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Item 1A. Risk Factors

2025-03-27 compared with 2024-03-07 · 95 added, 104 removed, 533 unchanged (27% of the section changed)

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Risks Related to Development and Commercialization of our Product Candidate

We are substantially dependent upon the clinical, regulatory, and commercial success of our sole product candidate, molgramostim nebulizer solution (molgramostim).

If we are unable to successfully complete clinical development of, obtain regulatory approval for, and successfully commercialize molgramostim, our business may be harmed.

The success of our business is dependent on our ability to advance the clinical development of our sole product candidate, molgramostim for the treatment of patients with aPAP.

We are substantially dependent upon the clinical, regulatory, and commercial success of our sole product candidate, MOLBREEVI.

If we are unable to successfully complete clinical development of, obtain regulatory approval for, and successfully commercialize MOLBREEVI, our business may be harmed.

The success of our business is dependent on our ability to advance the clinical development of our sole product candidate, MOLBREEVI, an investigational inhaled GM-CSF for the treatment of aPAP.

To date, we have never obtained regulatory approvals for or commercialized a product candidate, and we may never be able to develop a marketable product.

We are devoting, and expect to continue to devote, substantially all our efforts and financial resources to the development of molgramostim for aPAP, including clinical trials, regulatory approval, and, if approved, commercialization.

Our business depends heavily on the successful completion of clinical development and subsequent regulatory approval of molgramostim for aPAP.

We are conducting IMPALA-2, a global Phase 3 pivotal trial designed to compare the efficacy and safety of molgramostim 300 µg administered once daily by inhalation with matching placebo in patients with aPAP.

There can be no assurance that the IMPALA-2 pivotal trial will demonstrate with statistical significance that molgramostim is effective for the proposed indication compared to placebo or that it will establish adequate safety.

Any failure to do so would adversely impact the potential for regulatory approval of molgramostim.

Even if molgramostim demonstrates a statistically significant difference compared to placebo for the primary endpoint, we may not be able to demonstrate differences for our secondary endpoints.

Additionally, clinical trial data frequently are susceptible to varying interpretations.

We are devoting, and expect to continue to devote, substantially all our efforts and financial resources to the development of MOLBREEVI for aPAP, including clinical trials, regulatory approval, and, if approved, commercialization.

Our business depends heavily on the successful completion of clinical development and subsequent regulatory approval of MOLBREEVI for aPAP.

We are conducting IMPALA-2, a global Phase 3 pivotal trial designed to compare the efficacy and safety of MOLBREEVI 300 µg administered once daily by inhalation with matching placebo in patients with aPAP.

Although we may believe the trial demonstrates promising results, regulatory authorities may analyze or weigh trial data differently, resulting in delay or failure to obtain marketing approval or a requirement to conduct confirmatory studies.

We are not permitted to commercialize molgramostim in the U.S.

We are not permitted to commercialize MOLBREEVI in the U.S.

until we receive approval of a BLA, or in any other country until we receive the requisite approvals from the appropriate regulatory authorities.

Failure to obtain such approvals could impair our ability to generate revenues from the product candidate, which would have a material adverse effect on our business, operating results, growth prospects or financial condition, as well as the trading price of our common stock.

Given the developmental nature of our product candidate, we are subject to risks associated with initiating, completing, and achieving positive outcomes from our current and future clinical trials, including:

• slow implementation, enrollment, and completion of the clinical trials;

• inability to enroll enough patients in the clinical trials;

• low patient compliance and adherence to dosing and reporting requirements, for example, incomplete reporting of patient reported outcomes in the clinical trials or missed doses;

• lack of safety and efficacy in the clinical trials;

• delays in manufacture of supplies for both drug and device components due to delays in formulation, process development, or manufacturing activities;

• requirements for additional nonclinical or clinical trials based on changes to formulation and/or changes to regulatory requirements;

• poor quality or missing data from the clinical trials.

Given the developmental nature of our product candidate, we are subject to risks associated with initiating, completing, and achieving positive outcomes from our current and future clinical trials.

If we successfully complete the necessary clinical trials for our product candidate, our success will be subject to the risks associated with obtaining regulatory approvals, product launch, and commercialization, including:

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• unforeseen safety issues, including adverse side effects;

• changes in governmental regulations or administrative actions.

• changes in governmental regulations or administrative actions, such as lay-offs and staffing at regulatory agencies such as the FDA.

Changes in governmental regulations and guidance relating to clinical trials may occur and we may need to amend clinical trial protocols to reflect these changes, or we may amend trial protocols for other reasons.

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A number of companies in the pharmaceutical industry have suffered significant setbacks in advanced clinical trials due to lack of efficacy or adverse safety profiles, notwithstanding promising results in earlier clinical trials, and we cannot be certain that we will not face similar setbacks.

For example, the top line results from our IMPALA trial were released by us on June 12, 2019 and did not meet all of the statistical goals and protocol end points.

On October 1, 2019, we received a written response from the FDA in connection with a Type C meeting regarding the molgramostim development program for aPAP and results from IMPALA in which the FDA indicated that the data provided did not provide sufficient evidence of efficacy and safety for the treatment of aPAP.

For example, the top line results from our IMPALA trial were released by us on June 12, 2019 and did not meet all of the statistical goals and protocol end

On October 1, 2019, we received a written response from the FDA in connection with a Type C meeting regarding the MOLBREEVI development program for aPAP and results from IMPALA in which the FDA indicated that the data provided did not provide sufficient evidence of efficacy and safety for the treatment of aPAP.

Negative or inconclusive results could cause the FDA and other regulatory authorities to require us to repeat or conduct additional clinical trials, which could significantly increase the time and expense associated with development of that product candidate or cause us to elect to discontinue one or more clinical programs.

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

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

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

Regardless of any guidance the FDA or foreign regulatory agencies may provide a drug’s sponsor during its development, the FDA or foreign regulatory agencies retain complete discretion in deciding whether to accept a BLA, or the equivalent foreign regulatory approval submission for filing or, if accepted, whether to approve a BLA.

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

For example, the FDA has granted molgramostim for aPAP Fast Track and BTD, which are each designed to expedite the development and review of certain drugs.

For example, the FDA has granted MOLBREEVI for aPAP Fast Track and BTD, which are each designed to expedite the development and review of certain drugs.

If there were a change in FDA policies and we were to lose those designations, it could cause delays in the regulatory review process.

Additionally, U.S.

Additionally, changes in FDA priorities due to a new administration, layoffs, or U.S.

federal government shut-downs or budget sequestrations, such as ones that occurred during January 2018 and December 2018 through January 2019, may result in significant reductions to the FDA’s budget, employees, and operations, which may lead to slower response times and longer review periods, potentially affecting our ability to progress development of our product candidate or obtain regulatory approval for our product candidate.

Even if the FDA or foreign regulatory agencies grant approvals for a product candidate, the conditions or scope of the approval(s) may limit successful commercialization of the product candidate and impair our ability to generate substantial sales revenue.

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.

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.

For example, MOLBREEVI 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.

The FDA may limit the label of MOLBREEVI 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.

The FDA or foreign regulatory agencies may also only grant marketing approval contingent on the performance of costly post-approval nonclinical or clinical studies, or subject to warnings or contraindications that limit commercialization.

Additionally, even after granting approval, the manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion, and recordkeeping for our products will be subject to extensive and ongoing regulatory requirements.

These requirements include submissions of safety and other post-marketing information and reports, registration, and continued compliance with cGMP, good clinical practice ("GCP"), international conference on harmonization regulations, and good laboratories practice ("GLP"), which are regulations and guidelines that are enforced by the FDA or foreign regulatory agencies for all clinical development and for any clinical studies that we conduct post-approval.

Additionally, even after granting approval, the manufacturing processes, labeling, packaging,

distribution, adverse event reporting, storage, advertising, promotion, and recordkeeping for our products will be subject to extensive and ongoing regulatory requirements.

These requirements include submissions of safety and other post-marketing information and reports, registration, and continued compliance with cGMP, GCP, international conference on harmonization regulations, and good laboratories practice ("GLP"), which are regulations and guidelines that are enforced by the FDA or foreign regulatory agencies for all clinical development and for any clinical studies that we conduct post-approval.

The FDA or foreign regulatory agencies may decide to withdraw approval, add warnings, or narrow the approved indications in the product label, or establish risk management programs that could restrict distribution of our products.

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If any of these actions were to occur following approval, we may have to discontinue commercialization of the product, limit our sales and marketing efforts, implement risk minimization procedures, and/or conduct post-approval studies, which in turn could result in significant expense and delay or limit our ability to generate sales revenues.

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.

Our MOLBREEVI 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 MOLBREEVI 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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If we fail to demonstrate the efficacy of our drug candidate or undesirable side effects occur, they could possibly prevent approval, which would have a material and adverse effect on our business.

Additionally, the patient population in our clinical trials is a defined subset of patients who have agreed to enter the trials.

It is possible undesirable side effects could be seen in the larger addressable patient population that were not observed in the clinical trials.

If our product candidate receives marketing approval and we or others later identify undesirable side effects caused by the product:

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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.

Our molgramostim product candidate also will be subject to ongoing FDA requirements related to the manufacturing processes, labeling, packaging, storage, distribution, advertising, promotion, record-keeping, and submission of safety and other post-market information regarding the product.

Our MOLBREEVI product candidate also will be subject to ongoing FDA requirements related to the manufacturing processes, labeling, packaging, storage, distribution, advertising, promotion, record-keeping, and submission of safety and other post-market information regarding the product.

For instance, the FDA may require changes to approved drug labels, require post-approval clinical studies, and impose distribution and use restrictions on certain drug products.

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At December 31, 2024, we had an accumulated deficit of $489.3 million.

We expect to continue to incur substantial operating losses for the next several years as we seek to advance our molgramostim product candidate through clinical development (IMPALA-2 pivotal trial), global regulatory approvals, and commercialization.

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 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, primarily molgramostim.

Our priority remains the continued development of molgramostim for the treatment of aPAP and our IMPALA-2 pivotal trial.

We expect to continue to incur substantial operating losses for the next several years as we seek to advance our MOLBREEVI product candidate through clinical development, global regulatory approvals, and commercialization.

No revenue from operations will likely be available until, and unless, our current product candidate, MOLBREEVI, 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 may require additional financing to obtain regulatory approval for MOLBREEVI 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, primarily MOLBREEVI.

Our priority remains the continued development of MOLBREEVI for the treatment of aPAP.

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.

If adequate funds are not available to us on a timely basis, we may 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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In particular, due to the price per share of our common stock, any sale of our equity securities to raise significant capital would result in substantial ownership dilution to our stockholders.

If we raise additional capital through debt financing, it may be subject to

covenants limiting or restricting our ability to take specific actions, such as incurring additional debt or making capital expenditures, or subject to specified financial ratios, any of which could restrict our ability to develop and commercialize our product candidate or operate as a business.

If we raise additional capital through debt financing, it may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt or making capital expenditures, or subject to specified financial ratios, any of which could restrict our ability to develop and commercialize our product candidate or operate as a business.

Our loan agreement contains covenants which may adversely impact our business;

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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.

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.

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.

Refer to Note 7.

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As of December 31, 2024, we had IPR&D of approximately $10.3 million.

Our intangible assets have been previously impaired and remain subject to additional impairment analyses whenever an event or change in circumstances indicates the carrying amount of such an asset may not be recoverable and is tested annually on September 30.

Events giving rise to impairment are difficult to predict and are an inherent risk in the pharmaceutical industry.

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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, the Federal Deposit Insurance Corporation ("FDIC") took control of Silicon Valley Bank, where the Company maintains depository accounts and has a debt facility, and created the National Bank of Santa Clara to hold the deposits of Silicon Valley Bank after Silicon Valley Bank was unable to continue its operations.

On March 27, 2023, First Citizens BancShares, Inc.

FCNCA) announced that it had entered into an agreement with the FDIC to purchase all of the assets and liabilities of Silicon Valley Bank and all bank deposits.

For instance, in 2023 the Federal Deposit Insurance Corporation ("FDIC") took control of Silicon Valley Bank, where the Company maintains depository accounts and has a debt facility.

Although the failure of Silicon Valley Bank did not cause us to experience any material impacts on our financial condition or results of operations, our access to our cash and cash equivalents in amounts adequate to finance our operations could be significantly impaired if the financial institutions with which we have arrangements face liquidity constraints or failures.

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The loss of any of these vendors or a vendor’s failure to provide us with an adequate supply of clinical trial or commercial product material in a timely manner and on commercially acceptable terms, or at all, could harm our business.

We outsource the manufacture of our molgramostim product candidate and do not plan to establish our own manufacturing facilities.

We outsource the manufacture of our MOLBREEVI product candidate and do not plan to establish our own manufacturing facilities.

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.

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.

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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.

terminate the trials completely.

Delays or interruptions in the supply of commercial product could result in increased cost of goods sold and lost sales.

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.

In addition, MOLBREEVI 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.

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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.

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 rely significantly on third parties to conduct our nonclinical testing and clinical trials and other aspects of our MOLBREEVI development program, and if those third parties do not satisfactorily perform their contractual obligations or meet anticipated deadlines, the development of our MOLBREEVI 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.

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In addition, our CROs may be affected by business or workforce interruptions for many reasons over which they and we have limited control.

If our CROs, trial investigators, and/or third-party sponsors fail to

devote sufficient time and resources to trials of our product candidate, if we and/or our CROs do not comply with all GLP and GCP regulatory and contractual requirements, or if their performance is substandard, we may delay commencement and/or completion of these trials, submission of applications for regulatory approval, regulatory approval, and commercialization of our product candidate.

If our CROs, trial investigators, and/or third-party sponsors fail to devote sufficient time and resources to trials of our product candidate, if we and/or our CROs do not comply with all GLP and GCP regulatory and contractual requirements, or if their performance is substandard, we may delay commencement and/or completion of these trials, submission of applications for regulatory approval, regulatory approval, and commercialization of our product candidate.

Failure of CROs to meet their obligations to us could adversely affect development of our product candidate.

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Our employees, independent contractors and consultants, principal investigators, CROs, CMOs, other vendors, and any future commercial partners may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could cause significant liability for us and harm our reputation.

We are exposed to the risk that our employees, independent contractors and consultants, principal investigators, CROs, CMOs, other vendors, and any future commercial partners may engage in fraudulent conduct or other misconduct, including intentional failures to comply with FDA regulations or similar regulations of comparable foreign regulatory authorities, to provide accurate information to the FDA or comparable foreign regulatory authorities, to comply with manufacturing standards required by cGMP or our standards, to comply with federal and state healthcare fraud and abuse laws and regulations and similar laws and regulations established and enforced by comparable foreign regulatory authorities, and to report financial information or data accurately or disclose unauthorized activities to them.

authorities, to provide accurate information to the FDA or comparable foreign regulatory authorities, to comply with manufacturing standards required by cGMP or our standards, to comply with federal and state healthcare fraud and abuse laws and regulations and similar laws and regulations established and enforced by comparable foreign regulatory authorities, and to report financial information or data accurately or disclose unauthorized activities to them.

The misconduct of our employees and other service providers could involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation.

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

We have engaged third-parties for our drug product and drug substance manufacturing to serve as second source manufacturers and suppliers of molgramostim to attain uninterrupted supply and mitigate approvability risk.

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

We have engaged third-parties for our drug product and drug substance manufacturing to serve as second source manufacturers and suppliers of MOLBREEVI to attain uninterrupted supply and mitigate approvability risk.

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

Any new manufacturer or supplier 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.

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Risks Related to Competition, Retaining Key Employees and Managing Growth

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

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

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.

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

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

If approval is received to market molgramostim, the FDA will not approve a similar product, with the same active ingredient, to molgramostim for seven years and the EMA will not approve a similar product to molgramostim for ten years, unless we are unable to produce enough supply to meet demand in the marketplace or another similar product, with the same active ingredient, is deemed clinically superior.

If approval is received to market MOLBREEVI, the FDA will not approve a similar product, with the same active ingredient, to MOLBREEVI for seven years and the EMA will not approve a similar product to MOLBREEVI for ten years, unless we are unable to produce enough supply to meet demand in the marketplace or another similar product, with the same active ingredient, is deemed clinically superior.

Similar product candidates, with the same active ingredient and route of delivery, may be granted Orphan Drug Designation during the development, but the Orphan Drug exclusivity is granted only to the first of such products approved, which means there is risk that a competitor product candidate may receive approval and Orphan Drug exclusivity before us, thus preventing us from marketing our product candidate until the exclusivity of the competing product expires.

Also, the Orphan Drug status will not prevent a competitor with a different active ingredient from competing with our product candidate.

If we are prevented from marketing molgramostim for aPAP due to a competitor’s Orphan Drug exclusivity, it would have a material adverse effect on our business.

We expect competition in the marketplace for our molgramostim product candidate should it receive regulatory approval.

If we are prevented from marketing MOLBREEVI for aPAP due to a competitor’s Orphan Drug exclusivity, it would have a material adverse effect on our business.

We expect competition in the marketplace for our MOLBREEVI product candidate should it receive regulatory approval.

The development and commercialization of new drug products is highly competitive and subject to rapid and significant change.

Developments by others may render potential application of our molgramostim product candidate in aPAP obsolete or noncompetitive, even prior to completion of its development and approval.

Developments by others may render potential application of our MOLBREEVI product candidate in aPAP obsolete or noncompetitive, even prior to completion of its development and approval.

If successfully developed and approved, we expect our product candidate will face competition.

We may not be able to compete successfully against organizations with competitive products, particularly large pharmaceutical companies.

We may not be able to compete successfully against

organizations with competitive products, particularly large pharmaceutical companies.

Many of our potential competitors have significantly greater financial, technical, and human resources than us, and may be better equipped to develop, manufacture, market, and distribute products.

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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.

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 for the off-label treatment of aPAP.

Additionally, Partner Therapeutics, Inc.

is working with the Pharmaceuticals and Medical Devices Agency and the MHLW 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 the pharmacy-compounded off-label treatment.

If Leukine ® were to receive formal regulatory approval in Japan, we believe it has the potential to present a material competitive threat to the commercial success of molgramostim in Japan, which could have a material adverse effect on our business.

Although we are not aware of any companies developing an inhaled form of GM-CSF for the treatment of aPAP, sargramostim (Leukine), 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 in the U.S.

for the off-label treatment of aPAP.

We cannot assess the effectiveness of its off-label administration to patients with aPAP or the number of aPAP patients in the U.S.

using Leukine as a pharmacy-compounded off-label treatment.

Additionally, in April 2024, Partner Therapeutics’ partner, Nobelpharma Co.

Ltd., received regulatory approval from the PMDA to market sargramostim for the treatment of aPAP in Japan.

Sargramostim has the potential to present a material competitive threat to the commercial success of MOLBREEVI in Japan which could have a material adverse effect on our business.

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.

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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.

To commercialize our MOLBREEVI 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.

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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.

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.

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Any failure or delay in the development of our internal sales, marketing, and distribution capabilities would adversely impact the commercialization of our product.

If we are not successful in commercializing our molgramostim product, either on our own or through collaborations with one or more third parties, our future product revenue will suffer, and we would incur significant additional losses.

If we are not successful in commercializing our MOLBREEVI product, either on our own or through collaborations with one or more third parties, our future product revenue will suffer, and we would incur significant additional losses.

To establish a sales and marketing infrastructure and expand our manufacturing capabilities, we will need to increase the size of our organization, and we may experience difficulties in managing this growth.

As of March 7, 2024, we had 37 employees including 25 employees engaged in research and development.

As we advance our molgramostim product candidate through the development process and to commercialization, we will need to continue to expand our development, regulatory, quality, managerial, sales and marketing, operational, finance, and other resources to manage our operations and clinical trials, continue our development activities, and commercialize our product candidate, if approved.

As we advance our MOLBREEVI product candidate through the development process and to commercialization, we will need to continue to expand our development, regulatory, quality, managerial, sales and marketing, operational, finance, and other resources to manage our operations and clinical trials, continue our development activities, and commercialize our product candidate, if approved.

As our operations expand, we expect that we will need to manage additional relationships with various manufacturers and collaborative partners, suppliers, and other organizations.

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Risks Related to Our Business Operations

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

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

Our corporate headquarters is located in a commercial facility 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.

Natural disasters and other catastrophic events, such as wildfires and other fires, earthquakes and extended power interruptions, public health crises, severe weather conditions, social unrest, such as that in Argentina, or acts of war or terrorism, such as the conflicts both in the Middle East and between Russia and Ukraine, could significantly disrupt our operations and result in additional, unplanned expense.

Any natural disaster or catastrophic

event could disrupt our business operations and result in setbacks to our development programs.

Natural disasters and other catastrophic events, such as wildfires and other fires, earthquakes and extended power interruptions, public health crises, severe weather conditions, social unrest or acts of war or terrorism could significantly disrupt our operations and result in additional, unplanned expense.

Any natural disaster or catastrophic event could disrupt our business operations and result in setbacks to our development programs.

Even though we believe we carry commercially reasonable insurance, we might suffer losses that are not covered by or exceed the coverage available under these insurance policies.

In addition, our operations may be adversely impacted by international conflict, such as the ongoing conflicts in both the Middle East and Ukraine, or social unrest, such as that currently in Argentina.

In addition, our operations may be adversely impacted by international conflict, such as the ongoing conflicts in Ukraine and Russia or social unrest, such as that currently in Argentina.

The political and physical conditions in those regions, as well as 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’ ability to partake in our clinical trials.

While we do not believe these conflicts will have a material impact on our current operations, given the rapidly evolving situation, the full impact of the conflict remains uncertain.

While we do not believe these conflicts will have a material impact on our current operations, given the rapidly evolving situation, the full impact remains uncertain.

Tariffs (including tariffs that have been or may in the future be imposed by the U.S.

or other countries), trade protection measures, import or export licensing requirements, trade embargoes, sanctions (including those administered by the Office of Foreign Assets Control of the U.S.

Department of the Treasury), other trade barriers (including further legislation or actions taken by the United States or other countries that restrict trade), and protectionist or retaliatory measures taken by the United States or other countries could have a negative impact on our operations and supply chain.

Our business and operations would suffer in the event of third-party computer system failures, cyber-attacks on third-party systems, or deficiency in our cybersecurity.

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Similarly, we could incur business disruption if our access to the internet is compromised, and we are unable to connect with third-party IT providers.

The risk of a security breach or disruption, particularly through cyber-attacks or cyber-intrusion by computer hackers, foreign governments, or cyber-terrorists, has generally increased as the number, intensity, and sophistication of attempted attacks and intrusions from around the world have increased.

The risk of a security breach or disruption, particularly through cyber-attacks or cyber-intrusion by computer hackers, foreign

governments, or cyber-terrorists, has generally increased as the number, intensity, and sophistication of attempted attacks and intrusions from around the world have increased.

In addition, we rely on those third parties to safeguard important confidential personal data regarding our employees and patients enrolled in our clinical trials.

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Technology in employees’ homes may not be as robust and could cause the networks, information systems, applications, and other tools available to employees to be more limited or less reliable than in our offices.

These cyber risks include greater phishing, malware, and other cybersecurity attacks, vulnerability to disruptions of our information technology infrastructure and telecommunication systems for remote operations, increased risk of unauthorized dissemination of confidential information, limited ability to restore the systems in the event of a systems failure or interruption, greater risk of a security breach resulting in destruction or misuse of valuable information, and potential impairment of our ability to

perform critical functions, including wiring funds, all of which could expose us to risks of data or financial loss, litigation and liability and could seriously disrupt our operations.

If we or our vendors fail to comply with data protection laws and regulations, we could be subject to government enforcement actions (which could include civil or criminal penalties), private litigation, and/or adverse publicity, which could negatively affect our operating results and business.

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As the applicable laws change, we may be required to implement additional mechanisms to comply, which may be difficult to implement and may require us to incur additional costs.

If we or our vendors fail to comply with applicable data privacy laws, we could be subject to government enforcement actions and significant penalties, and our business could be adversely impacted.

If we or our vendors fail to comply with applicable data privacy laws, we could be

subject to government enforcement actions and significant penalties, and our business could be adversely impacted.

A data security breach or change in applicable privacy or security laws or regulations could require us to devote significant management resources to address the problems created by the breach or such change in laws or regulations, and, further, to expend significant additional resources to upgrade the security measures that we employ to guard against such breaches or comply with such change in laws or regulations, each of which could disrupt our business, operations, and financial condition.

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Foreign Corrupt Practices Act and similar foreign anti-corruption laws.

We are subject to anti-corruption laws, including the FCPA, the U.K.

Bribery Act 2010, and other anti-corruption laws that apply in countries where we conduct business.

We are subject to anti-corruption laws, including the FCPA, the UK Bribery Act 2010, and other anti-corruption laws that apply in countries where we conduct business.

Under those laws, it is generally illegal to pay, offer to pay, or authorize the payment of anything of value to any foreign government official, government staff member, political party, or political candidate in an attempt to obtain or retain business or to otherwise influence a person working in an official capacity.

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Our operations also subject us to similar laws in other countries.

The provision of benefits or advantages to physicians to induce or encourage the prescription, recommendation, endorsement, purchase, supply, order, or use of medicinal products is prohibited in the E.U., and the provision of benefits or advantages to physicians is also governed by the national anti-bribery laws.

The provision of benefits or advantages to physicians to induce or encourage the prescription, recommendation, endorsement, purchase, supply, order, or use of medicinal products is prohibited in the EU, and the provision of benefits or advantages to physicians is also governed by the national anti-bribery laws.

Infringement of these laws could result in substantial fines and imprisonment.

Payments made to physicians in certain E.U.

member states must be publicly disclosed.

Payments made to physicians in certain EU member states must be publicly disclosed.

Moreover, agreements with physicians often must be the subject of prior notification and approval by the physician’s employer, his or her competent professional organization and/or the regulatory authorities of the individual country.

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If we are unable to adequately protect our intellectual property rights related to our product candidate, it could have a material adverse effect on our business.

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

Additionally, we have an exclusive supply agreement for the proprietary delivery device used for molgramostim and a proprietary cell bank used in the production of the drug substance.

We have no issued patents for MOLBREEVI for the treatment of aPAP and primarily rely on the Orphan Drug exclusivity as our primary barrier to competition.

Additionally, we have an exclusive supply agreement for the proprietary delivery device used for MOLBREEVI and a proprietary cell bank used in the production of the drug substance.

Our success will depend on our ability to:

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and in foreign countries.

We intend to rely on regulatory exclusivity for protection of our molgramostim product candidate, if approved for commercial sale.

We intend to rely on regulatory exclusivity for protection of our MOLBREEVI product candidate, if approved for commercial sale.

Implementation and enforcement of regulatory exclusivity, which may consist of regulatory data protection and market protection, varies widely from country to country.

Failure to qualify for regulatory exclusivity, or failure to obtain or maintain the extent or duration of such protections that we expect for our product candidate, if approved, could affect our decision on whether to market the products in a particular country or countries or could otherwise have an adverse impact on our revenue or results of operations.

For molgramostim, which is administered via nebulization, we may rely on regulatory exclusivity for the combination of molgramostim and its delivery system.

However, there is no assurance that our molgramostim product and its delivery system, if approved, will benefit from this type of market protection.

We have filed patent applications related to our molgramostim product candidate;

For MOLBREEVI, which is administered via nebulization, we may rely on regulatory exclusivity for the combination of MOLBREEVI and its delivery system.

there is no assurance that our MOLBREEVI product and its delivery system, if approved, will benefit from this type of market protection.

We have filed patent applications related to our MOLBREEVI product candidate;

however, there is no guarantee that patents will issue from any pending or future applications or that claims allowed will be sufficient to protect the technology we develop or that is used by us, our CMOs, or our other service providers.

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In addition, it is possible that inventions relevant to our business could be developed by a person not bound by an invention assignment agreement with us or independently discovered by a competitor.

We may rely on trademarks, trade names, and brand names to distinguish our molgramostim product, if approved for commercial sale, from the products of our competitors.

We intend to seek approval for a new name for molgramostim that meets the FDA’s and foreign regulatory requirements.

We may rely on trademarks, trade names, and brand names to distinguish our MOLBREEVI product, if approved for commercial sale, from the products of our competitors.

However, our trademark applications may not be approved.

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If our trademarks are successfully challenged, we could be forced to rebrand our product, which could result in loss of brand recognition and could require us to devote significant resources to advertising and marketing these new brands.

For example, we filed a trademark for the name “Savara” and were

For example, we filed a trademark for the name “Savara” and were challenged.

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

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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.

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 then 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.

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.

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.

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Our stock price is expected to continue to be volatile.

The market price of our common stock has experienced substantial volatility since we announced the top-line results of our IMPALA Phase 2/3 trial of molgramostim for aPAP on June 12, 2019, and our stock price will continue to be subject to significant volatility and fluctuations.

The market price of our common stock and our stock price will continue to be subject to significant volatility and fluctuations.

Market prices for securities of early-stage pharmaceutical, biotechnology, and other life sciences companies have historically been particularly volatile.

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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 we are unable to satisfy any of the continued listing requirements, Nasdaq may take steps to delist our common stock.

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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