investment in small molecule prescription drugs, coupled with other reforms to prevent any increase in overall costs to Medicare and its beneficiaries.”

Further, on May 12, 2025, President Trump issued an additional executive order calling on pharmaceutical manufacturers to voluntarily reduce the prices of medicines in the United States.

The Order directs the Secretary of DHHS to communicate most-favored-nation (“MFN”) price targets to pharmaceutical manufacturers to bring prices in line with comparably developed nations.

The executive order further provides that if such actions do not lower the costs of pharmaceuticals, the Secretary of DHHS would pursue other actions, including proposing a rulemaking that imposes MFN pricing in the United States.

Subsequently, on May 20, 2025, HHS indicated that the proposed MFN pricing will apply only to brand products without generic or biosimilar competition and the reference foreign countries will include only those in which the branded product similarly does not have generic or biosimilar competition.

Second, DHHS indicated that the MFN target price will be the lowest price in a country that is a member of the Organisation for Economic Co-operation and Development (“OECD”) with a gross domestic product (“GDP”), per capita of at least 60% of the U.S.

GDP per capita.

Based on previous estimates, there are likely at least 22 OECD countries that would satisfy this criterion.

The implications of these actions remain unclear and are likely to result in litigation if the administration pursues an MFN regulatory pricing requirement.

At the state level, individual states are increasingly aggressive in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

This is increasingly true with respect to products approved pursuant to the accelerated approval pathway.

State Medicaid programs and other payers are developing strategies and implementing significant coverage barriers, or refusing to cover these products outright, arguing that accelerated approval drugs have insufficient or limited evidence despite meeting the FDA’s standards for accelerated approval.

We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative or executive action, either in the United States or abroad.

We expect that additional state and federal health care reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for health care products and services.

Changes in tax laws or in their implementation or interpretation could adversely affect our business and financial condition.

Income, sales, use or other tax laws, statutes, rules, or regulations could be enacted or amended at any time, which could affect our business or financial condition, including causing potentially adverse impacts to our effective tax rate, tax liabilities, and cash tax obligations.

For example, the IRA was signed into law in August 2022, and the OBBBA was signed into law in July 2025.

The IRA introduced new tax provisions, including a one percent excise tax imposed on certain stock repurchases by publicly traded companies.

The one percent excise tax generally applies to any acquisition of stock by the publicly traded company (or certain of its affiliates) from a stockholder of the company in exchange for money or other property (other than stock of the company itself), subject to a de minimis exception.

Thus, the excise tax could apply to certain transactions that are not traditional stock repurchases.

The OBBBA contains numerous tax provisions that we are currently in the process of evaluating, and which may significantly affect our business or financial condition.

The recent changes under the OBBBA include tax rate extensions and changes to the business interest deduction limitation, the expensing of domestic research and development expenditures (in contrast to the continued capitalization and amortization of foreign research and development expenditures), the bonus depreciation deduction rules, and the international tax framework.

Regulatory guidance under the IRA, the OBBBA, and other tax-related legislation is and continues to be forthcoming, and such guidance could ultimately increase or lessen the impact of these laws on our business and financial condition.

In addition, it is uncertain if and to what extent various states will conform to changes in federal tax legislation.

If we successfully commercialize one of our product candidates, failure to comply with our reporting and payment obligations under U.S.

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If we participate in the Medicaid Drug Rebate Program if and when we successfully commercialize a product candidate, we will be required to report certain pricing information for our product to the Centers for Medicare & Medicaid Services, the federal agency that administers the Medicaid and Medicare programs.

We may also be required to report pricing information to the United States Department of Veterans Affairs.

We may also be required to report pricing information to the U.S.

Department of Veterans Affairs.

If we become subject to these reporting requirements, we will be liable for errors associated with our submission of pricing data, for failure to report pricing data in a timely manner, and for overcharging government payers, which can result in civil monetary penalties under the Medicaid statute, the federal civil False Claims Act, and other laws and regulations.

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If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of civil, criminal and administrative penalties, damages, monetary fines, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, contractual damages, reputational harm, diminished potential profits and future earnings, and curtailment of our operations, any of which could adversely affect our business, financial condition, results of operations or prospects.

Disruptions of funding for the FDA, the SEC and other government agencies caused by funding shortages, mass layoffs, or global health concerns could hinder their ability to hire and retain key leadership and other personnel, prevent our product candidates 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 relies, 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, ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory and policy changes.

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

Disruptions at the FDA and other government agencies from funding cuts, personnel losses, regulatory reform, government shutdowns and other developments could hinder our ability to obtain guidance from the FDA regarding our clinical development program and develop and secure approval of our product candidates in a timely manner, which would negatively impact our business.

The FDA and comparable regulatory agencies in foreign jurisdictions, such as the EMA and Committee for Medicinal Products for Human Use, play an important role in the development of our product candidates by providing guidance on our clinical development programs and reviewing our regulatory submissions, including INDs, requests for special designations and marketing applications.

If these oversight and review activities are disrupted, then correspondingly our ability to develop and secure timely approval of our product candidates could be impacted in a negative manner.

For example, the loss of FDA leadership and personnel could lead to disruptions and delays in FDA guidance, review and approval of our product candidates.

Pursuant to President Trump’s Executive Order 14210, “Implementing the President’s ‘Department of Government Efficiency’ Workforce Optimization Initiative,” the Secretary of DHHS announced on March 27, 2025, a reorganization and Reduction in Force (“RIF”) across the Department of approximately 20,000 employees (82,000 to 62,000), with FDA’s workforce of approximately 20,000 to decrease by 3,500 full-time employees.

Subsequently, the FDA indicated that roughly a quarter of those employees who received RIF notices had been reinstated.

On July 14, 2025, following litigation reaching the U.S.

Supreme Court, the administration began to carry out these layoffs across DHHS, including the FDA.

There are also ongoing deliberations within the administration and Congress over potentially substantial proposed cuts to the overall budget for DHHS and funding of the FDA for the 2026 federal fiscal year.

While the FDA’s review of marketing applications and other activities for new drugs and biologics is largely funded through the user fee program established under the Prescription Drug User Fee Act (“PDUFA”), it remains unclear how the administration’s RIF and budget cuts will impact this program and the ability of the FDA to provide guidance and review our product candidates in a timely manner.

For example, while the FDA RIF did not reportedly specifically target FDA reviewers, many operations, administrative and policy staff that help support such reviews were affected and those losses could lead to delays in PDUFA reviews and related activities.

As of July 15, 2025, there has been at least one report in which the FDA failed to meet a PDUFA goal date for approval of an NDA due to heavy workload and limited resources.

In addition, while currently unclear, there is a risk that the RIF and budget cutbacks could threaten the integrity of the PDUFA program itself.

That is because, for the FDA to obligate user fees collected under PDUFA in the first place, a certain amount of non-user fee appropriations must be spent on the process for the review of applications plus certain other costs during the same fiscal year.

There is also substantial uncertainty as to how regulatory reform measures being implemented by the Trump Administration across the government will impact the FDA and other federal agencies with jurisdiction over our activities.

For example, since taking office, the President has issued a number of executive orders that could have a significant impact on the manner in which the FDA conducts its operations and engages in regulatory and oversight activities.

These include Executive Order 14192, “Unleashing Prosperity Through Deregulation,” January 31, 2025;

Executive Order 14212, “Establishing the President’s Make America Healthy

Again Commission,” February 13, 2025;

and Executive Order 14219, “Ensuring Lawful Governance and Implementing the President’s ‘Department of Government Efficiency’ Deregulatory Initiative,” February 21, 2025.

If these or other orders or executive actions impose constraints on the FDA’s ability to engage in oversight and implementation activities in the normal course, our business may be negatively impacted.

Similarly, actions by the U.S.

government have significantly disrupted the operations of U.S.

government agencies such as the National Institutes of Health, National Science Foundation, Centers for Disease Control and Prevention, and FDA, which have traditionally provided funding for basic research, research and development, and clinical testing.

government actions have included, among other things, suspending, terminating and withholding of disbursements of funds owed under ongoing contracts, grants, and other financial assistance agreements;

declining to continue multi-year research projects for additional annual budget periods;

canceling or delaying solicitations for new contract, grant and other financial assistance awards;

canceling or delaying proposal evaluation processes and issuance of such new awards;

substantially reducing federal agency staff responsible for managing contract and financial assistance programs;

eliminating agency information and resources for facilitating research activity;

delaying or terminating federal agency procedures for authorizing international transactions;

initiating aggressive enforcement actions that may disrupt the operations of major research universities that are significant contributors to life sciences research in the U.S., and threatening access to federal agency contracts and other funding awards based on companies’ otherwise lawful corporate policies and choice of counsel.

government actions could, directly or indirectly, significantly disrupt, delay, prevent, or increase the costs of our research and product commercialization programs, including our ability to develop new product candidates, conduct clinical trials, implement research collaborations with other companies or institutions, and obtain approvals to market and sell new products.

In addition, government funding of the SEC and other government agencies on which our operations may rely, including those that fund research and development activities, is subject to the political process, which is inherently fluid and unpredictable.

Disruptions at the FDA and other agencies may also slow the time necessary for new drugs to be reviewed and/or approved by necessary government agencies, which would adversely affect our business.

For example, over the last several years, the United States government has shut down several times and certain regulatory agencies, such as the FDA and the SEC, have had to furlough critical FDA, SEC and other government employees and stop critical activities during that period.

In early 2025, following the inauguration of President Trump, the Trump Administration began terminating federal government employees, including at the FDA.

The impact of mass layoffs at the agency and other governmental offices with which we interact is unclear at this time.

However, it is expected that

with a proposed reduction in staff of up to 50%, the FDA in the future may be unlikely to meet its application review goals or to continue to be available for timely interactions with medical product developers.

It is currently unclear how the U.S.

biopharmaceutical industry will be affected by the Trump Administration’s major changes to the FDA and the federal government as a whole.

Separately, during the COVID-19 pandemic, the FDA postponed most inspections of domestic and foreign manufacturing facilities at various points.

Even though the FDA has since resumed standard inspection operations of domestic facilities where feasible, the agency has continued to monitor and implement changes to its inspectional activities to ensure the safety of its employees and those of the firms it regulates, and any resurgence of the virus or emergence of new infectious disease outbreaks may lead to future inspectional delays.

Regulatory authorities outside the United States may adopt similar policy measures in response to emerging infectious disease outbreaks, epidemics, or pandemics.

If a prolonged government shutdown or slowdown occurs, or if global health concerns similar to COVID-19 prevent the FDA or other regulatory agencies from conducting their regular inspections, review, or other regulatory activities, 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 business.

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

Further, three decisions from the U.S.

For example, over the last several years, the U.S.

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

If a prolonged government shutdown occurs, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions and could impact our ability to access the public markets and obtain necessary capital in order to properly capitalize and continue our operations.

At the same time, disruptions at the FDA and other government agencies may result from public health events similar to the COVID-19 pandemic.

For example, during the pandemic, a number of companies announced receipt of complete response letters due to the FDA’s inability to complete required inspections for their applications.

In the event of a similar public health emergency in the future, the FDA may not be able to continue its current pace and review timelines could be extended.

Regulatory authorities outside the United States facing similar circumstances may adopt similar restrictions or other policy measures in response to a similar public health emergency and may also experience delays in their regulatory activities.

If any of the foregoing developments and others impact the ability of the FDA to provide us with guidance regarding our clinical development programs or delay the agency’s review and processing of our regulatory submissions, including INDs and NDAs/BLAs, our business would be negatively impacted.

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

Finally, three decisions from the U.S.

Supreme Court issued in July 2024 may lead to an increase in litigation against regulatory agencies that could create uncertainty and thus negatively impact our business.

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These cases may result in increased litigation by industry against regulatory agencies, including but not limited to the FDA and SEC, and may impact how such agencies choose to pursue enforcement and compliance actions.

However, the specific, lasting effects of these decisions, which may vary within different judicial districts and circuits, is unknown.

However, the specific, lasting effects of these decisions, which may vary within different judicial districts and circuits, are unknown.

We also cannot predict the extent to which FDA and SEC regulations, policies, and decisions may become subject to increasing legal challenges, delays, and changes.

We may be materially adversely affected by the imposition of duties and tariffs and other trade barriers and retaliatory countermeasures implemented by the U.S.

and other governments.

This past spring, the U.S.

government initiated a series of tariff-related actions against U.S.

trading partners.

On April 2, 2025, President Trump issued an executive order announcing a “baseline” reciprocal tariff of 10% on all U.S.

trading partners effective April 5, 2025, and higher individualized reciprocal tariffs on 57 countries (with certain product exemptions for pharmaceutical-related products, among others).

Previously, the Trump administration had imposed a 25% tariff on Canada and Mexico for goods not covered by the United States-Mexico-Canada Agreement (“USMCA”) and tariffs equaling 20% on China.

In response, several countries threatened retaliatory measures, including Canada and China, which then imposed retaliatory tariffs.

to when the country-specific reciprocal tariffs were scheduled to take effect, the Trump administration delayed the effective date of such tariffs for all countries except China to August 1, 2025.

Later, the United States and China reached a framework agreement that resulted in the suspension of the higher reciprocal tariffs on China until August 12, 2025.

Several countries including, among others, the European Union, Japan, and the United Kingdom, have reached deals with the U.S.

that include reduced tariff rates to varying levels and other measures.

The Trump administration has not definitively indicated the effective date for these deals.

As of July 31, 2025, the 10% baseline reciprocal tariff announced in April on all countries remains in effect, in addition to the other tariffs on China (which were a minimum of an additional 20% as of July 15, 2025) and on Canada and Mexico (which were 25% as of July 15, 2025 for goods that are not covered by the USMCA).

Sustained uncertainty about, or the further escalation of, trade and political tensions between the United States and China could result in a disadvantageous research and manufacturing environment in China, particularly for U.S.

based companies, including retaliatory restrictions that hinder or potentially inhibit our ability to rely on CMOs and other service providers that operate in China.

Separately, on April 16, 2025, the U.S.

Department of Commerce announced an investigation under Section 232 of the Trade Expansion Act of 1962 into imports of pharmaceuticals and pharmaceutical ingredients, including finished drug products, medical countermeasures, critical inputs such as active pharmaceutical ingredients, and key starting materials, and derivative products of those items.

The investigation will examine the impact of these imports on U.S.

national security culminating in a decision by the President whether to take action to remedy any identified threats, including by imposing additional tariffs.

The statute provides that the Commerce Department report must be completed within 270 days of initiation of the investigation and that the President must decide whether to act within 90 days of receiving the report.

As a result of changes in tariffs that have been announced and/or implemented, and the underlying uncertainty currently surrounding international trade, we could experience a negative impact to our costs of materials and production processes, and supply chain disruptions and delays as a result of any new tariff policies or trade restrictions.

If we are unable to obtain necessary raw materials or product components in sufficient quantity and in a timely manner due to disruptions in the global supply chain caused by macroeconomic events and conditions, the development, testing and clinical trials of our product candidates may be delayed or infeasible, and regulatory approval or commercial launch of any resulting product may be delayed or not obtained, which could significantly harm our business.

We cannot yet predict the effect of the recently imposed U.S.

tariffs on imports, or the extent to which other countries will impose quotas, duties, tariffs, taxes or other similar restrictions upon imports or exports in the future, nor can we predict future trade policy or the terms of any renegotiated trade agreements and their impact on our business.

Risks Related to Employee Matters and Managing Growth

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If we are unable to continue to attract and retain high quality personnel, our ability to develop and commercialize product candidates will be limited.

We undertook internal restructuring activities that could result in disruptions to our business or otherwise materially harm our results of operations or financial condition, and we may not realize the expected benefits from our restructuring and we may incur additional costs implementing it or other difficulties.

We undertook internal restructuring activities that could result in disruptions to our business or otherwise materially harm our results of operations or financial condition.

On October 29, 2024, we announced a restructuring plan and implemented a workforce reduction.

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Further, internal restructurings can require a significant amount of time and focus from management and other employees, which may divert attention from operations.

Additionally, our restructuring may result in unexpected expenses or liabilities and/or write-offs.

If our restructuring fails to achieve some or all of the expected benefits therefrom, our cash resources may not last as long as estimated and our business, results of operations and financial condition could be materially and adversely affected.

If foreign approvals are obtained, we will be subject to additional risks in conducting business in international markets.

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The volatility of pharmaceutical, biotechnology and other life sciences company stocks often does not relate to the operating performance of the companies represented by the stock.

In the past, securities class action litigation has often been initiated against companies following periods of volatility in their stock price.

This type of litigation could result in substantial costs and divert our management’s attention and resources, and could also require us to make substantial payments to satisfy judgments or to settle litigation.

An active trading market for our common stock may never develop or be sustained.

Although our common stock is listed on the Nasdaq GS, an active trading market for our shares may never develop or be sustained.

In the past, securities class action litigation has often been initiated against companies following periods of volatility in their stock price, such as the two putative class action lawsuits filed against us and certain of our current and former officers in 2022 and the stockholder derivative action filed against us and certain of our current and former officers in 2023 and 2024.

This type of litigation could result, and has in the past resulted, in substantial costs and divert our management’s attention and resources, and could also require us to make substantial payments to satisfy judgments or to settle litigation.

We have received a “Wells Notice” from the SEC contemplating a civil enforcement action, which could have a material adverse effect on our business, financial condition and results of operations, prospects, and/or our stock price.

On January 9, 2025, we responded to the “Wells Notice” from the Staff of the SEC, as further described in Part II, Item 1 “Legal Proceedings” of this Quarterly Report on Form 10-Q.

If the SEC were to authorize an action against us and/or any of the identified individuals, it may seek an injunction or cease-and-desist order against future violations of provisions of the federal securities laws, the imposition of civil monetary penalties, disgorgement or other equitable relief within the SEC’s authority, or any combination of the foregoing.

The SEC could also seek an order barring each identified individual from serving as an officer or director of a public company for a specified period of time.

We are cooperating with the SEC and have made a submission in response to the Wells Notice explaining why an enforcement action would not be appropriate.

We cannot predict the results of the Investigation and the Wells Notice process and any corresponding enforcement action against us and/or any of the identified individuals, and the costs, timing and other potential consequences of responding and complying therewith with any certainty.

The Investigation, and the Wells Notice process continues to be expensive and disruptive, and we are subject to indemnifying each of the individuals for their costs associated with the Wells Notice s .

Our insurance, to the extent maintained, may not cover all claims that may be asserted against us or the specified individuals, and we are unable to predict how long the Investigation will continue.

An unfavorable outcome may have an adverse impact on our

business, financial condition and results of operations, prospects, or our stock price.

Any proceeding could also negatively impact our reputation among our stakeholders.

An active trading market for our common stock may not be sustained.

Although our common stock is listed on the Nasdaq GS, there is a risk that an active trading market for our shares may not continue to develop or be sustained.

As a result, it may be difficult for our stockholders to sell their shares without depressing the market price for the shares, or at all.

Our shares of common stock could be delisted from the Nasdaq GS, which could result in, among other things, a decline in the price of our common stock and less liquidity for our stockholders.

In the past, we have failed to maintain certain continued listing requirements of the Nasdaq GS and could fail to maintain those requirements again in the future, which could negatively affect the market price of our common stock, our liquidity and our ability to raise capital.

Our potential failure to meet the continued listing requirements of Nasdaq GS in the future could result in a delisting of our common stock.

Our common stock is listed on the Nasdaq GS, which imposes, among other requirements, a minimum $1.00 per share bid price requirement for continued inclusion on the Nasdaq GS pursuant to Nasdaq Listing Rule 5450(a)(1) (the “Bid Price Requirement”).

The closing bid price for our common stock must remain at or above $1.00 per share to comply with the Bid Price Requirement for continued listing.

On February 25, 2025, we received a deficiency letter (the “Notice”) from the Listing Qualifications Department of Nasdaq, or the Nasdaq Staff, informing us that we were not in compliance with the continued listing requirements of the Nasdaq GS because the bid price for our common stock had closed below $1.00 per share for 30 consecutive trading days.

In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we have until August 25, 2025 (the “Compliance Date”), to regain compliance with the Bid Price Requirement.

According to the Notice, if at any time before August 25, 2025, the closing bid price of our common stock is at least $1.00 per share for a minimum of 10 consecutive business days, Nasdaq will provide written notification that we have achieved compliance with the Bid Price Requirement and our common stock will continue to be eligible for listing on the Nasdaq GS.

If we do not regain compliance with the Bid Price Requirement by the Compliance Date, we may be eligible for an additional 180 day compliance period under the following circumstances.

To qualify, we would need to transfer the listing of the common stock to the Nasdaq Capital Market, provided that we meet the continued listing requirement for the market value of publicly held shares and all other initial listing standards, with the exception of the Bid Price Requirement.

To effect such a transfer, we would also need to pay an application fee to Nasdaq and will need to provide written notice to Nasdaq of our intention to cure the deficiency during the additional compliance period by effecting a reverse stock split, if necessary.

As part of its review process, Nasdaq would make a determination of whether it believes we will be able to cure this deficiency.

If Nasdaq concludes that we will not be able to cure the deficiency, or if we do not cure the deficiency within such additional 180 day compliance period, Nasdaq will provide written notification to us that our common stock will be subject to delisting.

At that time, we may appeal Nasdaq’s delisting determination to a Nasdaq Listing Qualifications Panel (the “Panel”).

However, there can be no assurance that, if we receive a delisting notice and appeal the delisting determination by Nasdaq to the Panel, such appeal would be successful.

There can be no assurance that we will be able to keep the closing bid price above $1.00 per share for the required 10 consecutive trading days by August 25, 2025.

Further, if we are unable to maintain the closing bid price at $1.00 for the required period, there is no guarantee that we will regain compliance with the Bid Price Requirement.

There is no guarantee that a reverse stock split would be approved by the stockholders or that a reverse stock split would allow us to regain compliance with the Bid Price Requirement.

Any potential delisting of our common stock could have a material adverse effect on the market for, and liquidity and price of, our common stock and would adversely affect our ability to raise capital on terms acceptable to us, or at all.

Delisting from Nasdaq GS could also have other negative results, including, without limitation, the potential loss of confidence by investors, customers and employees and fewer business development opportunities.

Such a delisting from the Nasdaq GS would also make trading our common stock more difficult for stockholders to sell their shares in the public market.

We intend to actively monitor the closing bid price of our common stock and may, if appropriate, consider implementing available options to maintain compliance with the minimum bid price requirement under the Nasdaq Listing Rules.

We intend to actively monitor the closing bid price of our common stock and may, if appropriate, consider implementing available options to regain compliance with the minimum bid price requirement under the Nasdaq Listing Rules.

On February 25, 2025, we received a deficiency letter (the “Notice”) from the Listing Qualifications Department of the Nasdaq Stock Market, LLC (“Nasdaq”) notifying us that, for the preceding 30 consecutive trading days, the closing bid price of our common stock was below the Bid Price Requirement.

In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we had until August 25, 2025, to regain compliance with the Bid Price Requirement.

On June 12, 2025, we received a letter from Nasdaq notifying us that the closing bid price of our common stock was at least $1.00 per share for a minimum of 10 consecutive trading days and that we had regained compliance with the Bid Price Requirement.

Our common stock continues to be eligible for listing on the Nasdaq GS.

There can be no assurance that we will be able to keep the closing bid price above $1.00 per share.

If we fail to satisfy the continued listing requirements of Nasdaq GS, including the Bid Price Requirement, Nasdaq will provide us with another deficiency letter regarding the continued listing requirement.

If we are unable to regain compliance with the Nasdaq Listing Rules in the future, Nasdaq will take steps to delist our common stock.

Such a delisting from the Nasdaq GS could make trading our common stock more difficult for investors, potentially leading to declines in our share price and liquidity.

If our common stock is delisted by the Nasdaq GS, our common stock may be eligible to trade on the Nasdaq Capital Market or an over-the-counter quotation system, where an investor may find it more difficult to sell our stock or obtain accurate quotations as to the market value of our common stock.

We cannot assure you that our common stock, if delisted from the Nasdaq GS, will be listed on another national securities exchange or quoted on an over-the counter quotation system.

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our share price and trading volume could decline.

The trading market for our common stock relies in part on the research and reports that securities or industry analysts publish about us or our business.

If few analysts provide coverage of us, the trading price of our stock would likely decline.

If one or more of the analysts covering our business downgrade our stock or change their opinion of our stock, our share price would likely decline.

If only a few analysts provide coverage of us, the trading price of our stock would likely decline.

If one or more of the analysts covering our business downgrade our stock or change their opinion of our stock, our stock price would likely decline.

In addition, if one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline.

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If the disruption and volatility persist or heighten, it may impact our ability to raise sufficient additional capital on agreeable terms, if at all.

If we are unable to raise sufficient additional capital, our business, financial condition, stock price and results of operations could be adversely affected, and we will need to implement cost reduction strategies, which could include delaying, reducing or altogether terminating both internal and external costs related to our operations and research and development programs.

reducing or altogether terminating both internal and external costs related to our operations and research and development programs.

In addition, political developments impacting government spending and international trade, including changes in trade agreements, trade disputes, tariffs and investment restrictions, such as the ongoing trade dispute between the United States and China, may negatively impact markets and cause weaker macroeconomic conditions.

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However, for so long as we remain a “smaller reporting company” (“SRC”) and non-accelerated filer, we intend to take advantage of certain exemptions from various reporting requirements, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404.

Once we do not meet the definition of a SRC and non-accelerated filer or, if prior to such date, we opt to no longer take advantage of the applicable exemption, we will be required to include an opinion from our independent registered public accounting firm on the effectiveness of our internal controls over financial reporting.

Once we do not meet the definition of a SRC and non-accelerated filer or, if prior to such date, we opt to no longer take advantage of the applicable exemption, we will be required to include an attestation report from our independent registered public accounting firm on the effectiveness of our internal controls over financial reporting.

We could continue to qualify as a SRC and non-accelerated filer if the market value of our common stock held by non-affiliates is below $75.0 million (or $700.0 million if our annual revenue is less than $100.0 million) as of June 30 in any given year.

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Sales of a substantial number of shares of our common stock in the public market could occur at any time.

These sales, or the perception in the market that the holders of a large number of shares of common stock intend to sell shares, could reduce the market price of our common stock.

These sales, or the perception in the market that the holders of a large number of shares of common stock intend to sell shares, could reduce the market

price of our common stock.

Our outstanding shares of common stock may be freely sold in the public market at any time to the extent permitted by Rules 144 and 701 under the Securities Act, or to the extent that such shares have already been registered under the Securities Act and are held by non-affiliates of ours.

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• require the approval of the holders of at least 75% of the votes that all of our stockholders would be entitled to cast to amend or repeal certain provisions of our Amended and Restated Certificate of Incorporation, as amended, or Amended and Restated Bylaws.

Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law (the “DGCL”), which prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner.

Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law (the “DGCL”), which prohibits a person who owns 15% or more of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired 15% or more of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner.

This could discourage, delay or prevent someone from acquiring us or merging with us, whether or not it is desired by, or beneficial to, our stockholders.

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Provisions in our Amended and Restated Certificate of Incorporation, as amended, and other provisions of Delaware law could limit the price that investors are willing to pay in the future for shares of our common stock.

On January 9, 2025, we responded to the “Wells Notice” from the Staff of the SEC, as further described in Part II, Item 1 “Legal Proceedings” of this Quarterly Report on Form 10-Q.

The SEC could also seek an order barring each identified individual from serving as an officer or director of a public company for a specified period of time.

Mahadevia and Mr.

Shukla are cooperating with the SEC and have made a submission in response to the Wells Notice explaining why an enforcement action would not be appropriate.

The Investigation, and the Wells Notice process continues to be expensive and disruptive, and we are subject to indemnifying each of the individuals for their costs associated with the Wells Notices.

Our insurance, to the extent maintained, may not cover all claims that may be asserted against us or the specified individuals, and we are unable to predict how long the Investigation will continue.

An unfavorable outcome may have an adverse impact on our business, financial condition and results of operations, prospects, or our stock price.

Any proceeding could also negatively impact our reputation among our stakeholders.

We may become involved in securities litigation that could divert management’s attention and harm the company’s business, and insurance coverage may not be sufficient to cover all costs and damages.

In the past, securities litigation has often followed certain significant business activities, such as the announcement of a strategic restructuring, or the announcement of negative events, such as negative results from clinical trials.

We may become involved in securities litigation that could divert management’s attention and harm our business, and insurance coverage may not be sufficient to cover all costs and damages.

Securities litigation often follows certain significant business activities, such as the announcement of a strategic restructuring, or the announcement of negative events, such as negative results from clinical trials.

We may be exposed to such litigation even if no wrongdoing occurred.

We have in the past, and may in the future, become subject to securities litigation.

For example, two putative class action lawsuits were filed against us and certain of our current and former officers in 2022 and a stockholder derivative action was filed against us and certain of our current and former officers in 2023 and 2024.

Litigation is usually expensive and diverts management’s attention and resources, which could adversely affect our business and cash resources and our ability to execute on our partnership with GSK to eventually commercialize tebipenem HBr, or the ultimate value our stockholders receive in such partnership or other opportunity.

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

What changed 10-Q

Item 1. Legal Proceedings