What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-02-29 compared with 2023-02-23 · 68 added, 71 removed, 191 unchanged (42% of the section changed)

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We have created a novel approach to immune modulation by designing biologics with structural characteristics that may not be achievable by existing therapeutic modalities, including monoclonal or bispecific antibodies.

Compounds derived from our proprietary Agonist Redirected Checkpoint, or ARC ® , platform simultaneously inhibit checkpoint molecules and activate costimulatory molecules with a single therapeutic.

Our ARC® platform was designed to simultaneously inhibit checkpoint molecules and activate costimulatory molecules with a single therapeutic as a potential treatment for cancer.

We also have at varying stages of preclinical development, dual-sided fusion proteins, distinct from our ARC platform, that have therapeutic potential in autoimmune and inflammatory diseases, among other therapeutic areas.

Our lead product candidate, SL-172154, is designed to simultaneously inhibit the CD47/SIRPα macrophage checkpoint interaction and activate the CD40 costimulatory receptor to induce an antitumor immune response.

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We are pursuing a broad clinical development strategy in both solid and hematologic tumors, with multiple ongoing clinical trials.

SL-172154 is in an ongoing Phase 1 clinical trial for the treatment of patients with ovarian cancer.

W e are also evaluating SL-172154 in an ongoing Phase 1 clinical trial for the treatment of patients with certa in hematologic malignancies, including acute myeloid leukemia, or AML, and higher-risk myelodysplastic syndromes, or HR-MDS.

SL-172154 is in an ongoing Phase 1B clinical trial for the treatment of patients with ovarian cancer.

W e are also evaluating SL-172154 in an ongoing Phase 1B clinical trial for the treatment of patients with certa in hematologic malignancies, including AML and HR-MDS.

We believe our clinical development plan may provide both first-in-class and best-in-class development opportunities for SL-172154.

We believe that data shared to date in human cancer patients have demonstrated that the unique protein engineering and physical properties of the ARC platform have led to a differentiated profile in terms of safety and on-target immune activation, demonstrated by unique pharmacodynamic findings, as compared to monoclonal or bispecific antibodies.

In addition to our clinical-stage ARC product candidate, we possess a deep pipeline of potential product candidates in preclinical development.

As an example, SL-9258, an ARC compound in preclinical development, is designed to inhibit the TIGIT/PVR checkpoint interaction while simultaneously activating HVEM and LTβ costimulatory receptors.

Furthermore, our expertise in dual-sided fusion proteins has led to the development of a second novel platform technology.

We call this our gamma delta T cell engager, or GADLEN ™ , platform.

The most advanced compounds from this platform are a CD20-directed GADLEN and a B7-H3-directed GADLEN.

Longer-term, we are pursuing additional disease areas, including autoimmune diseases, where our dual-sided fusion protein platforms may provide advantages over current treatment modalities.

We believe that data shared to date in human cancer patients demonstrate that the unique protein engineering and physical properties of the ARC platform have led to a differentiated profile in terms of safety and on-target immune activation, demonstrated by unique pharmacodynamic findings, as compared to monoclonal or bispecific antibodies.

Further, clinical data generated with our ARC platform has guided our preclinical research efforts to further expand our pipeline, and we are advancing certain potential product candidates through preclinical development.

We expect to nominate one or more additional product candidates to our clinical pipeline in the future, potentially for indications outside of oncology, by selecting product candidates where there is an expectation of monotherapy efficacy and where our scientific and protein engineering expertise has led to a product candidate with advantages over current treatment modalities.

In February 2024, we entered into the Ono Agreement in which we will lead research and preclinical development of certain compounds selected by Ono from our pipeline of bifunctional fusion proteins to a pair of prespecified targets for potential treatment of autoimmune and inflammatory diseases.

Overview of Operations

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We do not have any products approved for sale, and we have not generated any revenue from product sales.

We have funded our operations as of the filing date of this Annual Report on Form 10-K through the net proceeds from our IPO of approximately $213.5 million, the sale of redeemable convertible preferred stock for approximately $152.9 million, the issuance of convertible notes for approximately $10.5 million and payments received pursuant to our collaboration agreements for approximately $82.7 million.

We have funded our operations as of the filing date of this Annual Report on Form 10-K through the net proceeds from the sale of our common stock and pre-funded warrants for approximately $261.1 million, the sale of redeemable convertible preferred stock for approximately $152.9 million, the issuance of convertible notes for approximately $10.5 million and payments received pursuant to our collaboration agreements for approximately $84.2 million.

For the years ended December 31, 2023 and 2022, our net loss was $87.3 million and $101.9 million, respectively.

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• continue to advance the nonclinical and clinical development of our clinical-stage product candidate, SL-172154;

• initiate nonclinical studies and clinical trials for additional product candidates that we may identify in the future;

• manufacture sufficient quantities of bulk drug substance and drug product to support our ongoing and planned nonclinical studies and clinical trials;

• continue our process development efforts for our current and future product candidates;

• continue our process development efforts for our current and future product candidates, including scale up of our Phase 3 and commercial manufacturing process;

• initiate nonclinical studies and clinical trials for additional product candidates that we may identify in the future;

• maintain our operational, financial, and management systems;

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There can be no assurance that such funding may be available to us on acceptable terms, or at all, or that we will be able to commercialize our product candidates.

In addition, we may not be profitable even if we commercialize any of our product candidates.

COVID-19 Pandemic

As a result of the COVID-19 pandemic, we have experienced, and expect to continue to experience, delays in our clinical trials.

Our manufacturing operations have also been impacted, including delays with certain third-party manufacturers and difficulties in obtaining raw materials needed to manufacture material for our clinical trials.

Additionally, we have experienced, and expect to continue to experience, delays in enrolling patients, missed treatments for enrolled patients, and performance delays from certain third-party vendors supporting our clinical trials, although the significance of any future delays is difficult to predict.

Certain of our research and development activities, including the conduct of nonclinical studies, have been delayed and may be further delayed due to the impact of the COVID-19 pandemic.

The COVID-19 pandemic or local outbreaks associated with the COVID-19 pandemic could result in difficulty manufacturing our product candidates, securing clinical trial site locations, CROs;

and/or trial monitors and other critical vendors and consultants supporting our clinical trials.

In addition, outbreaks or the perception of an outbreak near a clinical trial site location could impact our ability to enroll patients or to complete all scheduled physician visits for currently enrolled patients.

These situations, or others associated with COVID-19

pandemic, could cause delays in our clinical trial plans and could increase expected costs, all of which could have a material and adverse effect on our business and its financial condition.

At the current time, we are unable to quantify the potential effects of the COVID-19 pandemic on our future operations.

In addition, we may not be profitable even if we commercialize one or more of our product candidates.

Global Economic Considerations

In addition, the global macroeconomic environment is uncertain, and could be negatively affected by, among other things, increased U.S.

trade tariffs and trade disputes with other countries, instability in the global capital and credit markets, supply chain weaknesses, and instability in the geopolitical environment, including as a result of the Russian invasion of Ukraine and other political tensions, and lingering effects of the COVID-19 pandemic.

Such challenges have caused, and may continue to cause, recession fears, rising interest rates, foreign exchange volatility and inflationary pressures.

The global macroeconomic environment is uncertain, and could be negatively affected by, among other things, increased U.S.

trade tariffs and trade disputes with other countries, instability in the global capital and credit markets, supply chain weaknesses, financial institution instability, instability in the geopolitical environment, and lingering effects of the COVID-19 pandemic.

Such challenges have caused, and may continue to cause, recession fears, high interest rates, foreign exchange volatility and inflationary pressures.

At this time, we are unable to quantify the potential effects of this economic instability on our future operations.

Collaboration Agreement - Takeda

On August 8, 2017, we entered into the Collaboration Agreement with Takeda.

The Collaboration Agreement was mutually terminated pursuant to the Termination Agreement.

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.

Components of our Results of Operation

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We have no products approved for commercial sale, and we have not generated any revenue from commercial product sales.

Our total revenue to date has been generated from our Collaboration Agreement with Takeda, and a research agreement with another third-party pharmaceutical company that was initiated and completed in 2022.

Additionally, we have entered into the Clinical Trial Collaboration Agreement with ImmunoGen, under which we expect to recognize up to $2.0 million of revenue, beginning in 2023 and continuing into or through 2024.

Our total revenue to date has been generated from our collaboration and research agreements with various third parties,

Revenue recognized in 2023 was a result of a clinical trial collaboration agreement with ImmunoGen in which activities began in 2023 and will continue in 2024.

We expect to recognize a total of $2 million of revenue under this collaboration agreement.

In February 2024, ImmunoGen was acquired by AbbVie.

In February 2024, we entered into the Ono Agreement in which we will lead research and preclinical development of certain compounds selected from our pipeline of bifunctional fusion proteins directed to a pair of prespecified targets for potential treatment of autoimmune and inflammatory diseases.

We are primarily responsible for carrying out the research activities in accordance with a mutually agreed upon research plan, which we expect to start in 2024.

In connection with entry into the Ono Agreement, we are entitled to receive up to $9 million consisting of an initial upfront payment and additional payments upon the achievement of certain specified milestones in the Research Plan.

Additionally, Ono has agreed to pay for all of our costs and expenses incurred in conducting the Research Plan.

We expect to begin recognizing revenue associated with the conduct of the Research Plan in 2024.

In the event Ono exercises its Option to further development their specified Development Compounds, we are entitled to receive licensing and development, regulatory and commercial milestone payments of up to $217.5 million, in the aggregate, and a tiered royalty on sales upon commercialization.

We continue to explore other potential collaborations and expect that collaboration revenue we may generate, if any, will fluctuate from period to period.

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These expenses include:

• expenses incurred to conduct our nonclinical studies and clinical trials;

• expenses incurred to conduct our clinical trials, including SL-172154 and any potential product candidates we may advance in the future;

• costs of manufacturing nonclinical study and clinical trial materials, including the costs of raw materials required for manufacturing;

• process development activities to optimize manufacturing processes;

• process development activities to optimize manufacturing processes, including the development and validation of Phase 3 and commercial manufacturing processes and analytical methods;

• expenses incurred to conduct our nonclinical studies, including research conducted on our wholly-owned compounds and those subject to the Ono Agreement;

• employee-related expenses, including salaries, benefits, and stock-based compensation;

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Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials, including increased demand for clinical trial material.

We expect to incur significant research and development expenses throughout 2023.

While it is difficult for us to predict with certainty, we expect increasing year-over-year operating expense over the next several years in the event that we conduct additional nonclinical studies and clinical trials (beyond our currently planned clinical trials), including later-stage clinical trials, for our current and future product candidates, pursue regulatory approval of our product candidates, or advance our preclinical pipeline.

We expect to incur significant research and development expenses throughout 2024, including expenses associated with the conduct of the Research Plan pursuant to the Ono Agreement.

While it is difficult for us to predict with certainty, we expect increasing year-over-year operating expense over the next several years in the event that we conduct additional nonclinical studies and clinical trials, which may include a material expansion of our existing clinical trials or the initiation of planned, later-stage clinical trials for our current and/or future product candidates, pursue regulatory approval of our product candidates, or advance additional product candidates from our preclinical pipeline.

The process of conducting the necessary nonclinical and clinical research to obtain regulatory approval is costly and time consuming.

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• the safety and efficacy of our product candidates;

• early clinical data for our product candidates;

• clinical data for our product candidates;

• investment in our clinical programs;

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These increases may include increased costs related to the retention of personnel and fees paid to outside consultants, lawyers, and accountants, among other expenses.

Additionally, we anticipate that we will continue to incur significant costs associated with being a public company, including expenses related to services associated with maintaining compliance with the requirements of Nasdaq and the Securities and Exchange Commission, or SEC, insurance, and investor relations costs.

If any of our current or future product candidates advances to later-stage clinical development or obtains regulatory approval, we expect that we would incur significantly increased expenses associated with building the appropriate general and administrative support for our increased research and development activities, or building a sales and marketing team, respectively.

Other income consists of interest earned on our cash, cash equivalents and investments, which consists of amounts held in a money market fund and at various times in government and corporate obligations as well as investment fees and realized gain or losses on investments (if any).

Since our inception, we have not recorded any income tax benefits for the net operating losses, or NOLs, we have incurred or for our research and development tax credits, as we believe, based upon the weight of available evidence, that it is more likely than not that all of our NOLs and tax credits will not be realized.

Since our inception, we have not recorded any income tax benefits for the NOLs we have incurred or for our research and development tax credits, as we believe, based upon the weight of available evidence, that it is more likely than not that all of our NOLs and tax credits will not be realized.

Our NOLs and tax credit carryforwards will begin to expire in 2024.

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Collaboration Revenue

Collaboration revenue decreased by $29.4 million, or (97.8)%, to $0.7 million for the year ended December 31, 2022 from $30.0 million for the year ended December 31, 2021.

This decrease is primarily attributable to the cessation of work with Takeda under the Collaboration Agreement, which was mutually terminated in the fourth quarter of 2021 and all remaining revenue was recognized at that time.

In the second quarter of 2022, we executed a collaboration agreement with another third party.

We completed the work in the fourth quarter of 2022 and have recognized all of the revenue associated with that agreement.

Collaboration revenue increased by $1.0 million, or 154.1%, to $1.7 million for the year ended December 31, 2023 from $0.7 million for the year ended December 31, 2022.

The increase in collaboration revenue was primarily attributable to an increase in clinical activity associated with our clinical trial collaboration agreement with ImmunoGen.

In the second quarter of 2022, we executed a collaboration agreement with another third party and completed the work in the fourth quarter of 2022 and have recognized all of the revenue associated with that agreement.

Research and Development Expense

Research and development expenses increased by $26.3 million, or 46.6%, to $82.9 million for the year ended December 31, 2022 from $56.6 million for the year ended December 31, 2021.

The increase was primarily due to an increase of $8.4 million in manufacturing costs related to the manufacture of clinical trial material for our ongoing clinical trials, an increase of $7.5 million as a result of an increase in headcount to expand our in-house research, manufacturing and clinical development capabilities, an increase of $4.3 million for facility and equipment expenses related to our increased lab space and related research activities, an increase of $3.2 million in clinical trial costs and an increase of $3.2 million in other operating expenses primarily related to fixed asset depreciation and impairment losses, offset by a decrease of $1.2 million in pharmacology costs.

Research and development expenses decreased by $8.6 million, or 10.4%, to $74.3 million for the year ended December 31, 2023 from $82.9 million for the year ended December 31, 2022.

The decrease in research and development expense was primarily a result of a decrease in the cGMP manufacture of clinical trial material of $13.8 million and a decrease in materials consumed in our lab of $1.2 million, offset primarily by increases in costs associated with the conduct of clinical trials for SL-172154 of $4.2 million, depreciation of fixed assets of $1.0 million and facility costs of $0.8 million related to the expansion of our in-house manufacturing and development capabilities.

General and Administrative Expense

General and administrative expenses increased by $2.4 million, or 12.6%, to $21.1 million for the year ended December 31, 2022 from $18.7 million for the year ended December 31, 2021.

The increase was primarily driven by a litigation settlement of $1.4 million and an increase of $0.6 million of costs associated with being a public company.

General and administrative expenses decreased by $1.8 million, or 8.4%, to $19.3 million for the year ended December 31, 2023 from $21.1 million for the year ended December 31, 2022.

The decrease in general and administrative expenses was primarily a result of recognizing the litigation settlement of $1.4 million in 2022 and a $1.0 million decrease in company insurance costs, primarily related to directors and officers insurance, offset by an increase in stock-based compensation of $0.6 million.

Liquidity and Capital Resources

Since our inception, our primary sources of liquidity have been generated by sales of our preferred stock and common stock, including our IPO, and collaboration agreements.

Since our inception, our primary sources of liquidity have been generated by sales of our common stock, pre-funded warrants, convertible preferred stock, convertible notes, and collaboration agreements.

As of December 31, 2023, we had an accumulated deficit of $306.3 million and $130.6 million of cash and cash equivalents and investments.

In July 2022, we entered into a sales agreement, or the Sales Agreement, with SVB Securities LLC, or the Sales Agent, pursuant to which we may offer and sell up to $75.0 million of shares of our common stock from time to time in the ATM Facility.

On December 26, 2023, we sold 4,651,163 shares of common stock through an underwritten public offering, and concurrently completed a private placement of 3,100,823 pre-funded warrants for net proceeds of $47.6 million.

The purchase price per share of common stock was $6.45, and the purchase price per pre-funded warrant was $6.4499 which was the purchase price per share of common stock, minus the $0.0001 per share exercise price of such pre-funded warrant.

Each pre-funded warrant may be exercised for one share of common stock, is immediately exercisable, does not expire, and is subject to

a beneficial ownership limitation of 9.99% post-exercise.

As of December 31, 2023, no pre-funded warrants have been exercised, and 3,100,823 pre-funded warrants remain outstanding.

In July 2022, we entered into a sales agreement (the “Sales Agreement”), with SVB Securities LLC (the “Sales Agent”), pursuant to which we may offer and sell up to $75.0 million of shares of our common stock from time to time (the “ATM Facility”).

The Sales Agent is generally entitled to compensation at a commission equal to 3.0% of the aggregate gross sales price per share sold under the Sales Agreement.

As of December 31, 2022, there were no sales pursuant to the ATM Facility.

As of February 29, 2024 there were no sales pursuant to the ATM Facility.

Capital Resources and Funding Requirements

Our primary uses of cash and cash equivalents and investments are to fund our operations, which consist primarily of research and development expenditures related to our programs, product development costs, research expenses, administrative support, capital expenditures related to bringing in-house certain process development and manufacturing capabilities, and working capital requirements.

We anticipate incurring additional net losses and negative cash flows from operations in the near future until such time, if ever, that we can generate significant sales of our product candidates currently in development.

We anticipate continuing to incur additional net losses and negative cash flows from operations in the near future until such time, if ever, that we can generate significant sales of our product candidates currently in development.

Our future funding requirements will depend on many factors, including:

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Additionally, if additional funding is not secured when required, we may need to delay or curtail our operations until such funding is received, which would have a material and adverse impact on our business prospects and results of operations.

We believe that our cash and cash equivalents and investments as of December 31, 2022 are sufficient to fund projected operations into the second half of 2024.

We believe that our cash and cash equivalents and investments as of December 31, 2023 are sufficient to fund projected operations into 2026.

The following table shows a summary of our cash flows for the periods indicated:

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Net cash used in operating activities $ (81,228) $ (94,498)

Net cash provided by (used in) investing activities 49,438 (10,443)

Net cash provided by investing activities

110,859 49,438

Net cash provided by financing activities 48,616 171

Net decrease in cash and cash equivalents $ (44,889) $ (65,630)

Net increase (decrease) in cash and cash equivalents

$ 78,247 $ (44,889)

Net Cash Used in Operating Activities

During the year ended December 31, 2022, net cash used in operating activities was $94.5 million and primarily reflected by our net loss of $101.9 million and a $4.5 million net change in our operating assets and liabilities, offset by noncash charges of $6.5 million in stock-based compensation, $4.7 million in depreciation expense, amortization of investments and non-cash operating lease expense and $0.7 million in losses on sale of assets.

We expect to continue to use cash in our operating activities

as we conduct our clinical trials and nonclinical studies, incur costs of manufacturing clinical trial and nonclinical study materials and continue process development activities to optimize our manufacturing processes.

During the year ended December 31, 2021, net cash used in operating activities was $57.1 million and primarily reflected by our net loss of $45.0 million and a $22.0 million net change in our operating assets and liabilities, offset by noncash charges of $5.5 million in stock-based compensation and $4.4 million in depreciation expense and amortization of investments.

Net Cash Provided by (Used in) Investing Activities

During the year ended December 31, 2022, net cash provided by investing activities was $49.4 million of which $60.9 million represents the net change in investments and $11.5 million represents purchases of property and equipment, net of sales, primarily attributable to our continued efforts to bring certain process development, manufacturing and laboratory capabilities in-house.

During the year ended December 31, 2021, net cash used in investing activities was $10.4 million of which $7.9 million was used to purchase property and equipment, primarily attributable to our continued efforts to bring certain process development, manufacturing and laboratory capabilities in-house and $2.5 million represents the net change in investments.

During the year ended December 31, 2023, net cash used in operating activities was $81.2 million and primarily reflected our net loss of $87.3 million and $4.1 million net change in our operating assets and liabilities, and was offset by noncash charges of $6.9 million in stock-based compensation, $2.9 million in depreciation expense, amortization of investments and non-cash operating lease expense and $0.3 million in losses on sale of assets.

We expect to continue to use cash in our operating activities as we conduct our clinical trials and nonclinical studies, incur costs of manufacturing clinical trial and nonclinical study materials and continue process development activities to optimize our manufacturing processes.

During the year ended December 31, 2022, net cash used in operating activities was $94.5 million and primarily reflected by our net loss of $101.9 million and a $4.5 million net change in our operating assets and liabilities, and was offset by noncash charges of $6.5 million in stock-based compensation, $4.7 million in depreciation expense, amortization of investments and non-cash operating lease expense, and $0.7 million in losses on sale of assets.

Net Cash Provided by Investing Activities

During the year ended December 31, 2023, net cash provided by investing activities was $110.9 million due to a $111.3 million increase in cash due to maturities of investments net of purchases, offset by $0.4 million in fixed asset purchases.

During the year ended December 31, 2022, net cash provided by investing activities was $49.4 million, of which $60.9 million represents the net change in investments and $11.6 million was used to purchase property and equipment, primarily attributable to our continued efforts to bring certain process development, manufacturing and laboratory capabilities in-house.

Net Cash Provided by Financing Activities

During the year ended December 31, 2022, net cash provided by financing activities was $0.2 million and was from the exercise of stock options and purchases pursuant to our employee stock purchase plan.

During the year ended December 31, 2023, net cash provided by financing activities was $48.6 million and was from the sale of common stock and pre-funded warrants for net cash proceeds of $48.2 million and the exercise of stock options and purchases pursuant to our employee stock purchase plan of $0.5 million.

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Critical Accounting Policies

Our management’s discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP.

The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, and expenses and the disclosure of contingent assets and liabilities in our financial statements.

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We determine the estimates by reviewing contracts, vendor agreements and purchase orders, and through discussions with our internal personnel and external service providers as to the progress or stage of completion of trials or services and the agreed-upon fee to be paid for such services.

However, actual

costs and timing of clinical trials are highly uncertain, subject to risks and may change depending upon a number of factors, including our clinical development plan.

However, actual costs and timing of clinical trials are highly uncertain, subject to risks and may change depending upon a number of factors, including our clinical development plan.

We make estimates of our prepaid and accrued expenses as of each balance sheet date in our financial statements based on facts and circumstances known at that time.

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We use the Black-Scholes option pricing model to value our stock option awards.

The fair values of restricted stock units, or RSUs, are based on the fair value of the Company’s common stock on the date of the grant.

The fair values of restricted stock units, “RSUs”, are based on the fair value of the Company’s common stock on the date of the grant.

We recognize compensation expense on a straight-line basis over the requisite service period, which is generally the vesting period of the award.

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Subject to certain conditions, as an emerging growth company, we may rely on certain of these exemptions, including without limitation exemptions to the requirements for (1) providing an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act and (2) complying with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements, known as the auditor discussion and analysis.

We will remain an emerging growth company until the earlier of (a) the last day of the fiscal year (i) following the fifth anniversary of the completion of our IPO, (ii) in which we have total annual gross revenues of at least $1.07 billion or (iii) in which we are deemed to be a “large accelerated filer” under the rules of the SEC, which means the market value of our common stock that is held by non-affiliates exceeds $700.0 million as of the prior June 30th, or (b) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.

We are also a “smaller reporting company” as defined under the Securities Exchange Act of 1934, as amended, or the Exchange Act.

We may continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250.0 million or (ii) our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700.0 million.

We will remain an emerging growth company until the earlier of (a) the last day of the fiscal year

(i) following the fifth anniversary of the completion of our IPO, (ii) in which we have total annual gross revenues of at least $1.235 billion or (iii) in which we are deemed to be a “large accelerated filer” under the rules of the SEC, which means the market value of our common stock that is held by non-affiliates exceeds $700.0 million as of the prior June 30th, or (b) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.

We are also a “smaller reporting company” as defined under the Exchange Act.

We will continue to be a smaller reporting company so long as (i) the market value of our stock held by non-affiliates is less than $250.0 million or (ii) our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700.0 million.

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

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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 7. Management’s Discussion and Analysis