What changed in this filing

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Item 1A. Risk Factors

2023-03-30 compared with 2022-03-30 · 109 added, 123 removed, 638 unchanged (27% of the section changed)

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No revenue from operations will likely be available until, and unless, our current product candidate, molgramostim, is approved by the FDA or another regulatory agency and successfully marketed, or we enter into an arrangement that provides for licensing revenue or other partnering-related funding, outcomes which we may not achieve.

We are also continuously and critically reviewing our liquidity and anticipated capital requirements in light of the uncertainty created by the COVID-19 global pandemic.

We are also continuously and critically reviewing our liquidity and anticipated capital requirements in light of the ongoing uncertainty created by the COVID-19 global pandemic.

We may require additional financing to obtain regulatory approval for molgramostim and a failure to obtain this necessary capital when needed on acceptable terms, or at all, could force us to delay, limit, reduce, or terminate our product development efforts or other operations.

Since our Aravas subsidiary was formed in 2007, most of our resources have been dedicated to the development and acquisition of our product candidates, molgramostim, vancomycin hydrochloride inhalation powder (“vancomycin”), and Apulmiq.

On December 10, 2020, based upon our analysis of the clinical data from the Phase 3 trial of vancomycin, we concluded and announced that the trial missed its primary endpoint, ceasing further development of vancomycin.

Additionally, as part of our December 2020 pipeline simplification strategy, we discontinued the Apulmiq clinical development program.

Since our Aravas subsidiary was formed in 2007, most of our resources have been dedicated to the development and acquisition of our product candidates, primarily molgramostim.

Our priority remains the continued development of molgramostim for the treatment of aPAP and continued progress in our Phase 3 trial.

We cannot estimate with reasonable certainty the actual amounts necessary to successfully complete the development and commercialization of our product candidate and there is no certainty that we will be able to raise the necessary capital on reasonable terms or at all.

If adequate funds are not available to us on a timely basis, we will be required to delay, limit, reduce, or terminate our establishment of sales and marketing, manufacturing or distribution capabilities, development activities, other activities that may be necessary to commercialize our product candidate, or conduct preclinical or clinical trials.

Our capital requirements for the foreseeable future will depend in large part on, and could increase significantly as a result of, our expenditures on our development programs.

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the costs involved in establishing, enforcing, or defending patent claims and other proprietary rights;

the continuing negative impacts of the COVID-19 pandemic and emerging variants.

Additional capital may not be available when we need it, on terms that are acceptable to us or at all.

the continuing negative impacts of the ongoing COVID-19 pandemic and emerging variants.

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

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the failure to comply with such covenants could cause our outstanding debt to become immediately payable or accelerate principal payments.

We are a party to a Loan and Security Agreement with Silicon Valley Bank (as amended, the “Amended Loan Agreement”), pursuant to which we have pledged substantially all of our assets, other than our intellectual property (which is subject to a negative pledge).

The Amended Loan Agreement includes a number of restrictive covenants, including restrictions on incurring additional debt, making investments, granting liens, disposing of assets, paying dividends, and redeeming or repurchasing capital stock, subject to certain exceptions.

We are a party to an Amended and Restated Loan and Security Agreement with Silicon Valley Bank (the “Loan Agreement”), pursuant to which we have pledged substantially all of our assets, other than our intellectual property (which is subject to a negative pledge).

The Loan Agreement includes a number of restrictive covenants, including restrictions on incurring additional debt, making investments, granting liens, disposing of assets, paying dividends, and redeeming or repurchasing capital stock, subject to certain exceptions.

Collectively, these restrictive covenants could constrain our ability to grow our business through acquisitions or engage in other transactions.

In addition, the Amended Loan Agreement includes covenants requiring, among other things, that we provide financial statements, comply with all laws, pay all taxes, and maintain insurance.

The Amended Loan Agreement includes customary events of default, such as our failure to pay amounts due, our failure to comply with covenants, or the occurrence of an event that would reasonably be expected to have a material adverse event on our business.

Upon the occurrence and during the continuation of an event of default, Silicon Valley Bank could declare all outstanding loans under the Amended Loan Agreement immediately due and payable and exercise remedies against us and the collateral.

In addition, the Loan Agreement includes covenants requiring, among other things, that we provide financial statements, comply with all laws, pay all taxes, and maintain insurance.

The Loan Agreement includes customary events of default, such as our failure to pay amounts due, our failure to comply with covenants, or the occurrence of an event that would reasonably be expected to have a material adverse event on our business.

Upon the occurrence and during the continuation of an event of default, Silicon Valley Bank could declare all outstanding loans under the Loan Agreement immediately due and payable and exercise remedies against us and the collateral.

Such an event would have a material adverse effect on our liquidity, financial condition, operating results, business, and prospects and cause the price of our common stock to decline.

On March 10, 2023, the California Department of Financial Protection and Innovation closed Silicon Valley Bank, and the Federal Deposit Insurance Corporation ("FDIC") was appointed receiver.

The Company is monitoring the impact on its Loan Agreement.

Any future acquisitions that we make could disrupt our business and harm our financial condition.

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If additional capital is not available on favorable terms when needed, we will be required to raise capital on adverse terms or significantly reduce operating expenses through the restructuring of our operations or deferral of strategic business initiatives.

If we raise additional capital through a public offering of securities or equity, a substantial number of additional shares may be issued, which may negatively affect our stock price and these additional shares will dilute the ownership interest of our current investors.

If we raise additional capital through a public offering of securities, a substantial number of additional shares may be issued, which may negatively affect our stock price and these additional shares will dilute the ownership interest of our current investors.

We have IPR&D and future impairment of IPR&D may have an adverse impact on our future financial condition and results of operations.

Our goodwill was fully impaired during the year ended December 31, 2019.

As of December 31, 2022, we had IPR&D of approximately $10.7 million.

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Some of the potential risks that could result in impairment of our IPR&D include negative clinical trial results, adverse regulatory developments, delay or failure to obtain regulatory approval, additional development costs, changes in the manner of our use or development of our product candidate, competition, earlier than expected loss of exclusivity, pricing pressures, higher operating costs, changes in tax laws, prices that third parties are willing to pay for our IPR&D or similar assets in an arm’s-length transaction being less than the carrying value of our IPR&D, and other market and economic environment changes or trends, such as the ultimate scope and scale of the COVID-19 global pandemic and the impact of COVID-19 on patient enrollment in our IMPALA-2 trial.

Events or changes in circumstances may lead to significant impairment

charges on our IPR&D in the future, which could materially adversely affect our financial condition and results of operations.

Events or changes in circumstances may lead to significant impairment charges on our IPR&D in the future, which could materially adversely affect our financial condition and results of operations.

Adverse developments affecting financial institutions, companies in the financial services industry, or the financial services industry generally, such as actual events or concerns involving liquidity, defaults, or non-performance, could adversely affect our operations and liquidity.

Actual events involving limited liquidity, defaults, non-performance, or other adverse developments that affect financial institutions or other companies in the financial services industry, or the financial services industry generally, or concerns or rumors about any such events, have in the past and may in the future lead to market-wide liquidity problems.

For example, on March 10, 2023, Silicon Valley Bank was closed by the California Department of Financial Protection and Innovation, which appointed the FDIC as receiver.

As of March 30, 2023, we had cash and cash equivalent balances on deposit with Silicon Valley Bank in excess of the FDIC insurance limitation of $250 thousand (“FDIC Limit”).

Our asset management account managed by Silicon Valley Bank is held in custody accounts at U.S.

Bank N.A., and we do not currently believe that our ability to access our marketable securities as needed will be affected by the closure of Silicon Valley Bank.

Department of the Treasury, Federal Reserve Board, and FDIC stated that all depositors of Silicon Valley Bank would have access to all of their money one business day following the date of closure;

we and other depositors with Silicon Valley Bank received such access on March 13, 2023.

Subsequently, FDIC Chairman Martin J.

Gruenberg has announced that all bank depositors, including deposits in excess of the FDIC Limit, with SVB will be fully protected.

However, uncertainty and liquidity concerns in the broader financial services industry remain.

Inflation and rapid increases in interest rates have led to a decline in the trading value of previously issued government securities with interest rates below current market interest rates.

Department of the Treasury, Federal Reserve Board, and FDIC have announced a program to provide up to $25 billion of loans to financial institutions secured by such government securities held by financial institutions to mitigate the risk of potential losses on the sale of such instruments.

However, widespread demands for customer withdrawals or other needs of financial institutions for immediate liquidity may exceed the capacity of the program.

There is no guarantee that the U.S.

Department of Treasury, Federal Reserve Board, and FDIC will provide access to uninsured funds in the future in the event of the closure of other banks or financial institutions in a timely fashion or at all.

Our access to our cash and cash equivalents in amounts adequate to finance our operations could be significantly impaired by the financial institutions with which we have arrangements directly facing liquidity constraints or failures.

In addition, investor concerns regarding the U.S.

or international financial systems could result in less favorable commercial financing terms, including higher interest rates or costs and tighter financial and operating covenants, or systemic limitations on access to credit and liquidity sources, thereby making it more difficult for us to acquire financing on acceptable terms or at all.

Any material decline in available funding or our ability to access our cash and cash equivalents could adversely impact our ability to meet our operating expenses, result in breaches of our contractual obligations, or result in violations of federal or state wage and hour laws, any of which could have material adverse impacts on our operations and liquidity.

Risks Related to Our Business Strategy and Operations

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

A failure of one or more of our clinical trials can occur at any time during the clinical trial process as demonstrated by the results of our IMPALA trial 2019 and AVAIL trial in 2020.

A failure of one or more of our clinical trials can occur at any time during the clinical trial process as demonstrated by the results of our IMPALA trial in 2019 and AVAIL trial in 2020.

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

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regulatory rejection in the EU, Japan, and other markets;

delays during regulatory review and/or requirements of additional Chemistry, Manufacturing, and Controls, nonclinical, or clinical studies, resulting in increased costs and/or delays in marketing approval and subsequent commercialization of the product candidate in the U.S.

and other markets;

delays during regulatory review and/or requirements of additional chemistry, manufacturing, and controls, nonclinical, or clinical studies, resulting in increased costs and/or delays in marketing approval and subsequent commercialization of the product candidate in the United States and other markets;

inability to consistently manufacture commercial supplies of drug and delivery devices resulting in slowed market development and lower revenue;

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If we cannot do so, or are significantly delayed in doing so, our business will be materially harmed.

Additionally, as we continue to advance the IMPALA-2 trial, there remains a general uncertainty regarding the impact of COVID-19 and emerging variants on the aPAP patient population and physicians.

Additionally, as we continue to advance the IMPALA-2 trial, there remains general uncertainty regarding the impact of COVID-19 and emerging variants on the aPAP patient population and physicians.

Patients suffering from aPAP are prone to underlying lung conditions and are often treated by infectious disease specialists and pulmonologists.

These treating physicians are on the front lines in addressing this global pandemic and must now, understandably, focus their attention on COVID-19.

These treating physicians are on the front lines in addressing this global pandemic and have had to, understandably, focus their attention on COVID-19.

Further, if an aPAP patient enrolled in the trial were to contract COVID-19, they may need to discontinue their participation.

If we fail to attract and retain senior management and key scientific personnel, we may be unable to successfully develop and commercialize our product candidate.

If we fail to attract and retain senior management and key scientific personnel and develop and maintain relationships with service providers, consultants and advisers, we may be unable to successfully develop and commercialize our product candidate.

We have historically operated with a limited number of employees that manage third parties for most development activities.

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To manufacture our product candidate, we have made numerous custom modifications at CMOs, making us highly dependent on these CMOs.

For clinical and commercial supplies, if approved, we have supply agreements with third party CMOs for drug substance, finished drug product, drug delivery devices and other necessary

components of our molgramostim product candidate.

For clinical and commercial supplies, if approved, we have supply agreements with third party CMOs for drug substance, finished drug product, drug delivery devices and other necessary components of our molgramostim product candidate.

While we have secured long-term commercial supply agreements with many of the third party CMOs, we would need to negotiate agreements for commercial supply with several important CMOs, and we may not be able to reach agreement on acceptable terms.

In addition, we rely on these third parties to conduct or assist us in key manufacturing development activities, including qualification of equipment, developing and validating methods, defining critical process parameters, releasing component materials, and conducting stability testing, among other things.

In addition, we rely on these third parties to conduct or assist us in key manufacturing development activities, including qualification of equipment, developing and validating methods, defining critical process parameters, releasing component materials, demonstrating comparability of DS and DP, and conducting stability testing, among other things.

If these third parties are unable to perform their tasks successfully in a timely manner, whether for technical, financial, or other reasons, we may be unable to secure clinical trial material, or commercial supply material if approved, which likely would delay the initiation, conduct, or completion of our clinical trials or prevent us from having enough commercial supply material for sale, which would have a material and adverse effect on our business.

For example, the impacts of the current COVID-19 global pandemic are evolving.

There have been and could be additional delays in the manufacturing supply chain for our product candidate, including delays in procurement of materials for certain of our clinical trials due to the outbreak, delays in clinical trials and recruitment.

Further, we have experienced an increase in costs associated with the supply chain disruption.

The extent to which the pandemic impacts our ability to procure sufficient supplies for the development and commercialization of our product candidate going forward will depend on the severity and duration of the spread of COVID-19 and emerging variants and the actions undertaken to contain the pandemic or treat its effects.

The extent to which the pandemic and global conflicts and acts of war impact our ability to procure sufficient supplies for the development and commercialization of our product candidate going forward will depend on the severity and duration of the spread of COVID-19 and emerging variants and the actions undertaken to contain the pandemic or treat its effects as well as the length and scope of global conflicts and acts of war.

All manufacturers of our clinical trial material and, if approved, commercial product, including drug substance manufacturers, must comply with cGMP requirements enforced by the FDA through its facilities inspection program and applicable requirements of foreign regulatory authorities.

These requirements include quality control, quality assurance, and the maintenance of records and documentation.

These requirements include manufacturing, quality control, quality assurance, and the maintenance of records and documentation.

Manufacturers of our clinical trial material may be unable to comply with these cGMP requirements and with other FDA, state, and foreign regulatory requirements.

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systems, we do not have full control over their ongoing compliance with these regulations.

Although the responsibility to maintain cGMP compliance is shared between us and the third-party manufacturer, we bear ultimate responsibility for our supply chain and compliance with regulatory standards.

Although the responsibility to maintain cGMP compliance is a requirement of third-party manufacturers, we bear ultimate responsibility for our supply chain and compliance with regulatory standards.

Failure to comply with these requirements may result in fines and civil penalties, suspension of production, suspension or delay or failure to obtain product approval, product seizure or recall, or withdrawal of product approval.

Currently, we do not have alternative vendors to back up our primary vendors of clinical trial material or, if approved, commercial supply material.

Identification of and discussions with other vendors may be protracted and/or unsuccessful, or these new vendors may be unsuccessful in producing the same results as the current primary vendors producing the material.

Therefore, if our primary vendors become unable or unwilling to perform their required activities, we could experience protracted delays or interruptions in the supply of clinical trial material and, ultimately, product for commercial sale, which would materially and adversely affect our development programs, commercial activities, operating results, and financial condition.

In addition, the FDA or regulatory authorities outside of the U.S.

may require that we have an alternate manufacturer of a drug product before approving it for marketing and sale in the U.S.

or abroad and securing such alternate manufacturer before approval of a BLA could result in considerable additional time and cost prior to BLA approval.

We are pursuing but have not yet engaged a second source manufacturer for molgramostim.

Identification of and discussions with alternative vendors, if necessary, may be protracted and/or unsuccessful, or these new vendors may be unsuccessful in producing the same results as the current primary vendors producing the material.

Therefore, if our primary and back-up vendors become unable or unwilling to perform their required activities, we could experience protracted delays or interruptions in the supply of clinical trial material and, ultimately, product for commercial sale, which would materially and adversely affect our development programs, commercial activities, operating results, and financial condition.

In addition, the FDA or regulatory authorities outside of the United States may require that we have an alternate manufacturer of a drug product before approving it for marketing and sale in the United States or abroad and securing such alternate manufacturer before approval of a BLA could result in considerable additional time and cost prior to BLA approval.

We have recently engaged a second source manufacturer for molgramostim.

Any new manufacturer or supplier of finished drug product or its component materials, including drug substance and delivery devices, would be required to qualify under applicable regulatory requirements and would need to have sufficient rights under applicable intellectual property laws to the method of manufacturing of such product or ingredients required by us.

The FDA or foreign regulatory agency may require us to conduct additional clinical trials, collect stability data, and provide additional information concerning any new supplier, or change in a validated manufacturing process, including scaling-up production, before we could distribute products from that manufacturer or supplier or revised process.

For example, if we were to engage a third party other than our current CMOs to supply the drug substance or drug product for future clinical trials or commercial sale, the FDA or regulatory authorities outside of the U.S.

may require us to conduct additional clinical and nonclinical studies to ensure comparability of the drug substance or drug product manufactured by our current CMOs to that manufactured by the new supplier.

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These problems include difficulties with production costs and yields, quality control, including stability of the product candidate and quality assurance testing, and shortages of qualified personnel.

Our product candidate has not been manufactured at the scale we believe will be necessary to maximize its commercial value and, accordingly, we may encounter difficulties in attempting to scale-up production and may not succeed in that effort on a timely basis or at all.

Our product candidate has not been manufactured at the scale we believe will be necessary to maximize its commercial value and, accordingly, after initial licensure and commercialization, we may encounter difficulties in attempting to scale-up production and may not succeed in that effort on a timely basis or at all.

In addition, the FDA or other regulatory authorities may impose additional requirements as we scale up initial production capabilities, which may delay our scale-up activities and/or add expense.

insufficient quantities of material to support ongoing and/or planned clinical trials or to meet commercial demand, if approved.

If our manufacturers encounter any of the aforementioned difficulties or otherwise fail to comply with their contractual obligations or there are delays entering commercial supply agreements due to capital constraints, we may have insufficient quantities of material to support ongoing and/or planned clinical trials or to meet commercial demand, if approved.

In addition, any delay or interruption in the supply of materials necessary or useful to manufacture our product candidate could delay the completion of our clinical trials, increase the costs associated with our development programs, and depending upon the period of delay, require us to commence new clinical trials at significant additional expense or terminate the trials completely.

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We cannot provide assurance that manufacturing or quality control problems will not arise in connection with the manufacture of our clinical trial material or commercial product, if approved, or that third-party manufacturers will be able to maintain the necessary governmental licenses and approvals to continue manufacturing such clinical trial material or commercial product, as applicable.

In addition, molgramostim is currently manufactured entirely outside the U.S.

and, as a result, we may experience interruptions in supply due to shipping or customs difficulties or regional instability.

In addition, molgramostim is currently manufactured entirely outside the United States and, as a result, we may experience interruptions in supply due to shipping or customs difficulties or regional instability.

Furthermore, changes in currency fluctuations, shipping costs, or import tariffs could adversely affect cost of goods sold.

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Our dependence upon third parties for the manufacture of our clinical trial material may adversely affect our future costs and our ability to develop and commercialize our product candidate on a timely and competitive basis.

The company intends to establish a redundant supply chain with second sources of drug substance and drug product manufacture.

If the product manufactured at the second sources of manufacture is not demonstrated to be comparable with materials used in the clinical program, we will not be able to commercialize from these second sources.

We currently rely on and have engaged third-parties for our drug product and drug substance manufacturing to ensure all aspects of our manufacturing are validated and can produce product at commercial scale to serve as second source manufacturers and suppliers of the molgramostim drug substances to attain uninterrupted drug substance supply and mitigate approvability risk.

If the second sources do not demonstrate the ability to provide drug substance and drug product manufacture comparable to our primary sources, the supply chain and scalability to commercialize molgramostim could be adversely impacted.

We rely significantly on third parties to conduct our nonclinical testing and clinical trials and other aspects of our molgramostim development program, and if those third parties do not satisfactorily perform their contractual obligations or meet anticipated deadlines, the development of our molgramostim product candidate could be adversely affected.

We do not employ personnel or possess the facilities necessary to conduct many of the activities associated with our programs.

We engage consultants, advisors, CROs, and others to assist in the design and conduct of nonclinical and clinical trials of our product candidate, with interpretation of the results of those trials and with regulatory activities, and we expect to continue to outsource all or a significant amount of such activities.

expect to continue to outsource all or a significant amount of such activities.

Specifically, in early 2021, we engaged Parexel to support our IMPALA-2 clinical trial development activities.

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Our molgramostim product candidate may cause undesirable side effects or adverse events or have other properties that could delay or prevent our clinical development, regulatory approval, or commercialization.

Undesirable side effects or adverse events caused by our molgramostim product candidate could interrupt, delay, or halt clinical trials and could result in the denial of regulatory approval by the FDA or other regulatory authorities for any or all

indications, and in turn prevent us from commercializing our product candidate.

A significant challenge in clinical development is that the patient population in early trials, where small numbers of patients are required, is different from the patient population observed in later stage trials, where larger groups of patients are required.

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For example, if one of our manufacturing partners were placed under a consent decree, we may be hampered in our ability to manufacture clinical or commercial supplies.

Our operations might be interrupted and financial results could be adversely impacted by the occurrence of a natural disaster, acts of war or terrorism, system malfunction, telecommunication and electrical failures or other catastrophic event, or public health crises, such as a pandemic (e.g.

Our corporate headquarters is located in a commercial facility in Austin, Texas, USA.

As of December 31, 2022, our corporate headquarters is located in a commercial facility in Austin, Texas, USA, and we maintain additional facilities in Langhorne, Pennsylvania.

Important documents and records, including copies of our regulatory documents and other records for our product candidate, are located both at a secure offsite document storage facility as well as at our own facilities, and we depend on our facilities for the continued operation of our business.

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In addition, our operations may be adversely impacted by international conflict.

For example, tensions between Ukraine and Russia have escalated in recent months, culminating in Russia’s recent invasion of Ukraine.

For example, tensions between Ukraine and Russia have escalated in 2022, culminating in Russia’s invasion of Ukraine.

The political and physical conditions in Ukraine and Russia, as well as in neighboring countries, may disrupt our supply chain and increase our costs, which may adversely affect our ability to conduct ongoing clinical trials and impact patients’

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While we do not believe this conflict will have a material impact on our current operations, given the rapidly evolving situation and the potential to expand beyond Ukraine and Russia, the full impact of the conflict remains uncertain.

During the first quarter of 2020, COVID-19 was declared a pandemic by the World Health Organization, resulting in significant disruptions to U.S.

and international manufacturing and supply chains or operations as well as travel restrictions in the U.S.

and many other countries.

During the first quarter of 2020, COVID-19 was declared a pandemic by the World Health Organization, resulting in significant disruptions to United States and international manufacturing and supply chains or operations as well as travel restrictions in the United States and many other countries.

Global supply chain disruptions have resulted in delays and increased costs associated with the goods.

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If we are unable to establish sales and marketing capabilities on our own or through third parties, we will be unable to successfully commercialize our product candidate, if approved, or generate product revenue.

To commercialize our molgramostim product candidate, if approved, in the U.S.

and other jurisdictions we seek to enter, we must build our marketing, sales, managerial, and other non-technical capabilities, or make arrangements with third parties to perform these services, and we may not be successful in doing so.

If our product receives regulatory approval,

we expect to market such product in the U.S.

through a focused, specialized sales force, which will be costly and time consuming.

To commercialize our molgramostim product candidate, if approved, in the United States and other jurisdictions we seek to enter, we must build our marketing, sales, managerial, and other non-technical capabilities, or make arrangements with third parties to perform these services, and we may not be successful in doing so.

If our product receives regulatory approval, we expect to market such product in the United States through a focused, specialized sales force, which will be costly and time consuming.

Institutionally, we have no prior experience in the marketing and sale of pharmaceutical products and there are significant risks involved in building and managing a sales organization, including our ability to hire, retain, and incentivize qualified individuals, generate sufficient sales leads, provide adequate training to sales and marketing personnel, and effectively manage a geographically dispersed sales and marketing team.

Outside of the U.S., we may consider collaboration arrangements.

Outside of the United States, we may consider collaboration arrangements.

If we are unable to enter into such arrangements on acceptable terms or at all, we may not be able to successfully commercialize our product in certain markets.

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Any safety or efficacy concern identified in a third-party sponsored trial could adversely affect our or another licensee’s development of our product candidate and prospects for its regulatory approval, even if the data from that trial are subject to varying interpretations and analyses.

If serious adverse events are observed in such third-party sponsored trials, it could delay or cause the discontinuation of the development of the product candidate and have a material adverse effect on our business.

serious adverse events are observed in such third-party sponsored trials, it could delay or cause the discontinuation of the development of the product candidate and have a material adverse effect on our business.

There are significant risks that ongoing and future clinical trials of our product candidate will not be successful.

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If a competitor obtains Orphan Drug exclusivity for a product with the same active ingredient and route of delivery as molgramostim for aPAP, we may be unable to market our product candidate until the exclusivity of the competing product expires.

Molgramostim has received Orphan Drug Designation in the U.S.

by the FDA and in Europe by the EMA for the treatment of aPAP.

Molgramostim has received Orphan Drug Designation in the United States by the FDA and in Europe by the EMA for the treatment of aPAP.

Orphan Drug Designation will not shorten the regulatory review or reduce the clinical data requirements needed to obtain approval.

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Further, completion of a clinical trial and/or its results may be adversely affected by failure to retain patients who enroll in a trial but withdraw due to adverse side effects, perceived lack of efficacy, belief that they are on placebo, improvement in condition before treatment has been completed, for personal reasons, without reason, or by patients who fail to return for or complete post-treatment follow-up.

For example, although we are not aware of any companies developing an inhaled form of GM-CSF for the treatment of aPAP, Leukine ® (sargramostim), a yeast-derived recombinant human granulocyte-macrophage colony stimulating factor, rhu-GM-CSF, which is a product of Partner Therapeutics, Inc., is being utilized by some patients, domestically and internationally, for the off-label treatment of aPAP.

For example, although we are not aware of any companies developing an inhaled form of GM-CSF for the treatment of aPAP, Leukine ® (sargramostim), a yeast-derived recombinant human granulocyte-macrophage colony stimulating factor, rhu-GM-CSF, which is a product of Partner Therapeutics, Inc., is being pharmacy-compounded and utilized by some patients, domestically and internationally, for the off-label treatment of aPAP.

Additionally, Partner Therapeutics, Inc.

is working with the Pharmaceuticals and Medical Devices Agency and the Ministry of Health, Labour, and Welfare in Japan for regulatory approval of Leukine ® for the treatment of aPAP.

We cannot assess the likelihood of formal regulatory approval of Leukine ® , the effectiveness of its off-label administration to patients with aPAP, or the number of aPAP patients using Leukine ® for off-label treatment.

However, the current off-label administration of Leukine ® could adversely affect the enrollment of patients in our IMPALA-2 trial.

Additionally, as we continue to advance the IMPALA-2 trial, there remains a general uncertainty regarding the impact of COVID-19 and emerging variants on the aPAP patient population and physicians.

Patients suffering from aPAP are prone to underlying lung conditions and are often treated by infectious disease specialists and pulmonologists.

These treating physicians are on the front lines in addressing this global pandemic and must now, understandably, focus their attention on COVID-19.

Further, if an aPAP patient enrolled in the trial were to contract COVID-19, they may need to discontinue their participation.

Clinical trials may not begin on time or be completed in the time frames we anticipate and may be costlier than we anticipate for a variety of reasons, including one or more of those described above.

The length of time necessary to successfully complete clinical trials vary significantly and is difficult to predict accurately.

We may make statements regarding anticipated timing for completion of enrollment in and/or availability of results from our clinical trials, but such predictions are subject to a number of significant assumptions and actual timing may differ materially for a variety of reasons, including patient enrollment rates, length of time needed to prepare raw trial data for analysis and then to review and analyze it, and other factors described above.

We may make statements

regarding anticipated timing for completion of enrollment in and/or availability of results from our clinical trials, but such predictions are subject to a number of significant assumptions and actual timing may differ materially for a variety of reasons, including patient enrollment rates, length of time needed to prepare raw trial data for analysis and then to review and analyze it, and other factors described above.

If we experience delays in the completion of a clinical trial, if a clinical trial is terminated, or if failure to conduct a trial in accordance with regulatory requirements or the trial’s protocol leads to deficient safety and/or efficacy data, the regulatory approval and/or commercial prospects for our product candidate may be harmed, and our ability to generate product revenue will be delayed.

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Various federal and foreign statutes and regulations also govern or materially influence the manufacturing, safety, labeling, storage, record keeping, and marketing of pharmaceutical products.

The process of obtaining these approvals and the subsequent compliance with appropriate U.S.

and foreign statutes and regulations is time-consuming and requires the expenditure of substantial resources.

The process of obtaining these approvals and the subsequent compliance with appropriate United States and foreign statutes and regulations is time-consuming and requires the expenditure of substantial resources.

Molgramostim is currently in Phase 3 clinical testing.

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The scope, powering, cost, and timing of IMPALA-2 will require us to expend substantial additional resources.

Additional clinical trials, and/or other costly trials, could require us to expend substantial additional resources and could significantly extend the timeline for clinical development prior to market approval.

Any additional clinical trials, and/or other costly trials, could require us to expend substantial additional resources and could significantly extend the timeline for clinical development prior to market approval.

Significant uncertainty exists with respect to the regulatory approval process for any investigational new drug, including molgramostim.

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Even if one or more Phase 3 clinical trials are successful in providing statistically significant evidence of the efficacy and safety of the investigational drug, the FDA or foreign regulatory agencies may not consider efficacy and safety data from the submitted trials adequate scientific support for a conclusion of effectiveness and/or safety and may require one or more additional Phase 3 or other trials prior to granting marketing approval.

If this were to occur, the overall development cost for the product candidate would be substantially

greater and competitors may bring products to market before us, which could impair our ability to generate revenues from the product candidate, or even seek approval, if blocked by a competitor’s Orphan Drug exclusivity, which would have a material adverse effect on our business, financial condition, and results of operations.

If this were to occur, the overall development cost for the product candidate would be substantially greater and competitors may bring products to market before us, which could impair our ability to generate revenues from the product candidate, or even seek approval, if blocked by a competitor’s Orphan Drug exclusivity, which would have a material adverse effect on our business, financial condition, and results of operations.

Further, development of our product candidate and/or regulatory approval may be delayed for reasons beyond our control.

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For example, molgramostim could be approved with restrictions for use only by patients unresponsive to the current standard of care or the FDA may approve label claims with age restrictions and/or treatment duration limitations.

They may limit the label of molgramostim to a subset of patients based on a review of which patient groups had the greatest efficacious response in clinical trials.

The FDA may limit the label of molgramostim to a subset of patients based on a review of which patient groups had the greatest efficacious response in clinical trials.

Such label restriction may be undesirable and may limit successful commercialization.

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These may occur as a result of drug scandals, recalls, or a political environment unrelated to our products.

Even if we receive regulatory approval for our primary product candidate, we may face regulatory difficulties that could materially and adversely affect our business, financial condition, and results of operations.

Even if we receive regulatory approval for our product candidate, we may face regulatory difficulties that could materially and adversely affect our business, financial condition, and results of operations.

Even if initial regulatory approval is obtained, as a condition to the initial approval, the FDA or a foreign regulatory agency may impose significant restrictions on a product’s indicated uses or marketing or impose ongoing requirements for potentially costly post-approval studies or marketing surveillance programs, any of which would limit the commercial potential of the product.

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If we determine that a product candidate may not achieve adequate market acceptance or that the potential market size does not justify additional expenditures on the program, we may reduce our expenditures on the development and/or the process of seeking regulatory approval of the product candidate while we evaluate whether and on what timeline to move the program forward.

Even if we receive regulatory approval to market our product candidate in the U.S., we may never receive approval or commercialize our product outside of the U.S., which would limit our ability to realize the full commercial potential of our product candidate.

In order to market products outside of the U.S., we must establish and comply with the numerous and varying regulatory requirements of other countries regarding safety and efficacy.

Even if we receive regulatory approval to market our product candidate in the United States, we may never receive approval or commercialize our product outside of the United States, which would limit our ability to realize the full commercial potential of our product candidate.

In order to market products outside of the United States, we must establish and comply with the numerous and varying regulatory requirements of other countries regarding safety and efficacy.

Approval procedures vary among countries and can involve additional product testing and validation and additional administrative review periods.

The time required to obtain approval in other countries generally differs from that required to obtain FDA approval.

The regulatory approval process in other countries may include all of the risks detailed above regarding FDA approval in the U.S., as well as other risks.

approval in one country does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country may have a negative effect on the regulatory process in others.

Failure to obtain regulatory approval in other countries or any delay or setback in obtaining such approval could have the same adverse effects detailed above regarding FDA approval in the U.S.

The regulatory approval process in other countries may include all of the risks detailed above regarding FDA approval in the United States, as well as other risks.

Regulatory approval in one country does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country may have a negative effect on the regulatory process in others.

Failure to obtain regulatory approval in other countries or any delay or setback in obtaining such approval could have the same adverse effects detailed above regarding FDA approval in the United States.

As described above, such effects include the risks that our product candidate may not be approved for all indications requested, which could limit the uses of our product candidate and have an adverse effect on product sales, and that such approval may be subject to limitations on the indicated uses for which the product may be marketed or require costly, post-marketing follow-up trials.

Conversely, if the product candidate does receive approval outside the U.S.

in the future, we may not meet the FDA requirements in the U.S.

for approval.

Conversely, if the product candidate does receive approval outside the United States in the future, we may not meet the FDA requirements in the United States for approval.

We must comply with the U.S.

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Such an accusation, even if unwarranted, could prove disruptive to our developmental and commercialization efforts.

The FCPA also obligates companies whose securities are listed in the U.S.

to comply with certain accounting provisions requiring the company to maintain books and records that accurately and fairly reflect all transactions of the company, including international subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international operations.

The SEC may suspend or bar issuers from trading securities on U.S.

exchanges for violations of the FCPA’s accounting provisions.

The FCPA also obligates companies whose securities are listed in the United States to comply with certain accounting provisions requiring the company to maintain books and records that accurately and fairly reflect all transactions of the company, including international subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international operations.

The SEC may suspend or bar issuers from trading securities on United States exchanges for violations of the FCPA’s accounting provisions.

Other countries have similar laws with which we must comply.

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Risks Related to Our Intellectual Property

Our success will depend on obtaining and maintaining effective intellectual property protection for our product candidate and proprietary technology.

Our success will depend on obtaining and maintaining effective patent and other intellectual property protection for our product candidate and proprietary technology.

We have no patent protection for molgramostim for the treatment of aPAP, and primarily rely on the Orphan Drug exclusivity as our primary barrier to competition.

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operate without infringing upon the patents and proprietary rights of others;

obtain appropriate licenses to patents or proprietary rights held by third parties if infringement would otherwise occur, or if necessary, to secure exclusive rights to them, both in the U.S.

and in foreign countries.

obtain appropriate licenses to patents or proprietary rights held by third parties if infringement would otherwise occur, or if necessary, to secure exclusive rights to them, both in the United States and in foreign countries.

The patent and intellectual property positions of biopharmaceutical companies generally are highly uncertain, involve complex legal and factual questions, and have been and continue to be the subject of much litigation.

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If competitors can develop and commercialize technology and products similar to ours, our ability to successfully commercialize our technology and products may be impaired.

Patent applications in the U.S.

are confidential for a period of time until they are published, and publication of discoveries in scientific or patent literature typically lags actual discoveries by several months.

patent applications filed before March 15, 2013), or that such inventors were the first to file patent applications for such inventions outside the U.S.

and, after March 15, 2013, in the U.S.

In addition, changes in or different interpretations of patent laws in the U.S.

and foreign countries may affect our patent rights and limit the number of patents we can obtain, which could permit others to use our discoveries or to develop and commercialize our technology and products without any compensation to us.

Patent applications in the United States are confidential for a period of time until they are published, and publication of discoveries in scientific or patent literature typically lags actual discoveries by several months.

As a result, we cannot be certain that the inventors listed in any patent or patent application owned by us were the first to conceive of the inventions covered by such patents and patent applications (for United States patent applications filed before March 15, 2013), or that such inventors were the first to file patent applications for such inventions outside the United States and, after March 15, 2013, in the United States.

In addition, changes in or different interpretations of patent laws in the United States and foreign countries may affect our patent rights and limit the number of patents we can obtain, which could permit others to use our discoveries or to develop and commercialize our technology and products without any compensation to us.

We also rely on unpatented know-how and trade secrets and continuing technological innovation to develop and maintain our competitive position, which we seek to protect, in part, through confidentiality agreements with employees, consultants, collaborators, and others.

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We decided to terminate the application, but we may revisit such filings at a future date.

Further, our competitors may infringe our trademarks or we may not have adequate resources to enforce our trademarks.

Further, our competitors may infringe on our trademarks or we may not have adequate resources to enforce our trademarks.

Our success depends on our ability to prevent competitors from duplicating or developing and commercializing equivalent versions of our product candidate, but patent protection may be difficult to obtain and any issued claims may be limited.

If we are issued a patent, it may not provide us with significant competitive advantages because the validity or enforceability of the patents may be challenged and, if instituted, one or more of the challenges may be successful.

Patents may be challenged in the U.S.

under post-grant review proceedings, inter partes re-examination, ex parte re-examination, or challenges in district court.

Patents may be challenged in the United States under post-grant review proceedings, inter partes re-examination, ex parte re-examination, or challenges in district court.

Patents issued in foreign jurisdictions may be subjected to comparable proceedings lodged in various foreign patent offices, or courts.

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The patent prosecution process is expensive and time-consuming.

We and any future licensors and licensees may not apply for or prosecute patents on certain aspects of our product candidate at a reasonable cost, in a timely fashion, or at

We and any future licensors and licensees may not apply for or prosecute patents on certain aspects of our product candidate at a reasonable cost, in a timely fashion, or at all.

We may not have the right to control the preparation, filing, and prosecution of some patent applications related to our product candidate or technology.

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Any of these circumstances could impair our ability to protect our products, if approved, in ways which may have an adverse impact on our business, financial condition, and operating results.

Furthermore, the issuance of a patent is not conclusive as to its inventorship, scope, validity, or enforceability, and future patents we may own or license may be challenged in the courts or patent offices in and outside of the U.S.

Such challenges may result in loss of exclusivity or freedom to operate or in patent claims being narrowed, invalidated, or held unenforceable, in whole or in part, which could limit our ability to use our patents to stop others from using or commercializing similar or identical products or technology, or limit the duration of the patent protection of our technology and drugs.

Given the amount of time required for the development, testing, and regulatory review of new drug candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized.

Enforcement of intellectual property rights in certain countries outside the U.S.

Enforcement of intellectual property rights in certain countries outside the United States.

has been limited or non-existent.

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Obtaining and maintaining patent protection depends on compliance with various procedural, document submission, fee payment, and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.

Periodic maintenance fees, renewal fees, annuity fees, and various other governmental fees on patents and applications are required to be paid to the United States Patent and Trademark Office (“USPTO”), and various governmental patent agencies outside of the U.S.

in several stages over the lifetime of the patents and applications.

The USPTO and various non-U.S.

governmental patent agencies require compliance with a number of procedural, documentary, fee payment, and other similar provisions during the patent application process and after a patent has been issued.

The USPTO and various non-United States governmental patent agencies require compliance with a number of procedural, documentary, fee payment, and other similar provisions during the patent application process and after a patent has been issued.

There are situations in which non-compliance can result in decreased patent term adjustment or in abandonment or lapse of the patent or patent application, leading to partial or complete loss of patent rights in the relevant jurisdiction.

Third parties may claim that our product, if approved, infringes on their proprietary rights and may challenge the approved use or uses of a product or its patent rights through litigation or administrative proceedings, and defending such actions may be costly and time consuming, divert management attention away from our business, and result in an unfavorable outcome that could have an adverse effect on our business.

Third parties may claim that our product, if approved, infringe on their proprietary rights and may challenge the approved use or uses of a product or its patent rights through litigation or administrative proceedings, and defending such actions may be costly and time consuming, divert management attention away from our business, and result in an unfavorable outcome that could have an adverse effect on our business.

Our commercial success depends on our ability and the ability of our CMOs and component suppliers to develop, manufacture, market, and sell our product and product candidate and use our proprietary technology without infringing the proprietary rights of third parties.

Numerous U.S.

and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which we are or may be developing products.

Numerous United States and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which we are or may be developing products.

Because patent applications can take many years to publish and issue, there currently may be pending applications, unknown to us, that may later result in issued patents that our product, product candidate, or technology infringe, or that the process of manufacturing our product or any of our respective component materials, or the component materials themselves, infringe, or that the use of our product, product candidate, or technology infringe.

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Molgramostim has received Orphan Drug Designation from the FDA and the EMA.

Orphan Drug Designation will provide market exclusivity in the U.S.

for seven years and ten years in Europe, but only if (i) molgramostim receives market approval before a competitor using the same active compound for the same indication, (ii) we are able to produce sufficient supply to meet demand in the marketplace, and (iii) another product with the same active ingredient is not deemed clinically superior.

Orphan Drug Designation will provide market exclusivity in the United States for seven years and ten years in Europe, but only if (i) molgramostim receives market approval before a competitor using the same active compound for the same indication, (ii) we are able to produce sufficient supply to meet demand in the marketplace, and (iii) another product with the same active ingredient is not deemed clinically superior.

The industries in which we operate (biopharmaceutical, specialty pharmaceutical, biotechnology, and pharmaceutical) are highly competitive and subject to rapid and significant change.

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Smaller companies may also prove to be significant competitors, particularly through collaborative arrangements with large pharmaceutical and biotechnology companies.

seek to commercialize the technologies they develop, which increases competition for investment in our programs.

Furthermore, heightened awareness on the part of academic institutions, government agencies, and other public and private research organizations of the potential commercial value of their inventions have led them to actively seek to commercialize the technologies they develop, which increases competition for investment in our programs.

Competitive products may be more effective, easier to dose, or more effectively marketed and sold than ours, which would have a material adverse effect on our ability to generate revenue.

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Significant uncertainty exists as to the reimbursement status for newly approved drug products, including coding, coverage, and payment.

There is no uniform policy requirement for coverage and reimbursement for drug products among third-party payers in the U.S., therefore coverage and reimbursement for drug products can differ significantly from payer to payer.

There is no uniform policy requirement for coverage and reimbursement for drug products among third-party payers in the United States, therefore coverage and reimbursement for drug products can differ significantly from payer to payer.

The coverage determination process is often a time-consuming and costly process that will require us to provide scientific and clinical support for the use of our products to each payer separately, with no assurance that coverage and adequate payment will be applied consistently or obtained.

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The containment of healthcare costs has become a priority of federal and state governments worldwide and the prices of drug products have been a focus in this effort.

For example, there have been several recent U.S.

Congressional inquiries and proposed bills designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drugs, and former President Trump signed four executive orders on July 24, 2020 aimed at bringing down pharmaceutical prices.

We expect that federal, state, and local governments in the U.S., as well as in other countries, will continue to consider legislation directed at lowering the total cost of healthcare.

For example, there have been several recent United States Congressional inquiries and proposed bills designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drugs, and former President Trump signed four executive orders on July 24, 2020 aimed at bringing down pharmaceutical prices.

We expect that federal, state, and local governments in the United States, as well as in other countries, will continue to consider legislation directed at lowering the total cost of healthcare.

In addition, in certain foreign markets, the pricing of drug products is subject to government control and reimbursement may in some cases be unavailable or insufficient.

It is uncertain whether and how future legislation, whether domestic or abroad, could affect prospects for our product candidate or what actions federal, state, or private payers for healthcare treatment and services may take in response to any such healthcare reform proposals or legislation.

Adoption of price controls and cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures may

prevent or limit our ability to generate revenue, attain profitability, or commercialize our product candidate, especially in light of our plans to price our product candidate at a high level.

Adoption of price controls and cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures may prevent or limit our ability to generate revenue, attain profitability, or commercialize our product candidate, especially in light of our plans to price our product candidate at a high level.

Furthermore, we expect that healthcare reform measures that may be adopted in the future are unpredictable, and the potential impact on our operations and financial position is uncertain, but may result in more rigorous coverage criteria, lower reimbursement, and additional downward pressure on the price we may receive for approved products.

Any reduction in reimbursement from Medicare or other government-funded programs may result in a similar reduction in payments from private payers.

reduction in reimbursement from Medicare or other government-funded programs may result in a similar reduction in payments from private payers.

The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize our products, if approved.

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If we fail to satisfy all applicable Nasdaq continued listing requirements, including the $1.00 minimum closing bid price requirement, our common stock may be delisted from Nasdaq, which could have an adverse impact on the liquidity and market price of our common stock.

Our common stock is currently listed on the Nasdaq Global Select Market, which has qualitative and quantitative continued listing requirements, including corporate governance requirements, public float requirements, and a $1.00

minimum closing bid price requirement.

If our common stock trades at closing bid prices below $1.00 for 30 consecutive business days, or if we are unable to satisfy any of the other continued listing requirements, Nasdaq may take steps to delist our common stock.

Such a delisting would likely have an adverse effect on the market liquidity of our common stock, decrease the market price of our common stock, result in the potential loss of confidence by investors, suppliers, customers, and employees, fewer business development opportunities, and adversely affect our ability to obtain financing for the continuation of our operations.

For example, on November 15, 2019, we received written notice from The Nasdaq Stock Market LLC indicating that, for the last 30 consecutive business days, the bid price for our common stock had closed below the minimum $1.00 per share requirement for continued listing on the Nasdaq Global Select Market under Nasdaq Listing Rule 5550(a)(2).

requirement for continued listing on the Nasdaq Global Select Market under Nasdaq Listing Rule 5550(a)(2).

However, on December 10, 2019, we received written notice from The Nasdaq Stock Market LLC stating that because our shares had a closing bid price at or above $1.00 per share for a minimum of ten consecutive business days, our stock had regained compliance with the minimum bid price requirement of $1.00 per share for continued listing on the Nasdaq Global Select Market, as set forth in Nasdaq Listing Rule 5450(a)(1).

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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