What changed in this filing

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Item 1A. Risk Factors

2022-03-15 compared with 2021-03-16 · 143 added, 132 removed, 344 unchanged (44% of the section changed)

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• Our product candidates may have serious adverse, undesirable, or unacceptable side effects or other properties that may delay or prevent marketing approval.

• If we experience delays or difficulties enrolling patients in our clinical trials, our research and development efforts and business, financial condition, and results of operations could be materially adversely affected.

• The development and commercialization of biopharmaceutical products is subject to extensive regulation, and the regulatory approval processes of the FDA and comparable foreign authorities are lengthy, time-consuming, and inherently unpredictable.

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For the years ended December 31, 2021 and 2020, we reported a net loss of $45.0 million and $36.6 million, respectively.

As of December 31, 2020, we have an accumulated deficit of $72.1 million.

As of December 31, 2021, we had an accumulated deficit of $117.1 million.

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

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Additional funding may not be available on acceptable terms, or at all.

If we are unable to raise capital when needed, we could be forced to delay, reduce, or eliminate our product development programs, our efforts to access manufacturing capacity and our commercialization efforts.

Based on our current business plans, we believe that our existing cash and cash equivalents and short-term investments will enable us to fund our operating expenses through the end of 2024.

If we are unable to raise capital when needed, we could be forced to delay, reduce, or eliminate our product development programs and other operations.

Based on our current business plans, we estimate that our existing cash and cash equivalents and short-term investments will enable us to fund our operating expenses into the second half of 2024.

We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect, requiring us to seek additional funds sooner than planned, through public or private equity or debt financings or other sources, such as strategic collaborations.

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

Attempting to secure additional financing may divert our management from our day-to-day activities, which may adversely affect our ability to develop our product candidates.

Attempting to secure additional financing may divert our management from our day-to-day activities, which may materially and adversely affect the development of our product candidates.

Our ability to raise additional funds will depend on financial, economic, and market conditions and other factors, over which we may have no or limited control.

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In addition, the possibility of such issuance may cause the market price of our common stock to decline.

Debt financing, if available, may result in increased fixed payment obligations and involve agreements that include covenants limiting or restricting our ability to take certain actions, which could adversely impact our ability to conduct our business.

Debt financing, if available, may result in increased fixed payment obligations and involve agreements that include covenants limiting or restricting our ability to take certain actions, which could materially and adversely impact our ability to conduct our business.

Public health crises such as pandemics or other events could materially and adversely affect our business operations, workforce, product development activities, research and development activities, preclinical and clinical trials, and financial condition.

We expect that our program timelines may continue to be negatively affected by the COVID-19 pandemic, which could materially and adversely affect our business, financial condition, and results of operations.

We have experienced delays in our

clinical trials of SL-172154 and SL-279252 as a result of the ongoing pandemic, including delays with certain third-party vendors supporting these trials.

In addition, we have and may in the future experience additional disruptions, including:

We have experienced delays in our clinical trials of SL-172154 and SL-279252 as a result of the ongoing pandemic, including delays with certain third-party

vendors supporting these trials.

In addition, we have experienced and may in the future experience additional disruptions, including:

• delays or difficulties in initiating or expanding clinical trials, including delays or difficulties with clinical site initiation and recruiting clinical site investigators and clinical site staff;

• delays or difficulties in manufacturing sufficient quantities of materials of our product candidates for preclinical testing and clinical trials, including difficulty procuring sufficient quantities of raw materials required for our manufacturing processes;

• delays or difficulties in manufacturing sufficient quantities of materials of our product candidates for preclinical studies and clinical trials, including difficulty reserving manufacturing capacity with our third-party vendors and obtaining sufficient quantities of raw materials required for our manufacturing processes;

• increased rates of patients either declining to enroll in our clinical trials, missing treatments, or withdrawing from our clinical trials following enrollment as a result of contracting COVID-19 or other health conditions or being forced to quarantine;

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• interruption or delays in the operations of the FDA and comparable foreign regulatory agencies.

Further, due to public health guidance measures, we may implement a work-from-home policy for some or all of our employees, which negatively impact productivity, or disrupt, delay, or otherwise adversely impact our business.

For example, with our personnel working from home, some of our research activities that require our personnel to be in our laboratories may be delayed.

Further, due to public health guidance measures, we may need to implement policies that could negatively impact productivity, or disrupt, delay, or otherwise materially and adversely impact our business.

For example, we have in the past and may again in the future implement work-from-home requirements, and if our personnel are required to work from home, some of our research activities that require our personnel to be in our laboratories may be delayed.

The COVID-19 pandemic may also result in the loss of some of our employees and key personnel, either temporarily or permanently, which could negatively impact our operations.

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We do not yet know the full extent of potential delays or impacts on our business, our research, our clinical trials, healthcare systems, or the global economy as a whole.

Specifically, biologics manufacturing resources are being diverted to assist with COVID-19 vaccine production, which may result in delays in the manufacture of our drug candidates.

In addition, hospitals, healthcare works, and other medical care resources are being diverted to treat COVID-19 patients and administer COVID-19 vaccines, which may result in further delays to the progress of our clinical trials.

Specifically, biologics manufacturing resources are being diverted to assist with COVID-19 vaccine production, which may result in delays in the manufacture of our product candidates.

In addition, hospitals, healthcare workers, and other medical care resources are being diverted to treat COVID-19 patients and administer COVID-19 vaccines, which may result in further delays to the progress of our clinical trials.

We do not yet know the full impact that the COVID-19 pandemic may have on our business.

Any one or a combination of these events could have an adverse effect on our results of operations and financial condition.

Any one or a combination of these events could have a material and adverse effect on our results of operations and financial condition.

Our ARC and GADLEN platforms are based on novel technologies that are unproven and may not result in approvable or marketable products, which exposes us to unforeseen risks and makes it difficult for us to predict the time and cost of product development and potential for regulatory approval.

We may not be successful in our efforts to use and expand our technology platforms to develop and commercialize our product candidates, or may experience significant delays in doing so.

We are developing a pipeline of product candidates using our proprietary ARC and GADLEN platforms.

We have not received regulatory approval for any of our product candidates.

We may not be successful in our efforts to use and expand our technology platforms to develop and commercialize our current and future product candidates, or may experience significant delays in doing so.

A key element of our strategy is to use and expand our proprietary ARC and GADLEN platforms to build a pipeline of product candidates and progress these product candidates through preclinical and clinical development.

Although our research and development efforts to date have resulted in a pipeline of product candidates directed at various cancers and other indications, we have not received regulatory approval for any of our product candidates.

The scientific research that forms the basis of our efforts to develop product candidates with our proprietary platforms is still ongoing.

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We cannot be certain that our approach will lead to the development of approvable or marketable products, alone or in combination with other therapies.

To our knowledge, our dual-sided fusion protein product candidates have not previously been tested in humans and may have properties that negatively impact safety and efficacy, such as greater immunogenicity when compared to existing therapeutics.

To our knowledge, our dual-sided fusion protein product candidates have not previously been tested in humans and may have properties that negatively impact safety or efficacy, such as greater immunogenicity when compared to existing therapeutics.

Moreover, our product candidates may have unexpected biological interactions when administered in vivo.

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Finally, the FDA or other regulatory agencies may lack experience in evaluating the safety and efficacy of our product candidates, which could result in a longer than expected regulatory review process, increase our expected development costs, and delay or prevent commercialization of our product candidates.

Additionally, a key element of our strategy is to use and expand our technology platforms to build a pipeline of product candidates and progress these product candidates through preclinical and clinical development.

Although our research and development efforts to date have resulted in a pipeline of product candidates directed at various cancers and other indications, we may not be able to develop product candidates that are safe and effective.

The successful development of our product candidates will depend on several factors, including the successful and timely completion of clinical trials and preclinical studies, successful patient enrollment in clinical trials, receipt of regulatory approvals and marketing authorizations, commercially viable manufacturing processes, and our ability to demonstrate the safety and efficacy of our product candidates.

Our ability to generate revenues, which we do not expect will occur for at least the next several years, if ever, will depend heavily on the successful development and eventual commercialization of our product candidates, which may never occur.

We currently generate no revenue from sales of any products, and we may never be able to develop or commercialize a marketable product, which could result in significant harm to our financial position and adversely affect our share price.

Our future growth and ability to compete depends on retaining our key personnel and recruiting additional qualified personnel.

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If our recruitment and retention efforts are unsuccessful in the future, it may be difficult for us to implement our business strategy, which could have a material adverse effect on our business.

To manage our anticipated future growth, we must continue to implement and improve our managerial, operational, and financial systems;

and expand our facilities.

To manage our anticipated future growth, we must continue to implement and improve our managerial, operational, and financial systems, and expand our facilities.

Due to our limited financial resources and the limited experience of our management team in managing a company with such anticipated growth, we may not be able to effectively manage the expansion of our operations systems and facilities.

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Any inability to manage growth could delay the execution of our business plans or disrupt our operations.

In addition, we are a small company with limited resources, our business prospects are uncertain and our stock price is volatile.

For some or all of the foregoing reasons, we may not be able to recruit all of the management, technical and other personnel that we require or we may be unable to retain all of our existing personnel.

In such event, we may be required to limit our growth and expansion efforts and our business and financial results may suffer.

Risks Related to the Development and Clinical Testing of Our Product Candidates

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To obtain the requisite regulatory approvals to market and sell any product candidates, we must demonstrate through extensive preclinical studies and clinical trials that our investigational drug products are safe and effective for use in each targeted indication.

Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain.

Clinical testing is expensive and takes many years to complete, and its outcome is inherently uncertain.

The process of obtaining regulatory approval is expensive, often taking many years following the commencement of clinical trials, and can vary substantially based upon the type, complexity, and novelty of the product candidates involved, as well as the target indications, patient population, and regulatory agency.

Clinical trials that we conduct may not demonstrate the efficacy and safety necessary to obtain regulatory approval to market our product candidates.

As mentioned herein, our product candidates and technology platforms are novel and entail significant complexity.

Clinical trials that we conduct may not demonstrate the efficacy and safety that is necessary to obtain regulatory approval to market our product candidates.

If the results of our ongoing or future clinical trials are inconclusive with respect to the efficacy of our product candidates, if we do not meet the clinical endpoints with statistical and clinically meaningful significance, or if there are safety concerns associated with our product candidates, we may be delayed in obtaining marketing approval, if at all.

Additionally, any safety concerns observed in any one of our clinical trials could limit the prospects for regulatory approval of that product candidate or other product candidates in any indications.

Even if the trials are successfully completed, clinical data are often susceptible to varying interpretations and analyses, and we cannot guarantee that the FDA or comparable foreign regulatory authorities will interpret the results as we do, and more trials could be required before we submit our product candidates for approval.

Moreover, results acceptable to support approval in one jurisdiction may be deemed inadequate to support regulatory approval in other jurisdictions.

Even if regulatory approval is secured for a product candidate, the terms of such approval may limit the scope and use of the specific product candidate, which may also limit its commercial potential.

Even if our clinical trials are successfully completed, clinical data are often susceptible to varying interpretations and analyses, and we cannot guarantee that the FDA or comparable foreign regulatory authorities will interpret the results as we do, and more trials could be required before we are able to submit our product candidates for approval.

Moreover, results that are acceptable to support approval in one jurisdiction may be deemed inadequate to support regulatory approval in other jurisdictions.

Even if regulatory approval is secured for a product candidate, the terms of such approval may limit the scope and use of the specific product candidate in a manner that does not meet our expectations, which limitations may reduce its commercial potential.

Interim, topline or preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data becomes available and are subject to audit and verification procedures that could result in material changes in the final data.

From time to time, we may publicly disclose interim, topline or preliminary data from our preclinical studies and clinical trials, which is based on a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change following a more comprehensive review of the data related to the particular trial.

The interim, topline or preliminary results that we report may differ from future results of the same studies, or different conclusions or considerations

may qualify such results, once additional data have been received and fully evaluated.

The interim, topline or preliminary results that we report may differ from future results of the same studies, or different conclusions or considerations may qualify such results, once additional data have been received and fully evaluated.

As a result, interim, topline or preliminary data should be viewed with caution until the final data are available.

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Product candidates in clinical trials may fail to show the desired pharmacological properties or safety and efficacy traits despite having progressed through preclinical studies.

Additionally, some of our trials, including our ongoing Phase 1 trial evaluating SL-279252 and Phase 1 trials evaluating SL-172154, are open-label trials in which both the patient and investigator know whether the patient is receiving the investigational product candidate or an existing approved therapy.

Additionally, all of our trials, including our ongoing Phase 1 trial evaluating SL-279252 and Phase 1 trials evaluating SL-172154, are open-label trials in which both the patient and investigator know whether the patient is receiving the investigational product candidate or an existing approved therapy.

Open-label clinical trials are subject to various limitations that may exaggerate any therapeutic effect, as patients in open-label clinical trials are aware when they are receiving treatment.

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Such authorities may suspend or terminate a clinical trial due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical trial protocols, inspection of the clinical trial operations or trial site by the FDA or other regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from the product candidates, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial.

If we are required to conduct additional clinical trials or other testing of our product candidates beyond those that we currently contemplate, if we are unable to successfully complete clinical trials of our product candidates, if the results of these trials are not positive or are only moderately positive or if there are safety concerns, our business and results of operations may be adversely affected, and we may incur significant additional costs.

If we are required to conduct additional clinical trials or other testing of our product candidates beyond those that we currently contemplate, if we are unable to successfully complete clinical trials of our product candidates, if the results of these trials are not positive or are only moderately positive or if there are safety concerns, our business and results of operations may be materially and adversely affected, and we may incur significant additional costs.

Our product candidates may have serious adverse, undesirable, or unacceptable side effects or other properties that may delay or prevent marketing approval.

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Results of our clinical trials could reveal a high and unacceptable severity and prevalence of these or other side effects.

In such an event, our clinical trials could be suspended or terminated and the FDA or comparable foreign authorities could order us to cease further development of or deny approval of our product candidates for any or all targeted indications.

In such an event, our clinical trials could be suspended or terminated and the FDA or comparable foreign authorities could order us to cease further development or deny approval of our product candidates for any or all targeted indications.

The drug-related side effects could affect patient recruitment or the ability of enrolled patients to complete the clinical trial or result in potential product liability claims.

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With a limited number of patients and limited duration of exposure, rare and severe side effects of our product candidates may only be uncovered with a significantly larger number of patients exposed to the product candidate.

If we experience delays or difficulties enrolling patients in our clinical trials, our research and development efforts and business, financial condition, and results of operations could be materially adversely affected.

Successful and timely completion of clinical trials will require that we enroll a sufficient number of patient candidates.

Trials may be subject to delays for a variety of reasons, including as a result of patient enrollment taking longer than anticipated, patient withdrawal, or adverse events.

Trials have been and may continue to be subject to delays for a variety of reasons, including as a result of patient enrollment taking longer than anticipated, fewer than expected patients who meet enrollment eligibility criteria, patient withdrawal, or adverse events.

Our clinical trials compete with other clinical trials that are in the same therapeutic areas as our product candidates and/or that seek to enroll the same specific patient populations as our clinical trials, which reduces the number and types of patients available to us.

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Either of these prior treatment regimens may render our therapies less effective in clinical trials.

We may seek to mitigate these effects in the future through modification of enrollment eligibility criteria, including patients with tumor types that are not typically responsive to anti-PD-1 antibodies, or pursuing combination regimens early in clinical development to enable access to anti-PD-1 naïve patients.

We have sought and may continue to seek to mitigate these effects in the future through modification of enrollment eligibility criteria, including patients with tumor types that are not typically responsive to anti-PD-1 antibodies, or pursuing combination regimens early in clinical development to enable access to anti-PD-1 naïve patients.

Additionally, patients who have failed approved therapies will typically have more advanced cancer and a poorer long-term prognosis.

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The ability of the FDA to review and approve regulatory submissions can be affected by a variety of factors, including disruptions caused by government shutdowns and public health crises.

Such disruptions could significantly impact the ability of

the FDA or other regulatory authorities to timely review and process our regulatory submissions, which could have a material adverse effect on our business.

Such disruptions could significantly impact the ability of the FDA or other regulatory authorities to timely review and process our regulatory submissions, which could have a material adverse effect on our business.

Our research and development activities could be affected or delayed as a result of possible restrictions on animal testing.

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These laws may constrain the business or financial arrangements and relationships through which we conduct our operations, including how we research, market, sell and distribute our product candidates, if approved.

See “Business—Government Regulation—Other Healthcare Laws and Compliance Regulations.” for a more detailed description of the laws that may affect our ability to operate.

See “Business—Government Regulation—Other Healthcare Laws and Compliance Requirements.” for a more detailed description of the laws that may affect our ability to operate.

Ensuring that our internal operations and future business arrangements with third parties comply with applicable healthcare laws and regulations will involve substantial costs.

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Therefore, even if we are successful in defending against any such actions that may be brought against us, our business may be impaired.

Our employees, independent contractors, principal investigators, consultants, commercial partners, and vendors may engage in misconduct or other improper activities, including noncompliance with applicable laws and regulations.

We are exposed to the risk that our employees, independent contractors, consultants, commercial collaborators, principal investigators, CROs, suppliers and vendors acting for or on our behalf may engage in misconduct or other improper activities.

We have adopted a code of conduct, but it is not always possible to identify and deter misconduct by these parties, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations.

Our employees, independent contractors, principal investigators, CROs, consultants, commercial partners, suppliers, and vendors acting for us or on our behalf may engage in misconduct or other improper activities, including noncompliance with applicable laws and regulations.

We have adopted a code of conduct, but it is not always possible to identify and deter such misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations.

Risks Related to Commercialization of Our Product Candidates

We operate in highly competitive and rapidly changing industries, which may result in others discovering, developing or commercializing competing products before or more successfully than we do.

Our success is highly dependent on our ability to discover, develop and obtain marketing approval for new and innovative products on a cost-effective basis, and to develop them expeditiously, and market them successfully.

Our success is highly dependent on our ability to expeditiously discover, develop and obtain marketing approval for new and innovative products on a cost-effective basis and market them successfully.

With the proliferation of new oncology drugs and immuno-therapies, we expect to face increasingly intense competition as new technologies become available.

If we fail to stay at the forefront of technological change, we may be unable to compete effectively.

If we fail to stay at the forefront of technological innovation, we may be unable to compete effectively.

The market opportunities for our product candidates may be limited to those patients who are ineligible for or have failed prior treatments and may be small.

Cancer therapies are sometimes characterized by line of therapy (first, second, third, fourth, etc.), and the FDA often initially approves new therapies only for use in a particular line or lines of therapy.

By way of example, we may initially seek approval of our product candidates as a third line therapy for patients who have failed other approved treatments.

For example, we may initially seek approval of our product candidates as a third line therapy for patients who have failed other approved treatments.

We may subsequently seek approval as a second and first line therapy.

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Risks Related to Our Dependence on Third Parties

We rely on third parties to manufacture biological materials and our product candidates.

We rely on third parties to manufacture our product candidates and other biological materials.

The manufacture of our product candidates is complex.

Our third-party manufacturers may encounter difficulties in production, which could delay or entirely halt their ability to supply our product candidates for clinical trials or, if approved, for commercial sale.

Our product candidates are considered to be biologics, and the process of manufacturing biologics is complex and requires significant expertise and capital investment, including the development of advanced manufacturing techniques and process controls that are in compliance with current Good Manufacturing Practices (cGMP).

We rely on third-party contract manufacturers to produce sufficient quantities of cGMP materials required for clinical trials and intend to do so for the commercial manufacture of our products, if approved.

To date, we and our contract manufacturers have limited experience in the manufacturing of cGMP batches of our product candidates and have only produced small cGMP batches and have not finalized processes for commercial-scale cGMP manufacturing.

The nature of our dual-sided fusion proteins requires the development of novel manufacturing and purification processes, which could cause delays in the scale-up of manufacturing, as well as greater costs that could negatively impact the financial viability of our product candidates.

Moreover, the nature of our dual-sided fusion proteins creates challenges for the stability of the drug substance, which has the potential to cause delays in completing clinical studies and potentially limiting clinical trial site locations based on applicable regulations.

Reliance on third-party manufacturers entails risks to which we would not be subject if we manufactured product candidates ourselves, including reliance on the third-party to procure certain raw materials required for our manufacturing processes, to have manufacturing capacity sufficient to meet our needs, and to meet cGMP obligations, including regulatory and quality control and assurance requirements.

Any discovery of problems with a product, or a manufacturing or laboratory facility used by us or our strategic partners, may result in restrictions on the product or on the manufacturing or laboratory facility.

We may have little to no control regarding our third-party’s failure to obtain raw materials, lack of manufacturing capacity, failure to meet cGMP obligations, including quality requirements and product specifications, or the occurrence of third-party manufacturer incidents.

We also rely on third parties for biological materials that are used in our discovery and development programs.

These materials can be difficult to produce and occasionally have variability from the product specifications.

Any disruption in the supply of these biological materials consistent with our product specifications could materially adversely affect our business.

Although we have control processes and screening procedures, biological materials are susceptible to damage and contamination and may contain active pathogens.

We may also have lower yields in manufacturing batches, which can increase our costs and slow our development timelines.

Improper storage of these materials, by us or any third-party suppliers, may require us to destroy some of our biological raw materials or product candidates.

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

Even minor deviations from normal manufacturing processes could result in reduced production yields, product defects, and other supply disruptions.

The process of manufacturing our product candidates is complex and requires significant expertise and capital investment, including the development of advanced manufacturing techniques and process controls that are in compliance with current Good Manufacturing Practices, or cGMP.

We do not currently own or operate any GMP manufacturing facilities, nor do we have any in-house GMP manufacturing capabilities.

We rely on third-party contract manufacturers to produce sufficient quantities of materials required for the manufacture, transport, and storage of our product candidates for preclinical testing and clinical trials, in compliance with applicable regulatory and quality standards.

If we are unable to arrange for such third-party manufacturing sources, or fail to do so on commercially reasonable terms, we may not be able to successfully produce sufficient supply of product candidate or we may be delayed in doing so.

Such failure or substantial delay could materially and adversely harm our business.

We currently rely on a single-source supplier for bulk drug substances, or BDS.

The loss of our current supplier or its failure to supply us with BDS on a timely basis could cause our inability to develop and manufacture our product candidates, which could materially and adversely affect our business.

We are working toward the successful manufacture of satisfactory, validated BDS with additional suppliers.

The process for identifying additional BDS suppliers and successfully manufacturing BDS with those suppliers is lengthy and expensive, and there can be no assurance that any additional suppliers will be able to successfully produce satisfactory BDS.

If we are not able to successfully manufacture BDS with additional suppliers, our existing supplier may need to increase manufacturing capacity to meet anticipated demand, which could involve significant challenges.

Because we rely on a third-party manufacturer to provide our BDS, there can be no assurance that our supply of BDS will not be limited or interrupted, have satisfactory quality or product characteristics, or continue to be available at acceptable prices.

There can also be no assurance that our supplier will continue to meet regulatory requirements for cGMP manufacturing.

As is common in our industry, we have experienced enrollment delays in our clinical trials as a result of delays in receipt of BDS.

We have limited control over the process or timing of the acquisition or manufacture of materials by our supplier, and cannot ensure that it will deliver to us the BDS we order on time, or at all.

In the normal course of business, the process of manufacturing our product candidates has been negatively impacted by equipment failure, or improper installation or operation of equipment, vendor or operator error, inconsistency in yields, variability in product characteristics, and difficulties in scaling the production process.

Even minor deviations from normal manufacturing processes, which we have experienced, results in reduced production yields and other supply disruptions.

If microbial, viral, or other contaminations are discovered in our product candidates or in the manufacturing facilities in which our product candidates are made, this could lead to withdrawal of our products from the market, and such manufacturing facilities may need to be closed for an extended period of time to investigate and remedy the contamination.

Moreover, if the FDA determines that our third-party manufacturers are not in compliance with FDA laws and regulations, including those governing cGMPs, the FDA may deny BLA approval until the deficiencies are corrected or we replace the manufacturer in our BLA with a manufacturer that is in compliance.

Any adverse developments affecting manufacturing operations for our product candidates, if any are approved, may result in shipment delays, inventory shortages, lot failures, product withdrawals or recalls, or other interruptions in the supply of our products.

We may also have to take inventory write-offs and incur other charges and expenses for products that fail to meet specifications as a result of defects or storage over an extended period of time, undertake costly remediation efforts, or seek more costly manufacturing alternatives.

As part of our process development efforts, we also may make changes to our manufacturing processes at various points during development, for various reasons, such as controlling costs, achieving scale, decreasing processing time, increasing manufacturing success rate, or other reasons.

Such changes carry the risk that they will not achieve their intended objectives, and any of these changes could cause our product candidates to perform differently and

affect the results of our ongoing clinical trials or future clinical trials.

We are investing in an in-house process development pilot plant to reduce our reliance on third parties for process development efforts.

This undertaking is costly, and we have no guarantee that these efforts

will result in useful changes to our manufacturing processes.

Any changes to our manufacturing processes carry the risk that they will not achieve their intended objectives, and any of these changes could cause our product candidates to perform differently and affect the results of our ongoing clinical trials or future clinical trials.

In some circumstances, changes in the manufacturing process may require us to perform ex vivo comparability studies and to collect additional data from patients prior to undertaking more advanced clinical trials.

If we were unable to find an adequate replacement for our third-party manufacturers or another acceptable solution in time, our clinical trials could be delayed, or our commercial activities could be harmed.

In addition, we are subject to the risk that the products may have manufacturing defects that we have limited ability to prevent or control.

Any failure by our third-party manufacturers to meet product specifications, to comply with cGMP, or failure to scale up manufacturing processes, including any failure to deliver sufficient quantities of product candidates that meet required product specifications in a timely manner, could lead to a delay in the conduct of clinical trials, or failure to obtain, regulatory approval of any of our product candidates.

We rely, and expect to continue to rely, on third parties to conduct preclinical studies and clinical trials.

If these third parties do not successfully carry out their contractual duties, comply with applicable regulatory requirements, or meet expected deadlines, we may not be able to obtain regulatory approval for or commercialize our product candidates and our business could be substantially harmed.

We have relied upon and plan to continue to rely upon third parties, including independent clinical investigators and third-party CROs, to conduct certain preclinical studies and clinical trials and to monitor and manage data for our ongoing preclinical and clinical programs.

In addition, the FDA and other regulatory authorities require that our product candidates be manufactured according to cGMPs and similar foreign standards relating to methods, facilities, and controls used in the manufacturing, processing, packing, storage, and distribution of the product, which are intended to ensure that biological products are safe and that they consistently meet applicable requirements and specifications.

We are dependent on third parties for all of these activities, and we have limited ability to prevent or control the risk that such activities will not be in compliance with cGMP.

In addition, the storage and distribution of our product candidates for use in clinical trials is subject to extensive regulation by the FDA and other regulatory authorities.

Any failure by our third-party manufacturers to comply with cGMP or failure to scale up manufacturing processes, including any failure to deliver sufficient quantities of product candidates in a timely manner, could lead to a delay in our clinical trials and development efforts, or a delay in or failure to obtain regulatory approval of any of our product candidates.

Pharmaceutical manufacturers are also subject to extensive oversight by the FDA and comparable regulatory authorities in other jurisdictions, which include periodic unannounced and announced inspections by the FDA to assess compliance with cGMP requirements.

If an FDA inspection of a manufacturer’s facilities reveals conditions that the FDA determines not to comply with applicable regulatory requirements, the FDA may issue observations through a Notice of Inspectional Observations, commonly referred to as a “Form FDA 483” report.

If observations in the Form FDA 483 report are not addressed in a timely manner and to the FDA’s satisfaction, the FDA may issue a Warning Letter or proceed directly to other forms of enforcement action.

Any failure by one of our contract manufacturers to comply with cGMP or to provide adequate and timely corrective actions in response to deficiencies identified in a regulatory inspection could result in further enforcement action that could lead to a shortage of products and harm our business.

The failure of a manufacturer to address any concerns raised by the FDA or foreign regulators could also lead to plant shutdown or the delay or withholding of product approval by the FDA in additional indications, or by foreign regulators in any indication.

Certain countries may impose additional requirements on the manufacturing of drug products or drug substances, and on manufacturers, as part of the regulatory approval process for products in such countries.

The failure by our third-party manufacturers to satisfy such requirements could impact our ability to obtain or maintain approval of our products in such countries.

We rely, and expect to continue to rely, on third parties to conduct preclinical studies, nonclinical studies, and clinical trials.

We have relied, and plan to continue to rely, upon third parties, including independent clinical investigators and third-party CROs, to conduct certain preclinical studies, nonclinical studies, and clinical trials and to monitor, record, and manage data for our ongoing preclinical, nonclinical, and clinical programs.

We rely on these parties for execution of certain preclinical studies and clinical trials, and control only certain aspects of their activities.

As a result, we will have less direct control over the conduct, timing and completion of these preclinical studies and clinical trials and the management of data developed through these preclinical studies and clinical trials than would be the case if we were relying entirely upon our own staff.

If we or any of these third parties fail to comply with applicable GCP regulations, the clinical data generated in our clinical trials may be deemed unreliable and the FDA or comparable foreign regulatory authorities may require us to perform additional clinical trials before approving our marketing applications.

As a result, we will have less direct control over the conduct, timing and completion of these preclinical studies, nonclinical studies and clinical trials and the management of data developed through these preclinical studies and clinical trials than would be the case if we were relying entirely upon our own staff.

If we or any of these third parties fail to comply with applicable good laboratory practice, or GLP, or good clinical practice, or GCP, regulations, such data may be deemed unreliable and the FDA or comparable foreign regulatory authorities may require us to perform additional preclinical or nonclinical studies, or clinical trials before approving our marketing applications.

Moreover, our business may be implicated if any of these third parties violates federal or state fraud and abuse or false claims laws and regulations or healthcare privacy and security laws.

The investigators and CROs are not our employees and we will not be able to control, other than by contract, the amount of resources, including time, which they devote to our product candidates and clinical trials.

There is a limited number of third-party service providers that specialize or have the expertise required to achieve our business objectives.

The investigators and CROs are not our employees and we will not be able to control, other than by contract, the amount of resources, including time, that they devote to our product candidates and clinical trials.

There is a limited number of third-party service providers that specialize in or have the expertise required to achieve our business objectives.

If any of our relationships with these third parties terminate, we may not be able to enter into arrangements with alternative third parties or to do so in a timely manner or on commercially reasonable terms.

If the third parties do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our preclinical or clinical protocols, regulatory requirements or for other reasons, our preclinical studies or clinical trials may be extended, delayed, or terminated and we may not be able to obtain regulatory approval for or successfully commercialize our product candidates.

We may not realize the benefits of any existing or future collaborative or licensing arrangement, and if we fail to enter into new strategic relationships our business, financial condition, commercialization prospects, and results of operations may be materially adversely affected.

We have entered into, and may decide in the future to enter into new, collaborations with pharmaceutical or biopharmaceutical companies for the development and potential commercialization of certain of our product candidates.

If the third parties do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced or if the quality or accuracy of the preclinical, nonclinical, or clinical data they obtain is compromised due to the failure to adhere to our preclinical or clinical protocols, regulatory requirements or for other reasons, our preclinical studies, nonclinical studies, or clinical trials may be extended,

delayed, or terminated and we may not be able to obtain regulatory approval for or successfully commercialize our product candidates.

We have entered into, and may decide in the future to enter into, collaborations with pharmaceutical or biopharmaceutical companies for the development and potential commercialization of certain of our product candidates.

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

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We also may not be able to ensure that our collaboration partner adequately protects and does not misuse our intellectual property.

We and our collaboration partner may disagree regarding the development plan for product candidates on which we are collaborating and disputes could arise between the collaborators and us that result in the delay or termination of the research, development or commercialization of our product candidates or that result in costly litigation or arbitration that diverts management attention and resources.

We and our collaboration partner may disagree regarding the research plan or the development plan for product candidates on which we are collaborating and disputes could arise between the collaborators and us that result in the delay or termination of the research, development or commercialization of our product candidates or that result in costly litigation or arbitration that diverts management attention and resources.

If our strategic collaborations do not result in the successful development and commercialization of product candidates or if one of our collaborators fails to act under the collaboration agreement or terminates its agreement with us, we may not receive any future research funding or milestone or royalty payments under the collaboration.

In November 2021, we and Takeda mutually agreed to terminate, pursuant to a Termination Agreement, our collaboration agreement for SL-279252 and SL-115154, originally executed in 2017.

Under the terms of the Termination Agreement, we are not required to satisfy any remaining performance obligations, we will not make any payments to or receive any future milestone or royalty payments from Takeda, and all options to license and rights of first negotiation held by Takeda under the Collaboration Agreement were terminated.

In addition, if a collaboration is terminated, it may result in a need for additional capital to pursue further development or commercialization of the applicable product candidates.

If we license products or businesses, we may not be able to realize the benefit of such transactions if we are unable to successfully integrate them with our existing operations and company culture.

To date, we have relied on one single-source supplier for bulk drug substance, or BDS.

The loss of this supplier or its failure to supply us with BDS on a timely basis could cause our inability to develop our product candidates and adversely affect our business.

There can be no assurance that our supply of BDS would not be limited, interrupted, or would have satisfactory quality, or satisfactory product characteristics, or would continue to be available at acceptable prices.

There can also be no assurance that our supplier will continue to meet regulatory requirements for cGMP manufacturing.

As is common in our industry, we have experienced delays in receipt of BDS and that has resulted in moderate enrollment delays in our clinical trials.

We do not have any control over the process or timing of the acquisition or manufacture of materials by our supplier, and cannot ensure that it will deliver to us the BDS we order on time, or at all.

Moreover, to meet anticipated demand, our single-source supplier may need to increase manufacturing capacity, which could involve significant challenges.

The loss of BDS provided by this supplier could require us to change the design of our product candidate development process based on the functions, limitations, features, and specifications of the replacement.

In addition, the lead time needed to establish a relationship with a new supplier can be lengthy, and we may experience delays in meeting demand in the event we must switch to a new supplier.

The time and effort to qualify a new supplier could result in additional costs, diversion of resources, or reduced manufacturing yields, any of which would negatively impact our operating results.

If we are unable to obtain sufficient raw and intermediate materials on a timely basis or if we experience other manufacturing or supply difficulties, our business may be adversely affected.

We work closely with our suppliers to ensure the continuity of supply, but cannot guarantee these efforts will always be successful.

Further, while efforts are made to diversify our sources of raw and intermediate materials, in certain instances we acquire raw and intermediate materials from a sole supplier.

While we believe that alternative sources of supply exist where we rely on sole supplier relationships, there can be no assurance that we will be able to quickly establish additional or replacement sources for some materials.

If we license products or businesses, we may not be able to realize the benefit of such transactions if we are unable to successfully integrate such products or business into our existing operations and company culture.

If we are unable to obtain sufficient raw and intermediate materials on a timely basis or if we experience other manufacturing or supply difficulties, our business may be materially and adversely affected.

We work closely with our suppliers to ensure the continuity of supply of raw and intermediate materials but cannot guarantee these efforts will always be successful.

As has been commonly experienced during the COVID-19 pandemic, we have experienced raw and intermediate materials supply shortages, which has contributed to manufacturing delays and impacted the progress of our clinical trials.

Further, while efforts are made to diversify our sources of raw and intermediate materials, in certain instances we acquire raw and intermediate materials from a sole supplier, and there can be no assurance that we will be able to quickly establish additional or replacement sources for some materials.

A reduction or interruption in supply, and an inability to develop alternative sources for such supply, could adversely affect our ability to manufacture our product candidates in a timely or cost-effective manner and could delay completion of our clinical trials, product testing, and potential regulatory approval of our product candidates.

Risks Related to Intellectual Property and Information Technology

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Even if patents do successfully issue and even if such patents cover our product candidates and extend for a commercially relevant time, third parties may initiate invalidity, non-infringement, opposition, interference, re-examination, post-grant review, inter partes review, nullification, or derivation actions in court or before patent offices, or similar proceedings challenging the validity, inventorship, ownership, enforceability, or scope of such patents, which may result in the patent claims being narrowed, invalidated, or held unenforceable or circumvented.

Such challenges and potential negative results could materially adversely affect our business.

Such challenges and potential negative results could materially and adversely affect our business.

Furthermore, even where we have a valid and enforceable patent, we may not be able to exclude others from practicing our invention, such as where the other party can show that they used the invention in commerce before our filing date or the other party benefits from a compulsory license.

Additionally, some countries, including China and India, have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties;

and some countries limit the

enforceability of patents against government agencies or government contractors.

and some countries limit the enforceability of patents against government agencies or government contractors.

In these countries, the patent owner may have limited remedies, which could materially diminish the value of such patent.

Additionally, our competitors or other third parties may be able to evade our patent rights by developing new fusion proteins, antibodies, biosimilar antibodies, or alternative technologies or products in a non-infringing manner.

These risks may impact our ability to enjoy the protection we obtain, and may adversely impact our business.

These risks may impact our ability to enjoy the protection we obtain, and may materially and adversely impact our business.

Our commercial success depends, in part, on our ability to develop, manufacture, market, and sell our product candidates without infringing or otherwise violating the intellectual property and other proprietary rights of third parties.

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Furthermore, we may be subject to third-party claims asserting that our employees, consultants, contractors, collaborators, or advisors have misappropriated or wrongfully used or disseminated their intellectual property, or claiming ownership of what we regard as our own intellectual property.

These and related risks to defending against third-party claims may materially adversely affect our business.

These and related risks to defending against third-party claims may materially and adversely affect our business.

Our competitors in both the United States and abroad, many of which have substantially greater resources and have made substantial investments in patent portfolios and competing technologies, may have applied for or obtained or may in the future apply for and obtain, patents that will prevent, limit, or otherwise interfere with our ability to make, use, and sell our product candidates.

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Our determination of the expiration date of any patent in the United States or abroad that we consider relevant may be incorrect, which may negatively impact our ability to develop and market our product candidates.

We cannot provide any assurances that third-party patents do not exist which might be enforced against our current technology, including our platform technologies, product candidates and their respective methods of use, manufacture, and formulations thereof, and could result in either an injunction prohibiting our manufacture or future sales, or, with respect to our future sales, an obligation on our part to pay royalties and/or other forms of compensation to third parties, which could be significant.

We cannot provide any assurances that third-party patents do not exist that might be enforced against our current technology, including our platform technologies, product candidates and their respective methods of use, manufacture, and formulations thereof, and could result in either an injunction prohibiting our manufacture or future sales, or, with respect to our future sales, an obligation on our part to pay royalties and/or other forms of compensation to third parties, which could be significant.

We rely in part on in-licensed patents and other intellectual property rights to develop and commercialize our product candidates.

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Our competitive position may suffer if patents issued to third parties or other third-party intellectual property rights cover our methods or product candidates or elements thereof, our manufacture or uses relevant to our development plans, our product candidates or other attributes of our product candidates, or our ARC or GADLEN platform.

In such cases, we may not be in a position to develop or commercialize product candidates unless we successfully pursue litigation to nullify or invalidate the third-party intellectual property right concerned, which can be expensive and time-consuming, or have to enter into a license agreement with the intellectual property right holder, if available on commercially reasonable terms at all.

In such cases, we may not be in a

position to develop or commercialize product candidates unless we successfully pursue litigation to nullify or invalidate the third-party intellectual property right concerned, which can be expensive and time-consuming, or we may have to enter into a license agreement with the intellectual property right holder, which may not be available on commercially reasonable terms, if at all.

There is a substantial amount of intellectual property litigation in the biotechnology and pharmaceutical industries, and we may become party to, or threatened with, litigation or other adversarial proceedings regarding intellectual property rights with respect to our product candidates.

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Disputes may arise with our licensors of patents and other intellectual property rights.

We may yet need to obtain licenses from others for continued development and commercialization of our product candidates, and we may be unable to secure those licenses at all, or on commercially reasonable terms.

Should we be required to obtain licenses to any third-party

technology, including any such patents required to manufacture, use, or sell our product candidates, the growth of our business will likely depend in part on our ability to acquire, in-license, maintain, or use these proprietary rights.

We may yet need to obtain licenses from others for continued development and commercialization of our product candidates, and we may be unable to secure those licenses on commercially reasonable terms or at all.

Should we be required to obtain licenses to any third-party technology, including any such patents required to manufacture, use, or sell our product candidates, the growth of our business will likely depend in part on our ability to acquire, in-license, maintain, or use these proprietary rights.

The inability to obtain any third-party license required to develop or commercialize any of our product candidates could cause us to abandon any related efforts, which could seriously harm our business and operations.

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In addition, while we cannot determine currently the amount of the royalty obligations we would be required to pay on sales of future products, if any, the amounts may be significant.

The amount of our future royalty obligations will depend on the technology and intellectual property we use in products that we successfully develop and commercialize, if any.

The amount of our future royalty obligations will depend on the technology and intellectual property we use in products that we successfully develop and

commercialize, if any.

Therefore, even if we successfully develop and commercialize products, we may be unable to achieve or maintain profitability.

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• others may be able to make product candidates similar to our product candidates but that are not covered by the claims of the patents that we own or have exclusively licensed;

• the patents of third parties may have an adverse effect on our business;

• the patents of third parties may have a material and adverse effect on our business;

• we or any future strategic partners might not have been the first to conceive or reduce to practice the inventions covered by the issued patent or pending patent application that we own or have exclusively licensed;

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Should any of these events occur, they could significantly harm our business, results of operations, and prospects.

We may rely on trade secret and proprietary know-how, which can be difficult to trace and enforce and, if we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.

We rely on trade secret and proprietary know-how, which can be difficult to trace and enforce and, if we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.

Trade secrets and/or confidential know-how can be difficult to protect or maintain as confidential.

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Any sort of contested proceeding related to intellectual property, offensive or defensive, may cause us to incur significant expenses and would be likely to divert significant resources from our core business, including distracting our technical and management personnel from their normal responsibilities, and may impact our reputation.

There could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock.

There could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a material and adverse effect on the price of our common stock.

Such litigation or proceedings could substantially increase our operating losses and reduce our resources available for development activities.

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Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their substantially greater financial resources.

Infringement or related suits against us by others could result in damages awards against us, for example in the case of accusations of infringement of third-party intellectual property, or even injunction or other equitable relief precluding continued commercialization of our products.

Infringement or related suits against us by others could result in damages awards against us or injunction or other equitable relief precluding continued commercialization of our products.

Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace.

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Noncompliance events that could result in abandonment or lapse of a patent or patent application include failure to respond to official actions within prescribed time limits, non-payment of fees, and failure to properly legalize and submit formal documents within prescribed time limits.

If we fail to maintain the patents and patent applications covering our product candidates or if we otherwise allow our patents or patent applications to be abandoned or lapse, our competitors might be able to enter the market, which would have an adverse effect on our business.

Our information technology systems, or those used by our CROs or other contractors or consultants, may fail or suffer security breaches, which could adversely affect our business.

Our information technology systems, or those used by our CROs or other contractors or consultants, may fail or suffer security breaches, which could materially and adversely affect our business.

In the ordinary course of our business, we collect, store, and transmit large amounts of confidential information in digital form.

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While we continue to make investments to improve the protection of data and information technology, there can be no assurance that our efforts will prevent service interruptions or security breaches.

Although to our knowledge we have not experienced any material cybersecurity incident to date, if such an event were to occur, it could seriously harm our development programs and our business operations or subject us to litigation or regulatory actions taken by governmental authorities.

taken by governmental authorities.

See Part I, Item 1.

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Our stock price may be volatile or may decline regardless of our operating performance, resulting in substantial losses for investors.

The market price of our common stock may be highly volatile and may fluctuate substantially as a result of a variety of factors, some of which are related in complex ways.

The market price of our common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including the factors described in this “Risk Factors” section and elsewhere in this Annual Report on Form 10-K.

The market price of our common stock may be highly volatile and may fluctuate significantly as a result of a variety of factors, some of which are related in complex ways and many of which are beyond our control, including the factors described in this “Risk Factors” section and elsewhere in this Annual Report on Form 10-K.

In addition, the stock market in general, and The Nasdaq Stock Market, or Nasdaq, and biopharmaceutical companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies.

In particular, the trading prices for pharmaceutical, biopharmaceutical and biotechnology companies have been highly volatile as a result of the COVID-19 pandemic.

In addition, broad market and

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

In the past, securities class action litigation has often been instituted against companies following periods of volatility in the market price of a company’s securities.

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

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

Securities class action litigation is often been instituted against companies following periods of volatility in the market price of a company’s securities.

We are the subject of putative securities class action cases against the Company and certain of our officers and directors, alleging that defendants made false or misleading statements.

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

See the discussion of Legal Proceedings in Part I, Item 3 of this Form 10-K.

Our principal stockholders and management own a significant percentage of our stock and are able to exert significant control over matters subject to stockholder approval.

As of March 1, 2022, our executive officers, directors, holders of 5% or more of our capital stock and their respective affiliates beneficially owned approximately 41.6% of our outstanding voting stock.

Therefore, these stockholders have the ability to influence us through this ownership position.

These stockholders may be able to determine all matters requiring stockholder approval.

Therefore, these stockholders have the ability to influence us through this ownership position and may be able to determine all matters requiring stockholder approval.

For example, these stockholders may be able to control elections of directors, amendments of our organizational documents, or approval of any merger, sale of assets, or other major corporate transaction.

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Complying with these rules and regulations has increased and will continue to increase our legal and financial compliance costs, make some activities more difficult, time consuming or costly and increase demand on our systems and resources.

As a result, management’s attention may be diverted from other business concerns, which could adversely affect our business and operating results.

As a result, management’s attention may be diverted from other business concerns, which could materially and adversely affect our business and operating results.

We may also need to hire additional employees or engage outside consultants to comply with these requirements, which will increase our costs and expenses.

By disclosing information in this and in future filings required of a public company, our business and financial condition will become more visible, which we believe may result in threatened or actual litigation, including by competitors and other third parties.

By disclosing information in this and in future filings required of a public company, our business and financial condition will become more visible, which has resulted in and may in future result in threatened or actual litigation, including by competitors and other third parties.

If those claims are successful, our business could be seriously harmed.

Even if the claims do not result in litigation or are resolved in our favor, the time and resources needed to resolve them could divert our management’s resources and seriously harm our business.

See the discussion of Legal Proceedings in Part I, Item 3 of this Form 10-K.

Class-action litigation filed against us could harm our business, and insurance coverage may not be sufficient to cover all related costs and damages.

We face the threat of legal claims and regulatory matters involving various aspects of our business.

Given the volatility of the trading price of our common stock, and the increase in shareholder litigation generally, we face a risk of lawsuits alleging violations of the securities laws.

On January 31, 2022 and February 11, 2022, putative class action lawsuits were filed in the U.S.

District Court for the Eastern District of New York against the Company and certain of our officers and directors, in each case alleging that defendants made false or misleading statements regarding our collaboration agreement with Takeda.

The plaintiffs in both lawsuits seek a ruling that the case may proceed as a class action, and seeks unspecified damages, and attorneys’ fees, expert fees and costs.

Similar class-action lawsuits may be filed in future.

We and the individual defendants deny any allegations of wrongdoing and intend to vigorously defend against the claims asserted in these lawsuits.

However, litigation is inherently uncertain, and adverse rulings may occur, including awards of monetary damages, that may have a material adverse impact on our business.

These lawsuits may also divert management’s attention and resources, and may require us to incur substantial costs, some of which will not be covered by insurance.

See the discussion of Legal Proceedings in Part I, Item 3 of this Form 10-K.

If we fail to maintain proper and effective internal controls over financial reporting our ability to produce accurate and timely financial statements could be impaired.

Our management will be required to report upon the effectiveness of our internal control over financial reporting beginning with the annual report for our fiscal year ending December 31, 2021.

We are required to report upon the effectiveness of our internal control over financial reporting.

To comply with the requirements of being a reporting company under the Securities Exchange Act of 1934, as amended, or the Exchange Act, we have implemented and will continue to implement additional financial and management controls, reporting systems and procedures and we have hired and will continue to hire additional accounting and finance staff.

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For example, our directors or executive officers could inadvertently fail to disclose a new relationship or arrangement causing us to fail to make a required related party transaction disclosure.

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

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

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

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

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It also provides that the federal district courts of the United States will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act but that the forum selection provision will not apply to claims brought to enforce a duty or liability created by the Exchange Act.

These exclusive forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes, which may discourage lawsuits.

These exclusive forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for

disputes, which may discourage lawsuits.

There is uncertainty as to whether a court would enforce such provisions.

If a court were to find these types of provisions to be inapplicable or unenforceable, and if a court were to find the exclusive forum provision in our amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could materially adversely affect our business.

Our ability to use our net operating loss carryforwards and other tax attributes may be limited.

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federal and state net operating loss, or NOL, carryforwards of $97.4 million and $0.2 million, respectively, which may be available to offset future taxable income.

As of December 31, 2020, we also had federal tax credits of $4.5 million, which may be used to offset future tax liabilities.

As of December 31, 2021, we also had gross federal tax credits of $7.6 million, which may be used to offset future tax liabilities.

These NOLs and tax credit carryforwards will begin to expire in 2036.

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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-K

Item 1A. Risk Factors