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Item 1A. Risk Factors

2021-08-13 compared with 2021-05-06 · 223 added, 308 removed, 652 unchanged (45% of the section changed)

The following important factors could cause our actual business and financial results to differ materially from those contained in forward-looking statements made in this Quarterly Report on Form 10-Q

or elsewhere by management from time to time.

The risk factors in this Quarterly Report have been revised to incorporate changes to our risk factors from those included in our Annual Report on Form 10-K

for the fiscal year ended December 31, 2020.

The risk factors set forth below with an asterisk (*) next to the title are new risk factors or risk factors containing changes, which may be material, from the risk factors previously disclosed in Item 1A of our Annual Report on Form 10-K

for the fiscal year ended December 31, 2020, as filed with the Securities and Exchange Commission.

The risk factors in this Quarterly Report have been revised to incorporate changes to our risk factors from those included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

The market price of our common stock could decline if one or more of these risks or uncertainties actually occur, causing you to lose all or part of your investment.

The impact of COVID-19

may also exacerbate other risks discussed in this filing, any of which could have a material effect on us.

The impact of COVID-19 may also exacerbate other risks discussed in this filing, any of which could have a material effect on us.

This situation is changing rapidly and additional impacts may arise.

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Certain statements below are forward-looking statements.

See “Cautionary Note Regarding Forward-Looking Statements” in this Quarterly Report.

See “Cautionary Note Regarding Forward-Looking Statements”

in this Quarterly Report.

RISKS RELATED TO OUR BUSINESS

Our business, operations and clinical development plans and timelines could be adversely affected by the effects of health epidemics, including the COVID-19 pandemic,

on the manufacturing, clinical trial and other business activities performed by us or by third parties with whom we conduct business, including our contract manufacturers, clinical research organizations, or CROs, shippers and others.

Our business, operations and clinical development plans and timelines could be adversely affected by the effects of health epidemics, including the COVID-19 pandemic, on the manufacturing, clinical trial and other business activities performed by us or by third parties with whom we conduct business, including our contract manufacturers, clinical research organizations, or CROs, shippers and others.

Our business could be adversely affected by health epidemics wherever we have clinical trial sites or other business operations.

In addition, health epidemics could cause significant disruption in the operations of third-party manufacturers, CROs and other third parties upon whom we rely.

We have implemented work-from-home policies for many of our employees.

We have implemented work-from-home policies for non-laboratory functions.

The effects of our work-from-home policies and travel restrictions may negatively impact productivity, disrupt our business and delay our clinical programs and timelines, the magnitude of which will depend, in part, on the length and severity of the restrictions and other limitations on our ability to conduct our business in the ordinary course.

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We depend on a worldwide supply chain to manufacture products used in our preclinical studies and clinical trials.

Quarantines, shelter-in-place and

similar government orders, or the expectation that such orders, shutdowns or other restrictions could occur, whether related to COVID-19 or

other infectious diseases, could impact personnel at our own manufacturing facilities or third-party manufacturing facilities in the United States and other countries, or the availability or cost of materials, which could disrupt our supply chain.

If our relationships with our suppliers or other vendors are terminated or scaled back as a result of the COVID-19 pandemic

or other health epidemics, we may not be able to enter into arrangements with alternative suppliers or vendors or do so on commercially reasonable terms or in a timely manner.

Quarantines, shelter-in-place and similar government orders, or the expectation that such orders, shutdowns or other restrictions could occur, whether related to COVID-19 or other infectious diseases, could impact personnel at our own manufacturing facilities or third-party manufacturing facilities in the United States and other countries, or the availability or cost of materials, which could disrupt our supply chain.

If our relationships with our suppliers or other vendors are terminated or scaled back as a result of the COVID-19 pandemic or other health epidemics, we may not be able to enter into arrangements with alternative suppliers or vendors or do so on commercially reasonable terms or in a timely manner.

Switching or adding additional suppliers or vendors involves substantial cost and requires management time and focus.

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In addition, our preclinical studies and clinical trials have been and may continue to be affected by the COVID-19 pandemic.

Clinical site initiation, patient enrollment and activities that require visits to clinical sites, including data monitoring, have been and may continue to be delayed due to prioritization of hospital resources toward the COVID-19 pandemic

or concerns among patients about participating in clinical trials during a pandemic.

Some patients may have difficulty following certain aspects of clinical trial protocols if quarantines impede patient movement or interrupt healthcare services.

Similarly, if we are unable to successfully recruit and retain patients and principal investigators and site staff who, as healthcare providers, may have heightened exposure to COVID-19 or

experience additional restrictions by their institutions, city, or state our clinical trial operations could be adversely impacted.

The spread of COVID-19, which

has caused a broad impact globally, may materially affect us economically.

While the potential economic impact brought by, and the duration of, COVID-19 may

be difficult to assess or predict, a widespread pandemic could result in significant disruption of global financial markets, reducing our ability to access capital, which could in the future negatively affect our liquidity.

In addition, a recession or market correction resulting from the spread of COVID-19 could

materially affect our business and the value of our common stock.

The global COVID-19

pandemic continues to evolve rapidly.

The ultimate impact of the COVID-19 pandemic

or a similar epidemic is highly uncertain and subject to change.

We may experience a material impact on our operations, and we continue to monitor the COVID-19 situation

Some patients may have difficulty following certain aspects of clinical trial protocols

if quarantines impede patient movement or interrupt healthcare services.

Similarly, if we are unable to successfully recruit and retain patients and principal investigators and site staff who, as healthcare providers, may have heightened exposure to COVID-19 or experience additional restrictions by their institutions, city, or state our clinical trial operations could be adversely impacted.

The spread of COVID-19, which has caused a broad impact globally, may materially affect us economically.

While the potential economic impact brought by, and the duration of, COVID-19 may be difficult to assess or predict, a widespread pandemic could result in significant disruption of global financial markets, reducing our ability to access capital, which could in the future negatively affect our liquidity.

In addition, a recession or market correction resulting from the spread of COVID-19 could materially affect our business and the value of our common stock.

The global COVID-19 pandemic continues to evolve rapidly.

The ultimate impact of the COVID-19 pandemic or a similar epidemic is highly uncertain and subject to change.

We may experience a material impact on our operations, and we continue to monitor the COVID-19 situation closely.

*We will require substantial additional financial resources to continue ongoing development of our product candidates and pursue our business objectives;

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We have not generated significant revenue and have incurred significant net losses in each year since our inception.

For the three months ended March 31, 2021, we had a net loss of $21.6 million, and, as of March 31, 2021, we have incurred approximately $785.7 million of accumulated deficit since our inception in 2003.

For the six months ended June 30, 2021, we had a net loss of $44.2 million, and, as of June 30, 2021, we have incurred approximately $808.3 mil lion of accumulated deficit since our inception in 2003.

We expect to continue to incur significant operating expenditures and net losses.

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continue to undertake clinical trials for product candidates;

the formulation and manufacturing of our product candidates;

scale-up the formulation and manufacturing of our product candidates;

seek regulatory approvals for product candidates;

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hire additional personnel, including highly-skilled and experienced scientific and medical staff.

As of March 31, 2021, we have approximately $100.1 million of cash and cash equivalents.

Given our current development plans, we anticipate our cash resources will be sufficient to fund our operations into the second quarter of 2022 and we have no committed sources of additional capital at this time.

The forecast of cash resources is forward-looking information that involves risks and uncertainties, and the actual amount of our expenses could vary materially and adversely as a result of a number of factors.

As of June 30, 2021, we have approximately $76.7 million of cash and cash equivalents. Given our current development plans, we anticipate our cash resources, plus the $25.0 million gross debt proceeds raised in August 2021,will be sufficient to fund our operations into the fourth quarter of 2022 and we have no committed sources of additional capital at this time.

We have based our estimates on assumptions that may prove to be wrong, and our expenses could prove to be significantly higher than we currently anticipate.

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Our actual cash requirements may vary materially from our current expectations for a number of other factors that may include, but are not limited to, changes in the focus and direction of our development programs, slower and/or faster than expected progress of our research and development efforts, changes in governmental regulation, competitive and technical advances, rising costs associated with the development of our product candidates, our ability to secure partnering arrangements, and costs of filing, prosecuting, defending and enforcing our intellectual property rights.

pandemic continues to rapidly evolve and has already resulted in a significant disruption of global financial markets.

The COVID-19 pandemic continues to rapidly evolve and has already resulted in a significant disruption of global financial markets.

If the disruption persists and deepens, we could experience an inability to access additional capital, which could in the future negatively affect our operations.

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Any decision to reduce or eliminate activities for a program may negatively impact the potential for the program, which could have a material adverse effect on our business.

For instance, we have decided

to wind down the existing clinical programs of our Controlled IL-12

program in 2021 and to actively explore partnership opportunities for the Controlled IL-12

program to support its continued development.

Some of these changes to our planned Controlled IL-12

program may impact the prospects and future development of this program, including our ability to pursue later stage development or a partnership for this program.

For instance, we have decided to wind down the existing clinical programs of our Controlled IL-12 program in 2021 and to actively explore partnership opportunities for the Controlled IL-12 program to support its continued development.

Some of these changes to our planned Controlled IL-12 program may impact the prospects and future development of this program, including our ability to pursue later stage development or a partnership for this program.

We need to raise additional capital to fund our operations.

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The unpredictability of the capital markets may severely hinder our ability to raise capital within the time periods needed or on terms we consider acceptable, if at all.

In addition, the ongoing COVID-19

pandemic continues to disrupt the global financial markets, negatively impacted U.S.

In addition, the ongoing COVID-19 pandemic continues to disrupt the global financial markets, negatively impacted U.S.

market conditions and may reduce opportunities for us to seek out additional funding in the future.

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In June 2019, we entered into an Open Market Sale Agreement with Jefferies LLC, as agent, or Jefferies, pursuant to which we may offer and sell, from time to time through Jefferies, shares of our common stock having an aggregate offering price of up to $100.0 million.

Shares will be sold pursuant to our effective registration statement on Form S-3ASR

Shares will be sold pursuant to our effective registration statement on Form S-3ASR (File No.

333-232283), as previously filed with the Securities and Exchange Commission.

During the year ended December 31, 2020, we issued and sold an aggregate of 2,814,673 shares of our common stock under the sales agreement for aggregate net proceeds of $13.0 million after deducting commissions and offering expenses of $0.4 million and may sell and issue approximately $80.9 million in additional shares under the sales agreement.

There were no issuances during the three months ended March 31, 2021.

To the extent that we raise additional capital by issuing equity securities such as under our at-the-market

program, our existing stockholders’ ownership will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders.

There were no issuances during the three or six months ended June 30, 2021.

To the extent that we raise additional capital by issuing equity securities such as under our at-the-market program, our existing stockholders’

ownership will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders.

Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.

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These restrictive covenants may include limitations on additional borrowing and specific restrictions on the use of our assets as well as prohibitions on our ability to create liens, pay dividends, redeem our stock or make investments.

Furthermore, the ongoing impact of COVID-19

on global financial markets could make the terms of any available financing less attractive to use and more dilutive to our existing shareholders.

Furthermore, the ongoing impact of COVID-19 on global financial markets could make the terms of any available financing less attractive to use and more dilutive to our existing shareholders.

If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

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

*We have issued or reserved for future issuance shares nearing the maximum number of shares of common stock authorized by our certificate of incorporation.

If we are unable to increase the total number of authorized shares, we may be unable to effectively utilize our common stock to establish strategic relationships with other companies, expand our business through acquisitions, raise capital, or offer equity incentives to employees.

Our amended and restated certificate of incorporation authorizes us to issue 250,000,000 shares of common stock.

As of April 30, 2021, there were 215,525,411 shares of common stock outstanding and an additional 33,965,938 shares of common stock reserved for issuance pursuant to outstanding stock options and warrants.

We may need additional shares for business and financial purposes in the future.

For example, we will need additional shares of authorized common stock to raise capital to, among other things, fund our operations, conduct and/or complete clinical trials, continue our research and development activities, seek regulatory approval for our product candidates and commercialize our product candidates.

In addition, we may wish to issue additional shares in connection with entering into future strategic relationships, or acquiring other businesses, therapeutics or product candidates.

Furthermore, our success depends, in part, on our continued ability to attract, retain and motivate highly qualified management and clinical and scientific personnel, and the lack of available unissued shares may also have an adverse impact on our to provide appropriate equity incentives to employees, officers, directors, consultants and/or advisors.

If we are unable to increase the total number of authorized shares available to us, our business development and financing opportunities may be limited, and stockholder value may be harmed.

Our plans to develop and commercialize non-viral

and viral adoptive cellular therapies based on engineered cytokines and CAR T-cell

as well as TCR therapies can be considered as new approaches to cancer treatment, the successful development of which is subject to significant challenges.

and viral adoptive cellular therapies based on cytokines, T-cells,

CARs and TCRs, possibly under control of the RTS ®

and other switch technologies targeting both hematologic and solid tumor malignancies.

*We have identified a material weakness in our internal control as of June 30, 2021 and may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, which may result in material misstatements of our financial statements or could have a material adverse effect on our business and trading price of our securities.

We are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, the Sarbanes-Oxley Act of 2002 and the rules and regulations of the Nasdaq Global Market.

Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, we are required to perform system and process evaluation and testing of our internal control over financial reporting to allow our management to report on the effectiveness of our internal control over financial reporting.

We are also required to have our independent registered public accounting firm issue an opinion on the effectiveness of our internal control over financial reporting on an annual basis.

In connection with the review of our consolidated financial statements as of and for the quarter ended June 30, 2021, we identified a material weakness in our internal control over financial reporting.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our consolidated financial statements will not be prevented or detected on a timely basis.

The material weakness was related to the reconciliation and review of our accounts in a timely manner.

Specifically, our identified material weakness existing in our financial reporting process relates to the lack of sufficient accounting resources to execute certain controls related to the reconciliation and review of accounts in a timely manner.

We are in the process of designing and implementing measures to remediate the underlying causes of the control deficiencies that gave rise to the material weakness.

We will continue to monitor the effectiveness of these controls and will make any further changes management determines appropriate.

We cannot assure you that any measures we are taking or may take in the future will be sufficient to remediate the control deficiencies that led to the material weakness in our internal control over financial reporting or to avoid potential future material weaknesses.

We also previously had a material weakness identified for the year ended December 31, 2019, which was fully remediated as of December 31, 2020.

If we are unable to successfully remediate our existing or any future material weakness in our internal control over financial reporting, or if we identify any additional material weaknesses, the accuracy and timing of our financial reporting may be adversely affected.

If we are unable to maintain effective internal controls, we may not have adequate, accurate or timely financial information, and we may be unable to meet our reporting obligations as a public company, including the requirements of the Sarbanes-Oxley Act, we may be unable to accurately report our financial results in future periods, or report them within the timeframes required by the requirements of the SEC, Nasdaq or the Sarbanes-Oxley Act.

Failure to comply with the Sarbanes-Oxley Act, when and as applicable, could also potentially subject us to sanctions or investigations by the SEC or other regulatory authorities.

Any failure to maintain or implement required new or improved controls, or any difficulties we encounter in their implementation, could result in identification of additional material weaknesses or significant deficiencies, cause us to fail to meet our reporting obligations or result in material misstatements in our financial statements.

Furthermore, if we cannot provide reliable financial reports or prevent fraud, our business and results of operations could be harmed and investors could lose confidence in our reported financial information.

*Our plans to develop and commercialize non-viral adoptive cellular therapies such as TCR therapies and CAR T-cell can be considered as new approaches to cancer treatment, the successful development of which is subject to significant challenges.

We intend to employ technologies such as the technology licensed from MD Anderson pursuant to the MD Anderson License described above, and from PGEN, pursuant to the License Agreement, to pursue the development and commercialization of non-viral and viral adoptive cellular therapies based on cytokines, T-cells, CARs and TCRs, possibly under control of the RTS ® and other switch technologies targeting both hematologic and solid tumor malignancies.

Because this is a new approach to cancer immunotherapy and cancer treatment generally, developing and commercializing product candidates subjects us to a number of challenges, including:

obtaining regulatory approval from the FDA and other regulatory authorities that have very limited experience with the commercial development of genetically modified and/or unmodified T-cell

therapies for cancer;

obtaining regulatory approval from the FDA and other regulatory authorities that have very limited experience with the commercial development of genetically modified and/or unmodified T-cell therapies for cancer;

identifying and manufacturing appropriate TCRs from patient and from third parties that can be administered to a patient;

developing and deploying consistent and reliable processes for engineering a patient’s and/or donor’s T-cells

and infusing the T-cells

back into the patient;

developing and deploying consistent and reliable processes for engineering a patient’s and/or donor’s T-cells ex vivo and infusing the T-cells back into the patient;

possibly conditioning patients with chemotherapy in conjunction with delivering each of the potential products, which may increase the risk of adverse side effects of the potential products;

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addressing any competing technological and market developments;

developing processes for the safe administration of these potential products, including long-term follow-up

for all patients who receive the potential products;

developing processes for the safe administration of these potential products, including long-term follow-up for all patients who receive the potential products;

sourcing additional clinical and, if approved, commercial supplies for the materials used to manufacture and process the potential products;

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maintaining and defending the intellectual property rights relating to any products we develop;

and not infringing the intellectual property rights, in particular, the patent rights, of third parties, including competitors, such as those developing T-cell

and not infringing the intellectual property rights, in particular, the patent rights, of third parties, including competitors, such as those developing T-cell therapies.

We cannot assure you that we will be able to successfully address these challenges, which could prevent us from achieving our research, development and commercialization goals.

Our current product candidates are based on novel technologies and are supported by limited clinical data and we cannot assure you that our current and planned clinical trials will produce data that supports regulatory approval of one or more of these product candidates.

The immuno-oncology effector platform in which we have acquired rights pursuant to our License Agreement with PGEN represents early-stage technology in the field of human oncology biotherapeutics, with Ad-RTS-IL-12

plus veledimex having completed trials, in melanoma, breast cancer and rGBM.

Similarly, our genetically modified and/ or non-modified

candidates are supported by limited clinical data, all of which has been generated through trials conducted by MD Anderson, the NCI, and Eden BioCell, not by us.

We plan to assume control of the overall clinical and regulatory development of our T-cell

product candidates, and any failure to obtain, or delays in obtaining, sponsorship of new INDs, or in filing INDs sponsored by us for these or any other product candidates we determine to advance could negatively affect the timing of our potential future clinical trials.

Similarly, our genetically modified and/ or non-modified T-cell candidates are supported by limited clinical data, all of which has been generated through trials conducted by MD Anderson, the NCI, and Eden BioCell, not by us.

We plan to assume control of the overall clinical and regulatory development of our T-cell product candidates, and any failure to obtain, or delays in obtaining, sponsorship of new INDs, or in filing INDs sponsored by us for these or any other product candidates we determine to advance could negatively affect the timing of our potential future clinical trials.

Such an impact on timing could increase research and development costs and could delay or prevent obtaining regulatory approval for our product candidates, either of which could have a material adverse effect on our business.

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In addition, the results of the limited clinical trials conducted to date may not be replicated in future clinical trials.

Our Ad-RTS-IL-12

plus veledimex and genetically modified and non-modified

product candidates, as well as other product candidates, may fail to show the desired safety and efficacy in clinical development, and we cannot assure you that the results of any future trials will demonstrate the value and efficacy of our product candidates.

Our Ad-RTS-IL-12 plus veledimex and genetically modified and non-modified T-cell product candidates, as well as other product candidates, may fail to show the desired safety and efficacy in clinical development, and we cannot assure you that the results of any future trials will demonstrate the value and efficacy of our product candidates.

Moreover, there are a number of regulatory requirements that we must satisfy before we can continue clinical trials of CAR+ T, TCRs or other cellular therapy product candidates in the United States.

Satisfaction of these requirements will entail substantial time, effort and financial resources.

Any time, effort and financial resources we expend on our Ad-RTS-IL-12

plus veledimex and genetically modified and non-modified

product candidates and other early-stage product candidate development programs may adversely affect our ability to continue development and commercialization of our immuno-oncology product candidates.

Any time, effort and financial resources we expend on our Ad-RTS-IL-12 plus veledimex and genetically modified and non-modified T-cell product candidates and other early-stage product candidate development programs may adversely affect our ability to continue development and commercialization of our immuno-oncology product candidates.

We report interim data on certain of our clinical trials and we cannot assure you that interim data will be predictive of either future interim results or final study results.

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We are also competing with academic institutions, governmental agencies, and private organizations that are conducting research in the field of cancer.

Our genetically engineering T-cell

programs face significant competition in the CAR and TCR technology space from multiple companies and their collaborators.

Three such companies, Novartis International AG (Kymriah ®

), Kite Pharma Inc./Gilead Sciences, Inc.

) and Bristol-Myers Squibb Company (Breyanzi ®

), have now commercialized autologous CAR+ T cells against CD19.

Additional companies developing autologous CAR+ T targets include Bristol-Myers Squibb Company, Precigen, Inc., bluebird bio, Inc., in collaboration with Celgene Corporation, Nanjing Legend Biotech and Janssen Biotech, Inc., a subsidiary of Johnson & Johnson, Gracell Biotechnologies Inc., CARsgen Therapeutics Co.

Ltd., Bellicum Pharmaceuticals, Inc., Autolus Therapeutics plc, Exuma Biotech Corp., Mustang Bio, Inc., Crispr Therapeutics AG, Precision Biosciences Inc., Protheragen Inc.

Our genetically engineering T-cell programs face significant competition in the CAR and TCR technology space from multiple companies and their collaborators.

Three such companies, Novartis International AG (Kymriah®), Kite Pharma Inc./Gilead Sciences, Inc.

(Yescarta®) and Bristol-Myers Squibb Company (Breyanzi®), have now commercialized autologous CAR+ T cells against CD19.

Additional companies developing autologous CAR+ T targets include Bristol-Myers Squibb Company, Precigen, Inc., bluebird bio, Inc., in collaboration with Celgene Corporation, Nanjing Legend Biotech and Janssen Biotech, Inc., a subsidiary of Johnson & Johnson, Gracell Biotechnologies Inc., CARsgen Therapeutics Co.

Ltd., Bellicum Pharmaceuticals, Inc., Autolus Therapeutics plc, Exuma Biotech Corp., Mustang Bio, Inc., Crispr Therapeutics AG, Protheragen Inc.

and Marker Therapeutics, Inc.

Several companies are pursuing the development of allogeneic CAR+ T therapies, including Allogene Therapeutics, Inc.

(in collaboration with Pfizer Inc.), Atara Biotherapeutics, Inc.

and Cellectis SA (in collaboration with Servier) which may compete with our product candidates.

Our TCR program faces competition from several companies, including from Adaptimmune Therapeutics plc in collaboration with GlaxoSmithKline plc, ArsenalBio, Lyell, bluebird bio, Kite Pharma Inc./Gilead Sciences, Inc., Achilles Therapeutics Limited, Iovance Biotherapeutics, Inc., Immatics Biotechnologies GmbH, Tmunity Therapeutics Inc, Medigene AG, Tactiva Therapeutics, LLC, Takara Bio, Inc., TCR2 Therapeutics Inc., Zelluna Immunotherapy AS, PACT Pharma, Inc.

Several companies are pursuing the development of allogeneic CAR+ T therapies, including Allogene Therapeutics, Inc., Atara Biotherapeutics, Inc., Precision Biosciences Inc.,and Servier (in collaboration with Cellectis) which may compete with our product candidates.

Our TCR program faces competition from several companies, including from Adaptimmune Therapeutics plc in collaboration with GlaxoSmithKline plc, ArsenalBio, Lyell, bluebird bio, BioNTech AG, Kite Pharma Inc./Gilead Sciences, Inc., Achilles Therapeutics Limited, Iovance Biotherapeutics, Inc., Immatics Biotechnologies GmbH, Tmunity Therapeutics Inc., Medigene AG, Tactiva Therapeutics, LLC, Takara Bio, Inc., TCR2 Therapeutics Inc., Zelluna Immunotherapy AS, PACT Pharma, Inc.

Many of these companies are either investigating TCR T cells against germline antigens or are utilizing tumor infiltrating lymphocytes (TIL) whereas Ziopharm is focused on developing TCR T cell products against neoantigens arising from somatic mutations in solid tumors.

Several companies, including Advaxis Inc./Amgen Inc., BioNTech AG and Gritstone Oncology, Inc., are pursuing vaccine platforms to target neoantigens for solid tumors.

Other companies are developing non-viral

gene therapies, including Poseida Therapeutics, Inc.

Other companies are developing non-viral gene therapies, including Poseida Therapeutics, Inc.

and several companies developing CRISPR technology.

We also face competition from companies developing therapies using cells other than T cells such as Takeda Pharmaceutical Company, NantKwest Inc., IN8bio, Inc., Fate Therapeutics Inc., and TC BioPharm Limited.

We also face competition from companies developing therapies using cells other than T cells such as Takeda Pharmaceutical Company, ImmunityBio, IN8bio, Inc., Fate Therapeutics Inc., and TC BioPharm Limited.

We also face competition from companies developing T cells with cytokines such as Repertoire Immune Medicines and Obsidian Therapeutics, Inc.

We also face competition from non-cell-

based treatments offered by other companies such as Amgen Inc., AstraZeneca plc, Bristol-Myers Squibb Company, Incyte Corporation, Merck & Co., Inc., and Roche Holding AG.

We initially developed our Controlled IL-12

platform for the treatment of rGBM.

We also face competition from non-cell- based treatments offered by other companies such as Amgen Inc., AstraZeneca plc, Bristol-Myers Squibb Company, Incyte Corporation, Merck & Co., Inc., and Roche Holding AG.

We initially developed our Controlled IL-12 platform for the treatment of rGBM.

Companies that sell marketed drugs for rGBM are Genentech Inc.

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and Northwest Biotherapeutics, Inc.

Other competitors with product candidates currently in Phase 2 clinical trials include AbbVie Inc.’s Depatus-M (ABT-414)

and DNA-2401,

a conditionally replicative adenovirus being evaluated in combination with pembrolizumab Phase 2 study of oncolytic polio/rhinovirus recombinant (PVSRIPO) alone or in combination with lomustine in recurrent WHO Grade IV malignant glioma patients.

Also, MedImmune, LLC/AstraZeneca plc’s durvalumab was evaluated in a Phase 2 trial in patients with rGBM.

Other competitors with product candidates currently in Phase 2 clinical trials include AbbVie Inc.’s Depatus-M (ABT-414) and DNA-2401, a conditionally replicative adenovirus being evaluated in combination with pembrolizumab Phase 2 study of oncolytic polio/rhinovirus recombinant (PVSRIPO) alone or in combination with lomustine in recurrent WHO Grade IV malignant glioma patients.

Also, MedImmune, LLC/AstraZeneca plc’s durvalumab was evaluated in a Phase 2 trial in patients with rGBM.

Even if we obtain regulatory approval of potential products, we may not be the first to market and that may affect the price or demand for our potential products.

Existing or future competing products may provide greater therapeutic convenience or clinical or other benefits for a specific indication than our products or may offer comparable performance at a lower cost.

Additionally, the availability and price of our competitors’ products could limit the demand and the price we are able to charge for our potential products.

Additionally, the availability and price of our competitors’

products could limit the demand and the price we are able to charge for our potential products.

We may not be able to implement our business plan if the acceptance of our potential products is inhibited by price competition or the reluctance of physicians to switch from existing methods of treatment to our potential products, or if physicians switch to other new drug or biologic products or choose to reserve our potential products.

Additionally, a competitor could obtain orphan product exclusivity from the FDA with respect to such competitor’s product.

If such competitor product is determined to be the same product as one of our potential products, that may prevent us from obtaining approval from the FDA for such potential products for the same indication for seven years, except in limited circumstances.

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Our competitors also may obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for ours, which could result in our competitors establishing a strong market position before we are able to enter the market.

In addition, our ability to compete may be affected in many cases by insurers or other third-party payors seeking to encourage the use of generic products.

our ability to compete may be affected in many cases by insurers or other third-party payors seeking to encourage the use of generic products.

Any termination of our licenses with PGEN, MD Anderson or the National Cancer Institute or our research and development agreements with MD Anderson could result in the loss of significant rights and could harm our ability to develop and commercialize our product candidates.

We are dependent on patents, know-how,

and proprietary technology that are licensed from others, particularly MD Anderson, Precigen and the National Cancer Institute, or the NCI, as well as the contributions by MD Anderson under our research and development agreements.

We are dependent on patents, know-how, and proprietary technology that are licensed from others, particularly MD Anderson, Precigen and the National Cancer Institute, or the NCI, as well as the contributions by MD Anderson under our research and development agreements.

Any termination of these licenses or research and development agreements could result in the loss of significant rights and could harm our ability to commercialize our product candidates.

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whether or not our partners are complying with all of their obligations to support our programs under licenses and research and development agreements;

the allocation of ownership of inventions and know-how

resulting from the joint creation or use of intellectual property by our licensors and by us.

the allocation of ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and by us.

If disputes over intellectual property that we have licensed prevent or impair our ability to maintain our current licensing arrangements, particularly with MD Anderson, PGEN and the NCI, on acceptable terms, we may be unable to successfully develop and commercialize the affected potential products.

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Recently, due to changes in U.S.

law referred to as patent reform, new procedures including inter partes review and post-grant review have been implemented, which adds uncertainty to the possibility of challenge to our or our licensors’ patents in the future.

We may not be able to retain the rights licensed to us and PGEN by MD Anderson to technologies relating to CAR, T-cell

therapies and other related technologies.

Under the MD Anderson License, we, together with PGEN, received an exclusive, worldwide license to certain technologies owned and licensed by MD Anderson including technologies relating to novel CAR+ T cell and TCR cell therapies arising from the laboratory of Laurence Cooper, M.D., Ph.D., who was then at MD Anderson, as well as either co-exclusive

or non-exclusive

licenses under certain related technologies.

When combined with PGEN’s technology suite and Ziopharm’s clinically tested RTS ®

interleukin 12 modules, the resulting proprietary methods and technologies may help realize the promise of genetically modified CAR+ T cells and TCR therapies by controlling cell expansion and activation in the body, minimizing off-target

and unwanted on-target

effects and toxicity while maximizing therapeutic efficacy.

patents in the future.

We may not be able to retain the rights licensed to us and PGEN by MD Anderson to technologies relating to CAR, T-cell therapies and other related technologies.

When combined with PGEN’s technology suite and Ziopharm’s clinically tested RTS ® interleukin 12 modules, the resulting proprietary methods and technologies may help realize the promise of genetically modified CAR+ T cells and TCR therapies by controlling cell expansion and activation in the body, minimizing off-target and unwanted on-target effects and toxicity while maximizing therapeutic efficacy.

The term of the MD Anderson License expires on the last to occur of (a) the expiration of all patents licensed thereunder, or (b) the twentieth anniversary of the date of the MD Anderson License;

provided, however, that following the expiration of the term, we and PGEN shall then have a fully-paid up, royalty free, perpetual, irrevocable and sublicensable license to use the licensed intellectual property thereunder.

After 10 years from the date of the MD Anderson License and subject to a 90-day

cure period, MD Anderson will have the right to convert the MD Anderson License into a non-exclusive

license if we and PGEN are not using commercially reasonable efforts to commercialize the licensed intellectual property on a case-by-case

After five years from the date of the MD Anderson License and subject to a 180-day

cure period, MD Anderson will have the right to terminate the MD Anderson License with respect to specific technology(ies) funded by the government or subject to a third-party contract if we and PGEN are not meeting the diligence requirements in such funding agreement or contract, as applicable.

After 10 years from the date of the MD Anderson License and subject to a 90-day cure period, MD Anderson will have the right to convert the MD Anderson License into a non-exclusive license if we and PGEN are not using commercially reasonable efforts to commercialize the licensed intellectual property on a case-by-case basis.

After five years from the date of the MD Anderson License and subject to a 180-day cure period, MD Anderson will have the right to terminate the MD Anderson License with respect to specific technology(ies) funded by the government or subject to a third-party contract if we and PGEN are not meeting the diligence

requirements in such funding agreement or contract, as applicable.

MD Anderson may also terminate the agreement with written notice upon material breach by us or PGEN, if such breach has not been cured within 60 days of receiving such notice.

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There can be no assurance that we will be able to successfully perform under the MD Anderson License and if the MD Anderson License is terminated it may prevent us from achieving our business objectives.

We are partly reliant on the National Cancer Institute for research and development and early clinical testing of certain of our product candidates.

A portion of our research and development is being conducted by the NCI under the CRADA entered into in January 2017 and amended in February 2019.

Under the CRADA, the NCI, with Dr.

Rosenberg as the principal investigator, is responsible for conducting a clinical trial using the Sleeping Beauty

system to express TCRs for the treatment of solid tumors.

We have limited control over the nature or timing of the NCI’s clinical trial and limited visibility into their day-to-day

activities, including with respect to how they are providing and administering T cell therapy.

For example, the research we are funding constitutes only a small portion of the NCI’s overall research.

Additionally, other research being conducted by Dr.

Rosenberg may at times receive higher priority than research on our program.

Further, in response to the COVID-19

pandemic, the NCI has taken precautionary measures that have delayed the enrollment of the TCR-T

clinical trial using the Sleeping Beauty

system to express TCRs for the treatment of solid tumors.

In addition, enrollment in this clinical trial has been temporarily suspended due to issues internal to NCI and unrelated to our technology.

The progress and timeline, including the timeline for dosing patients, for this trial are under the control of the NCI.

The CRADA terminates on January 9, 2022 unless it is extended in writing by the parties, and either party may terminate the CRADA by providing at least 60 days’ prior written notice to the other party.

If the NCI unilaterally terminates the CRADA or the CRADA lapses without any extension, part or all of the research and development of the Sleeping Beauty

system conducted at the NCI would be suspended, and the research and development of our TCR program would be impacted.

Clinical trials are very expensive, time-consuming, difficult to design, initiate and implement.

Human clinical trials are very expensive and difficult to design, initiate and implement, in part because they are subject to rigorous regulatory requirements.

The clinical trial start-up

and process itself is also time-consuming and results are inherently uncertain.

The clinical trial start-up and process itself is also time-consuming and results are inherently uncertain.

We estimate that clinical trials of our product candidates will take at least several years to complete.

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In addition, we or the FDA may suspend our clinical trials at any time if it appears that we are exposing participants to unacceptable health risks or if the FDA finds deficiencies in our IND submission or in the conduct of these trials.

See also “Risks Related to the Clinical Testing, Regulatory Approval and Manufacturing of our Product Candidates— Our product candidates are in various stages of clinical trials, which are very expensive and time-consuming.

We cannot be certain when we will be able to submit a BLA, to the FDA and any failure or delay in completing clinical trials for our product candidates could harm our business.”

See also “Risks Related to the Clinical Testing, Regulatory Approval and Manufacturing of our Product Candidates—

Our product candidates are in various stages of clinical trials, which are very expensive and time-consuming.

We cannot be certain when we will be able to submit a BLA, to the FDA and any failure or delay in completing clinical trials for our product candidates could harm our business.”

We may not be able to commercialize any products, generate significant revenues, or attain profitability.

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The loss of any of our key personnel, could result in delays in product development, loss of key personnel or partnerships, and diversion of management resources, which could adversely affect our operating results.

We do not carry “key person” life insurance policies on any of our officers or key employees.

We do not carry “key person”

life insurance policies on any of our officers or key employees.

If we are unable to hire additional qualified personnel, our ability to grow our business may be harmed.

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This demonstration requires significant research and animal tests, which are referred to as preclinical studies, as well as human tests, which are referred to as clinical trials.

Satisfaction of the FDA’s regulatory requirements typically takes many years, depending upon the type, complexity, and novelty of the product candidate, and will require substantial resources for research, development, and testing.

Satisfaction of the FDA’s regulatory requirements typically takes many years, depending upon the

type, complexity, and novelty of the product candidate, and will require substantial resources for research, development, and testing.

We cannot predict whether our research, development, and clinical approaches will result in products that the FDA will consider safe for humans and effective for their intended uses.

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Notwithstanding our current clinical trial plans for each of our existing product candidates, we may not be able to commence additional trials or see results from these trials within our anticipated timelines.

As they enter later stages of development, our product candidates generally will become subject to more stringent regulatory requirements, including the FDA’s requirements for chemistry, manufacturing and controls for product candidates entering Phase 3 clinical trials.

There is no guarantee the FDA will allow us to commence Phase 3 clinical trials for product candidates studied in early clinical trials.

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The FDA or other foreign regulatory authorities could order us to cease further development of or deny approval of our product candidates for any or all targeted indications.

For instance, Ad-RTS-hIL-12

plus veledimex may result in local reactions during the time of injection, including severe swelling and bleeding.

If a serious adverse event was to occur in any of our clinical trials, including in our trial of Ad-RTS-hIL-12

plus veledimex for the treatment of DIPG, the FDA may place a hold on the clinical trial for this indication and, potentially, our clinical trials of Ad-RTS-hIL-12

plus veledimex in other indications.

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

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Inadequate training in recognizing or managing the potential side effects of our product candidates could result in adverse effects to patients, including death.

observation period recommended or required for patients who receive treatment using our products, a number of potentially significant negative consequences could result, including:

Additionally, if one or more of our product candidates receives marketing approval, and we or others later identify undesirable side effects caused by such products, including during any long-term follow-up observation period recommended or required for patients who receive treatment using our products, a number of potentially significant negative consequences could result, including:

regulatory authorities may withdraw approvals of such product;

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We currently depend on a limited number of vendors for certain materials and equipment used in the manufacture of our product candidates.

Some of these suppliers may not have the capacity to support commercial products manufactured under current good manufacturing practices by biopharmaceutical firms or may otherwise be ill-equipped

to support our needs.

Some of these suppliers may not have the capacity to support commercial products manufactured under current good manufacturing practices by biopharmaceutical firms or may otherwise be ill-equipped to support our needs.

We also do not have supply contracts with many of these suppliers and may not be able to obtain supply contracts with them on acceptable terms or at all.

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This failure would cause us to abandon a product candidate and may delay development of other product candidates.

Any delay in, or termination of, our clinical trials will delay the submission of our BLAs with the FDA and, ultimately, our ability to commercialize our product candidates and generate product revenues.

Any delay in, or termination

of, our clinical trials will delay the submission of our BLAs with the FDA and, ultimately, our ability to commercialize our product candidates and generate product revenues.

In addition, our clinical trials involve small patient populations.

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Our immuno-oncology product candidates are based on a novel technology, which makes it difficult to predict the time and cost of product candidate development and subsequently obtaining regulatory approval.

Currently, few gene therapy and cell therapy products have been approved in the United States and Europe.

Currently, a limited number of gene therapy and cell therapy products have been approved in the United States and Europe.

We are currently focused on developing products in immuno-oncology that employ novel gene expression, control and cell technologies to deliver safe, effective and scalable cell- and viral-based therapies for the treatment of cancer.

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For example, the FDA has established the Office of Tissue and Advanced Therapies within its Center for Biologics Evaluation and Research, or CBER, to consolidate the review of gene therapy and related products, and the Cellular, Tissue and Gene Therapies Advisory Committee to advise CBER on its review.

Also, before a clinical trial can begin at an institution, that institution’s institutional review board, or IRB, and its Institutional Biosafety Committee will have to review the proposed clinical trial to assess the safety of the trial.

In addition, adverse developments in clinical trials of gene therapy products conducted by others may cause the FDA or other regulatory bodies to change the requirements for approval of any of our product candidates.

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These institutions may also have, or implement in the future, policies and procedures that limit their ability to advance our programs.

For instance, our partners may take measures in response to the COVID-19

pandemic, that may impact enrollment in our clinical trials.

For instance, our partners may take measures in response to the COVID-19 pandemic, that may impact enrollment in our clinical trials.

These collaborators may also have relationships with other commercial entities, some of whom may compete with us.

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Our third-party manufacturers might be unable to formulate and manufacture our products in the volume and of the quality required to meet our clinical needs and commercial needs, if any.

Resources at 3rd party manufacturers should be called out here.

For example, competition for these scare resources, skills required, and on going training/certifications of employees.

Our future contract manufacturers may not perform as agreed or may not remain in the contract manufacturing business for the time required to supply our clinical trials or to successfully produce, store, and distribute our products.

Biopharmaceutical manufacturers are subject to ongoing periodic unannounced inspection by the FDA, the Drug Enforcement Administration and corresponding state and foreign agencies to ensure strict compliance with current good manufacturing practices, or cGMP, and other government regulations and corresponding foreign standards.

We do not have control over third-party manufacturers’ compliance with these regulations and standards.

We do not have control over third-party manufacturers’

compliance with these regulations and standards.

If any third-party manufacturer makes improvements in the manufacturing process for our products, we may not own, or may have to share, the intellectual property rights to the innovation.

Further third-party manufacturers may encounter difficulties in achieving volume production, quality control, and quality assurance and also may experience shortages in qualified personnel and obtaining materials for our product candidates, including delays or shortages due to limited supply or capacity of production facilities as a result of the recent COVID-19

Our third-party manufacturers may not be able to comply with cGMP regulations or similar regulatory requirements outside the United States.

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The FDA may also impose requirements for costly post-marketing studies or clinical trials and surveillance to monitor the safety or efficacy of our approved products.

The FDA closely regulates the post-approval marketing and promotion of products to ensure that they are marketed only for the approved indications and in accordance with the provisions of the approved labeling.

The FDA closely regulates the post-approval marketing and promotion of products to ensure that

they are marketed only for the approved indications and in accordance with the provisions of the approved labeling.

However, companies may share truthful and not misleading information that is otherwise consistent with the labeling.

The FDA imposes stringent restrictions on manufacturers’ communications regarding off-label

use and if we market our products outside of their approved indications, we may be subject to enforcement action for off-label

The FDA imposes stringent restrictions on manufacturers’

communications regarding off-label use and if we market our products outside of their approved indications, we may be subject to enforcement action for off-label marketing.

Violations of the Federal Food, Drug and Cosmetic Act relating to the promotion of prescription drugs may lead to investigations alleging violations of federal and state health care fraud and abuse laws, as well as state consumer protection laws.

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however, we cannot assure that we will be able to market, sell, and distribute our products successfully.

Our future success also may depend, in part, on our ability to enter into and maintain collaborative relationships for such capabilities and to encourage the collaborator’s strategic interest in the products under development, and such collaborator’s ability to successfully market and sell any such products.

Although we intend to pursue certain collaborative arrangements regarding the sale and marketing of certain of our product candidates, there are no assurances that we will be able to establish or maintain collaborative arrangements or, if we are able to do so, whether we would be able to conduct our own sales efforts.

There can also be no assurance that we will be able to establish or maintain relationships with third-party collaborators or develop in-house

sales and distribution capabilities.

There can also be no assurance that we will be able to establish or maintain relationships with third-party collaborators or develop in-house sales and distribution capabilities.

To the extent that we depend on third parties for marketing and distribution, any revenues we receive will depend upon the efforts of such third parties, and there can be no assurance that such efforts will be successful.

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If we are not able to partner with a third party and are not successful in recruiting sales and marketing personnel or in building a sales and marketing infrastructure, we will have difficulty commercializing our product candidates, which would harm our business.

If we rely on pharmaceutical or biotechnology companies with established distribution systems to market our products, we will need to establish and maintain partnership arrangements, and we may not be able to enter into these arrangements on acceptable terms or at all.

To the extent that we enter into co-promotion

or other arrangements, any revenues we receive will depend upon the efforts of third parties that may not be successful and that will be only partially in our control.

rely on pharmaceutical or biotechnology companies with established distribution systems to market our products, we will need to establish and maintain partnership arrangements, and we may not be able to enter into these arrangements on acceptable terms or at all.

To the extent that we enter into co-promotion or other arrangements, any revenues we receive will depend upon the efforts of third parties that may not be successful and that will be only partially in our control.

If we cannot compete successfully for market share against other biopharmaceutical companies, we may not achieve sufficient product revenues and our business will suffer.

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It is difficult to predict the coverage and reimbursement decisions that will be made by third-party payors for novel gene and cell therapy products such as ours.

Even if we obtain coverage for our product candidates, the resulting reimbursement payment rates might not be adequate or may require co-payments

that patients find unacceptably high.

Even if we obtain coverage for our product candidates, the resulting reimbursement payment rates might not be adequate or may require co-payments that patients find unacceptably high.

Patients are unlikely to use our product candidates unless coverage is provided and reimbursement is adequate to cover a significant portion of the cost of our product candidates.

In addition, the market for our product candidates for which we may receive regulatory approval will depend significantly on access to third-party payors’ drug formularies or lists of medications for which third-party payors provide coverage and reimbursement, which might not include all of the FDA-approved

drugs for a particular indication.

In addition, the market for our product candidates for which we may receive regulatory approval will depend significantly on access to third-party payors’

drug formularies or lists of medications for which third-party payors provide coverage and reimbursement, which might not include all of the FDA-approved drugs for a particular indication.

The industry competition to be included in such formularies often leads to downward pricing pressures on pharmaceutical companies.

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Our market opportunities may also be limited by competitor treatments that may enter the market.

See also “Risks Related to Our Ability to Commercialize Our Product Candidates— If we cannot compete successfully for market share against other biopharmaceutical companies, we may not achieve sufficient product revenues and our business will suffer

See also “Risks Related to Our Ability to Commercialize Our Product Candidates—

If we cannot compete successfully for market share against other biopharmaceutical companies, we may not achieve sufficient product revenues and our business will suffer .”

Healthcare legislative reform measures may have a material adverse effect on our business and results of operations.

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Increased the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program to 23.1% and 13% of the average manufacturer price for most branded and generic drugs, respectively;

Created a new Medicare Part D coverage gap discount program, in which manufacturers must now agree to offer 70% point-of-sale

discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D;

Extended manufacturers’ Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations;

Created a new Medicare Part D coverage gap discount program, in which manufacturers must now agree to offer 70% point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D;

Extended manufacturers’

Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations;

Created new methodologies by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected, and for drugs that are line extensions;

Expanded eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to additional individuals with income at or below 133% of the Federal Poverty Level, thereby potentially increasing both the volume of sales and manufacturers’ Medicaid rebate liability;

Medicaid rebate liability;

Expanded the entities eligible for discounts under the Public Health Service pharmaceutical pricing program;

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Expanded healthcare fraud and abuse laws, including the False Claims Act and the federal Anti-Kickback Statute, new government investigative powers, and enhanced penalties for noncompliance;

Created a licensure framework for follow-on

biologic products;

Created a licensure framework for follow-on biologic products;

Created new requirements under the federal Physician Payments Sunshine Act for certain drug manufacturers to annually report information related to payments and other transfers of value made to physicians, as defined by such law, and teaching hospitals as well as ownership or investment interests held by physicians and their immediate family members;

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While Congress has not passed comprehensive repeal legislation, several bills affecting the implementation of certain taxes under the ACA have been signed into law.

In December 2017, Congress repealed the tax penalty, effective January 1, 2019, for an individual’s failure to maintain ACA-mandated

health insurance as part of the Tax Cuts and Jobs Act of 2017, or Tax Act.

Further, the 2020 federal spending package permanently eliminated effective January 1, 2020, the ACA-mandated

“Cadillac” tax on high-cost employer-sponsored health coverage and medical device tax and effective January 1, 2021 also eliminated the health insurance tax.

The Bipartisan Budget Act of 2018, or the BBA, among other things, amended the ACA, effective January 1, 2019, to increase from 50 percent to 70 percent the point-of-sale

discount that is owed by pharmaceutical manufacturers who participate in Medicare Part D and close the coverage gap in most Medicare drug plans, commonly referred to as the “donut hole”.

On December 14, 2018, a Texas U.S.

District Court Judge ruled that ACA is unconstitutional in its entirety because the “individual mandate” was repealed by Congress as part of the Tax Act.

Additionally, on December 18, 2019, the U.S.

Court of Appeals for the 5th Circuit upheld the District Court ruling that the individual mandate was unconstitutional and remanded the case back to the District Court to determine whether the remaining provisions of the ACA are invalid as well.

On March 2, 2020, the United States Supreme Court is currently reviewing this case, but it is unknown when a decision will be reached.

Although the Supreme Court has not yet ruled on the constitutionality of the ACA, on January 28, 2021, President Biden issued an executive order to initiate a special enrollment period from February 15, 2021 through May 15, 2021 for purposes of obtaining health insurance coverage through the ACA marketplace.

The executive order also instructs certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ACA.

It is unclear how the Supreme Court ruling, other such litigation and the healthcare reform measures of the Biden administration will impact ACA and our business.

The ultimate content, timing or effect of any healthcare reform measures on the U.S.

healthcare industry is unclear.

There have been executive, legal and political challenges to certain aspects of the ACA.

For example, President Trump signed several executive orders and other directives designed to delay, circumvent, or loosen certain requirements mandated by the ACA.

Concurrently, Congress considered legislation to repeal or repeal and replace all or part of the ACA.

While Congress has not passed comprehensive repeal legislation, several bills affecting the implementation of certain taxes under the ACA have been signed into law.

In December 2017, Congress repealed the tax penalty, effective January 1, 2019, for an individual’s failure to maintain ACA-mandated

health insurance as part of the Tax Cuts and Jobs Act of 2017, or Tax Act.

Further, the 2020 federal spending package permanently eliminated effective January 1, 2020, the ACA-mandated

“Cadillac” tax on high-cost employer-sponsored health coverage and medical device tax and effective January 1, 2021 also eliminated the health insurance tax.

The Bipartisan Budget Act of 2018, or the BBA, among other things, amended the ACA, effective January 1, 2019, to increase from 50 percent to 70 percent the point-of-sale

discount that is owed by pharmaceutical manufacturers who participate in Medicare Part D and close the coverage gap in most Medicare drug plans, commonly referred to as the “donut hole”.

On December 14, 2018, a Texas U.S.

District Court Judge ruled that ACA is unconstitutional in its entirety because the “individual mandate” was repealed by Congress as part of the Tax Act.

Additionally, on December 18, 2019, the U.S.

On March 2, 2020, the United States Supreme Court is currently reviewing this case, but it is unknown when a decision will be reached.

It is unclear how the Supreme Court ruling, other such litigation and the healthcare reform measures of the Biden administration will impact ACA and our business.

In December 2017, Congress repealed the tax penalty, effective January 1, 2019, for an individual’s failure to maintain ACA-mandated health insurance as part of the Tax Cuts and Jobs Act of 2017, or Tax Act.

On June 17, 2021, the U.S.

Supreme Court dismissed a challenge on procedural grounds that argued that ACA is unconstitutional in its entirety because the “individual mandate”

was repealed by Congress.

Thus, the ACA will remain in effect in its current form.

Further, prior to the U.S.

Supreme Court ruling on January 28, 2021, President Biden issued an executive order that initiated a special enrollment period for purposes of obtaining health insurance coverage through the ACA marketplace, which began on February 15, 2021 and will remain open through August 15, 2021.

The executive order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ACA.

It is possible that the ACA will be subject to judicial or Congressional challenges in the future.

It is unclear how any such challenges and the healthcare reform measures of the Biden administration will impact ACA and our business.

The ultimate content, timing or effect of any healthcare reform measures on the U.S.

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At the federal level, the Trump administration used several means to propose or implement drug pricing reform, including through federal budget proposals, executive orders and policy initiatives.

For example, on July 24, 2020 and September 13, 2020, the Trump administration announced several executive orders related to prescription drug pricing that attempt to implement several of the administration’s proposals.

The FDA also released a final rule, effective November 30, 2020, implementing a portion of the importation executive order providing guidance for states to build and submit importation plans for drugs from Canada.

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The implementation of the rule has been delayed by the Biden administration from January 1, 2022 to January 1, 2023 in response to ongoing litigation.

The rule also creates a new safe harbor for price reductions reflected at the point-of-sale,

as well as a new safe harbor for certain fixed fee arrangements between pharmacy benefit managers and manufacturers, the implementation of which have also been delayed pending review by the Biden administration until March 22, 2021.

On November 20, 2020, CMS issued an interim final rule implementing President Trump’s Most Favored Nation executive order, which would tie Medicare Part B payments for certain physician-administered drugs to the lowest price paid in other economically advanced countries, effective January 1, 2021.

On December 28, 2020, the United States District Court in Northern California issued a nationwide preliminary injunction against implementation of the interim final rule.

However, it is unclear whether the Biden administration will work to reverse these measures or pursue similar policy initiatives.

The rule also creates a new safe harbor for price reductions reflected at the point-of-sale, as well as a new safe harbor for certain fixed fee arrangements between pharmacy benefit managers and manufacturers, the implementation of which have also been delayed until January , 2023.

On December 28, 2020, the United States District Court for the Northern District of California issued a nationwide preliminary injunction against implementation of the interim final rule.

On January 13, 2021, in a separate lawsuit brought by industry groups in the U.S.

District of Maryland, the government defendants entered into a joint motion to stay the litigation on the condition that the government would not appeal the preliminary injunction granted in the U.S.

District Court for the Northern District of California and that performance for any final regulation stemming from the MFN Model interim final rule shall not commence earlier than sixty (60) days after publication of that regulation in the Federal Register.

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

It is possible that additional governmental action is taken in response to the COVID-19

We expect that the ACA, as well as other healthcare reform measures that may be adopted in the future, particularly in light of the new presidential administration, which may result in more rigorous coverage criteria and in additional downward pressure on the price that we may receive for any approved product.

It is possible that additional governmental action is taken in response to the COVID-19 pandemic.

We expect that the ACA, as well as other healthcare reform measures that may be adopted in the future may result in more rigorous coverage criteria and in additional downward pressure on the price that we may receive for any approved product.

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

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If we fail to comply with federal and state healthcare laws, including fraud and abuse and health information privacy and security laws, we could face substantial penalties and our business, results of operations, financial condition and prospects could be adversely affected.

As a pharmaceutical company, even though we do not and will not control referrals of healthcare services or bill directly to Medicare, Medicaid or other third-party payors, certain federal and state healthcare laws and regulations pertaining to fraud and abuse and patients’ rights are and will be applicable to our business.

rights are and will be applicable to our business.

For example, we could be subject to healthcare fraud and abuse and patient privacy regulation by both the federal government and the states in which we conduct our business.

The laws that may affect our ability to operate include, among others:

The federal Anti-Kickback Statute, which regulates our business activities, including our marketing practices, educational programs, pricing policies, and relationships with healthcare providers or other entities, by prohibiting, among other things, soliciting, receiving, offering or paying remuneration, directly or indirectly, to induce, or in return for, either the referral of an individual or the purchase or recommendation of an item or service reimbursable under a federal healthcare program, such as the Medicare and Medicaid programs;

Federal civil and criminal false claims laws, including the False Claims Act which permits a private individual acting as a “whistleblower” to bring actions on behalf of the federal government alleging violations of the False Claims Act, and civil monetary penalty laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other third-party payors that are false or fraudulent;

for, either the referral of an individual or the purchase or recommendation of an item or service reimbursable under a federal healthcare program, such as the Medicare and Medicaid programs;

Federal civil and criminal false claims laws, including the False Claims Act which permits a private individual acting as a “whistleblower”

to bring actions on behalf of the federal government alleging violations of the False Claims Act, and civil monetary penalty laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other third-party payors that are false or fraudulent;

The federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created new federal civil and criminal statutes that prohibit, among other things, executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;

HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, and their implementing regulations, which imposes certain requirements relating to the privacy, security and transmission of individually identifiable health information on entities and individuals subject to the law including certain healthcare providers, health plans, and healthcare clearinghouses, known as covered entities, as well as individuals and entities that perform services for them which involve the use, or disclosure of, individually identifiable health information, known as business associates and their subcontractors that use, disclose or otherwise process individually identifiable health information;

Requirements under the Physician Payments Sunshine Act to report annually to CMS certain financial arrangements with physicians, (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, as defined in the ACA and its implementing regulations, including reporting any “transfer of value” made or distributed to teaching hospitals, and physicians, as defined by such law and reporting any ownership and investment interests held by physicians and their immediate family members and applicable group purchasing organizations during the preceding calendar year, which will be expanded beginning in 2022, to require applicable manufacturers to report such information regarding its relationships with physician assistants, nurse practitioners, clinical nurse specialists, anesthesiologist assistants, certified registered nurse anesthetists and certified nurse midwives during the previous year;

made or distributed to teaching hospitals, and physicians, as defined by such law and reporting any ownership and investment interests held by physicians and their immediate family members and applicable group purchasing organizations during the preceding calendar year, which will be expanded beginning in 2022, to require applicable manufacturers to report such information regarding its relationships with physician assistants, nurse practitioners, clinical nurse specialists, anesthesiologist assistants, certified registered nurse anesthetists and certified nurse midwives during the previous year;

State and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers;

state laws that require pharmaceutical companies to comply with the industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government that otherwise restricts certain payments that may be made to healthcare providers and entities;

state laws that require drug manufacturers to report information related to payments and other transfer of value to physicians and other healthcare providers and entities;

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If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, we may be subject to significant penalties, including administrative, civil and criminal penalties, damages, fines, exclusion from participation in United States federal or state health care programs, such as Medicare and Medicaid, disgorgement, imprisonment, integrity oversight and reporting obligations, and the curtailment or restructuring of our operations any of which could materially adversely affect our ability to operate our business and our financial results.

Although compliance programs can mitigate the risk of investigation and prosecution for violations of these laws, the risks cannot be entirely eliminated.

Any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses and divert our management’s attention from the operation of our business.

Although compliance programs can mitigate the risk of investigation and prosecution for

violations of these laws, the risks cannot be entirely eliminated.

Moreover, achieving and sustaining compliance with applicable federal and state privacy, security and fraud laws may prove costly.

Our immuno-oncology product candidates may face competition in the future from biosimilars.

The Biologics Price Competition and Innovation Act of 2009, or BPCIA, provides an abbreviated pathway for the approval of follow-on

biological products.

Our immuno-oncology product candidates may face competition in the future from biosimilars and/or new technologies.

The Biologics Price Competition and Innovation Act of 2009, or BPCIA, provides an abbreviated pathway for the approval of follow-on biological products.

Under the BPCIA, an application for a biosimilar product cannot be approved by the FDA until 12 years after the original branded product was approved under a BLA.

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Further, this data exclusivity does not prevent another company from developing a product that is highly similar to the original branded product, generating its own data and seeking approval.

Data exclusivity only assures that another company cannot rely upon the data within the innovator’s application to support the biosimilar product’s approval.

We rely significantly on information technology and any failure, inadequacy, interruption or security lapse of that technology or loss of data, including any cyber security incidents, could compromise sensitive information related to our business, prevent us from accessing critical information or expose us to liability which could harm our ability to operate our business effectively and adversely affect our business and reputation.

In the ordinary course of our business, we, our contract research organizations and other third parties on which we rely collect and store sensitive data, including legally protected patient health information, personally identifiable information about our employees, intellectual property, and proprietary business information.

We manage and maintain our applications and data utilizing on-site

We manage and maintain our applications and data utilizing on-site systems.

These applications and data encompass a wide variety of business-critical information including research and development information and business and financial information.

The secure processing, storage, maintenance and transmission of this critical information is vital to our operations and business strategy.

Because of the work-from-home policies we implemented due to COVID-19,

information that is normally protected, including company confidential information, may be less secure.

Because of the work-from-home policies we implemented due to COVID-19, information that is normally protected, including company confidential information, may be less secure.

Additionally, despite the implementation of security measures, our internal computer systems and those of third parties with which we contract are vulnerable to damage from cyber-attacks, computer viruses, breaches, unauthorized access, interruptions due to employee error or malfeasance or other disruptions, or damage from natural disasters, terrorism, war and telecommunication and electrical failures.

In addition, due to the COVID-19

pandemic, we have enabled many of our employees to work remotely, which may make us more vulnerable to cyberattacks.

In addition, due to the COVID-19 pandemic, we have enabled many of our employees to work remotely, which may make us more vulnerable to cyberattacks.

Any such event could compromise our networks and the information stored there could be accessed by unauthorized parties, publicly disclosed, lost or stolen.

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To date, we have exclusive rights in the field of cancer treatment to certain U.S.

and foreign intellectual property with respect to certain cell therapy and related technologies from MD Anderson and NCI, as well as with respect to the PGEN technology, including Ad-RTS-IL-12

plus veledimex.

Under the MD Anderson License, future filings and applications require the agreement of each of MD Anderson, PGEN and us, and MD Anderson has the right to control the preparation and filing of additional patent applications unless the parties agree that we or PGEN may prosecute the application directly.

and foreign intellectual property with respect to certain cell therapy and related technologies from MD Anderson and NCI, as well as with respect to the PGEN technology, including Ad-RTS-IL-12 plus veledimex.

the parties agree that we or PGEN may prosecute the application directly.

Although under the agreement MD Anderson has agreed to review and incorporate any reasonable comments that we or PGEN may have regarding licensed patents and patent applications, we cannot guarantee that our comments will be solicited or followed.

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Although under the agreement PGEN has agreed to consider in good faith and consult with us regarding any comments we may have regarding these patents and patent applications, we cannot guarantee that our comments will be solicited or followed.

Without direct control of the in-licensed

patents and patent applications, we are dependent on MD Anderson, the NCI or PGEN, as applicable, to keep us advised of prosecution, particularly in foreign jurisdictions where prosecution information may not be publicly available.

Without direct control of the in-licensed patents and patent applications, we are dependent on MD Anderson, the NCI or PGEN, as applicable, to keep us advised of prosecution, particularly in foreign jurisdictions where prosecution information may not be publicly available.

We anticipate that we, MD Anderson, the NCI and PGEN will file additional patent applications both in the United States and in other countries.

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Therefore, we cannot know with certainty whether we were the first to make the inventions claimed in our owned patents or pending patent applications, or that we were the first to file for patent protection of such inventions, nor can we know whether those from whom we license patents were the first to make the inventions claimed or were the first to file.

As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights are highly uncertain.

As a result, the issuance, scope, validity,

enforceability and commercial value of our patent rights are highly uncertain.

Our pending and future patent applications may not result in patents being issued which protect our technology or products, in whole or in part, or which effectively prevent others from commercializing competitive technologies and products.

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Even if our owned and licensed patent applications issue as patents, they may not issue in a form that will provide us with any meaningful protection, prevent competitors from competing with us or otherwise provide us with any competitive advantage.

Our competitors may be able to circumvent our owned or licensed patents by developing similar or alternative technologies or products in a non-infringing

Our competitors may be able to circumvent our owned or licensed patents by developing similar or alternative technologies or products in a non-infringing manner.

The issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and our owned and licensed patents may be challenged in the courts or patent offices in the United States and abroad.

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Our success also depends upon the skills, knowledge, and experience of our scientific and technical personnel, our consultants and advisors, as well as our licensors and contractors.

To help protect our proprietary know-how

and our inventions for which patents may be unobtainable or difficult to obtain, and to maintain our competitive position, we rely on trade secret protection and confidentiality agreements.

To help protect our proprietary know-how and our inventions for which patents may be unobtainable or difficult to obtain, and to maintain our competitive position, we rely on trade secret protection and confidentiality agreements.

To this end, it is our general policy to require our employees, consultants, advisors, and contractors to enter into agreements that prohibit the disclosure of confidential information and, where applicable, require disclosure and assignment to us of the ideas, developments, discoveries, and inventions important to our business.

These agreements may not provide adequate protection for our trade secrets, know-how,

confidential information or other proprietary information in the event of any unauthorized use or disclosure or the lawful development by others of such information.

These agreements may not provide adequate protection for our trade secrets, know-how, confidential information or other proprietary information in the event of any unauthorized use or disclosure or the lawful development by others of such information.

Moreover, we may not be able to obtain adequate remedies for any breaches of these agreements.

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If any of our trade secrets or other confidential information were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent them, or those to whom they communicate it, from using that technology or information to compete with us.

If any of our trade secrets, know-how

or other proprietary information is disclosed, the value of our trade secrets, know-how

and other proprietary rights would be significantly impaired and our business and competitive position would suffer.

If any of our trade secrets, know-how or other proprietary information is disclosed, the value of our trade secrets, know-how and other proprietary rights would be significantly impaired and our business and competitive position would suffer.

Third-party claims of intellectual property infringement would require us to spend significant time and money and could prevent us from developing or commercializing our products.

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There is considerable intellectual property litigation in the biotechnology and pharmaceutical industries.

While no such litigation has been brought against us and we have not been held by any court to have infringed a third party’s intellectual property rights, we cannot guarantee that our products or use of our products do not infringe third-party patents.

It is also possible that we have failed to identify relevant third-party patents or applications.

For example, applications filed before November 29, 2000 and certain applications filed after that date that will not be filed outside the United States remain confidential until patents issue.

applications filed before November 29, 2000 and certain applications filed after that date that will not be filed outside the United States remain confidential until patents issue.

Patent applications in the United States and elsewhere are published approximately 18 months after the earliest filing, which is referred to as the priority date.

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Our research, development and commercialization activities, as well as any product candidates or products resulting from these activities, may infringe or be claimed to infringe patents or patent applications under which we do not hold licenses or other rights.

A patent does not protect its owner from a claim of infringement of another owner’s patent.

Therefore, our patent position cannot and does not provide any assurance that we are not infringing the patent rights of another.

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While an inadvertent lapse can in many cases be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction.

Noncompliance events that could result in abandonment or lapse of a patent or patent application include, but are not limited to, failure to respond to official actions within prescribed time limits, non-payment

of fees and failure to properly legalize and submit formal documents.

In such an event, our competitors might be able to enter the market, which would have a material adverse effect on our business.

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Any such termination or claim could have a material adverse effect on our financial condition, results of operations, liquidity or business.

Even if we contest any such termination or claim and are ultimately successful, such dispute could lead to delays in the development or commercialization of potential products and result in time-consuming and expensive litigation or arbitration.

Even if we contest any such termination or claim and are ultimately successful, such dispute could lead to delays in the development

or commercialization of potential products and result in time-consuming and expensive litigation or arbitration.

On termination we may be required to license to the licensor any related intellectual property that we developed.

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Many of our employees were previously employed at universities or other biotechnology or pharmaceutical companies, including our competitors or potential competitors.

Although we try to ensure that our employees do not use the proprietary information or know-how

of others in their work for us, we may be subject to claims that these employees or we have used or disclosed intellectual property, including trade secrets or other proprietary information, of any such employee’s former employer.

Although we try to ensure that our employees do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that these employees or we have used or disclosed intellectual property, including trade secrets or other proprietary information, of any such employee’s former employer.

Litigation may be necessary to defend against these claims.

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Comments by securities analysts or changes in financial estimates or ratings by any securities analysts who follow our common stock, our failure to meet these estimates or failure of those analysts to initiate or maintain coverage of our common stock;

The public’s response to press releases or other public announcements by us or third parties, including our filings with the SEC, as well as announcements of the status of development of our products, announcements of technological innovations or new therapeutic products by us or our competitors, announcements regarding collaborative agreements and other announcements relating to product development, litigation and intellectual property impacting us or our business;

Government regulation;

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Changes in accounting principles.

pandemic, which has resulted in decreased stock prices for many companies notwithstanding the lack of a fundamental change in their underlying business models or prospects.

In addition, the stock market in general and our stock in particular from time to time experiences significant price and volume fluctuations unrelated to the operating performance of particular companies, including in connection with the ongoing COVID-19 pandemic, which has resulted in decreased stock prices for many companies notwithstanding the lack of a fundamental change in their underlying business models or prospects.

Public debt and equity markets, and in particular the Nasdaq Global Select Market, have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many biopharmaceutical companies.

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Provisions of our amended and restated certificate of incorporation and bylaws, as well as provisions of Delaware law, could make it more difficult for a third party to acquire us, even if doing so would benefit our stockholders.

These provisions authorize the issuance of “blank check” preferred stock that could be issued by our board of directors to increase the number of outstanding shares and hinder a takeover attempt, and limit who may call a special meeting of stockholders.

In addition, Section 203 of the Delaware General Corporation Law generally prohibits a publicly-held Delaware corporation from engaging in a business combination with a party that owns at least 15% of its common stock unless the business combination is approved by the company’s board of directors before the person acquires the 15% ownership stake or later by its board of directors and two-thirds

of its stockholders.

These provisions authorize the issuance of “blank check”

preferred stock that could be issued by our board of directors to increase the number of outstanding shares and hinder a takeover attempt, and limit who may call a special meeting of stockholders.

Section 203 could have the effect of delaying, deferring or preventing a change in control that our stockholders might consider to be in their best interests.

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However, our ability to utilize the NOLs and R&D credits is subject to the rules of Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, or the Code, respectively.

Those sections generally restrict the use of NOLs and R&D credits after an “ownership change.” An ownership change occurs if, among other things, the stockholders (or specified groups of stockholders) who own or have owned, directly or indirectly, 5% or more of a corporation’s common stock or are otherwise treated as 5% stockholders under Section 382 of the code and the United States Treasury Department regulations promulgated thereunder increase their aggregate percentage ownership of that corporation’s stock by more than 50 percentage points over the lowest percentage of the stock owned by these stockholders over the applicable testing period.

Those sections generally restrict the use of NOLs and R&D credits after an “ownership change.”

An ownership change occurs if, among other things, the stockholders (or specified groups of stockholders) who own or have owned, directly or indirectly, 5% or more of a corporation’s common stock or are otherwise treated as 5% stockholders under Section 382 of the code and the United States Treasury Department regulations promulgated thereunder increase their aggregate percentage ownership of that corporation’s stock by more than 50 percentage points over the lowest percentage of the stock owned by these stockholders over the applicable testing period.

In the event of an ownership change, Section 382 imposes an annual limitation on the amount of taxable income a corporation may offset with NOL carry forwards and Section 383 imposes an annual limitation on the amount of tax a corporation may offset with business credit (including the R&D credit) carry forwards.

We may have experienced an “ownership change” within the meaning of Section 382 in the past and there can be no assurance that we will not experience additional ownership changes in the future.

We may have experienced an “ownership change”

within the meaning of Section 382 in the past and there can be no assurance that we will not experience additional ownership changes in the future.

As a result, our NOLs and business credits (including the R&D credit) may be subject to limitations and we may be required to pay taxes earlier and in larger amounts than would be the case if our NOLs or R&D credits were freely usable.

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*Our principal stockholders, executive officers and directors have substantial control over the company, which may prevent you and other stockholders from influencing significant corporate decisions and may harm the market price of our common stock.

As of December 31, 2020, our executive officers, directors and holders of five percent or more of our outstanding common stock, beneficially owned, in the aggregate, 49.6% of our outstanding common stock.

As of June 30, 2021, our executive officers, directors and holders of five percent or more of our outstanding common stock, beneficially owned, in the aggregate, 51.4% of our outstanding common stock.

These stockholders may have interests that conflict with our other stockholders and, if acting together, have the ability to influence the outcome of matters submitted to our stockholders for approval, including the election and removal of directors and any merger, consolidation or sale of all or substantially all of our assets.

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In addition, this significant concentration of stock ownership may adversely affect the trading price of our common stock should investors perceive disadvantages in owning shares of common stock in a company that has such concentrated ownership.

We previously identified a material weakness in our internal control over financial reporting for the year ended December 31, 2019, which we believe has been fully remediated as of December 31, 2020.

If we have inadequately remediated this material weakness, or we otherwise fail to develop, implement and maintain an effective system of internal controls in future periods, our ability to report our financial condition or results of operations could be adversely affected and may result in material misstatements of our financial statements or could have a material adverse effect on our business and trading price of our securities.

We are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, the Sarbanes-Oxley Act of 2002 and the rules and regulations of The Nasdaq Global Market.

We are also required to have our independent registered public accounting firm issue an opinion on the effectiveness of our internal control over financial reporting on an annual basis.

In connection with the audit of our consolidated financial statements as of and for the year ended December 31, 2019, we identified a material weakness in our internal control over financial reporting.

The material weakness was related to the design and maintenance of effective controls relating to the monitoring and oversight of expensing third party clinical trial costs.

Specifically, our internal controls were not designed effectively to provide reasonable assurance regarding the accurate and timely evaluation of the amount of third-party costs to record.

To remediate the material weakness described above and prevent similar deficiencies in the future, throughout 2020 we added additional controls and procedures, including:

(i) implementation of monthly meeting between the finance and clinical departments to review accruals, material contracts, pre-authorized

work and material pass-through costs, (ii) monthly contract meetings with the legal department to review the terms of material contracts, including leases, and (iii) engaging a third-party to perform an evaluation to ascertain whether the components of internal control were present and functioning throughout the year ended December 31, 2020.

During the fourth quarter of 2020, we completed our testing of the operating effectiveness of the implemented controls and found them to be effective.

As a result, we have concluded the material weakness has been remediated as of December 31, 2020.

If we have inadequately remediated this material weakness, there will continue to be an increased risk that our future financial statements could contain errors that will be undetected.

Further and continued determinations that there are material weaknesses in the effectiveness of our internal controls could reduce our ability to obtain financing or could increase the cost of any financing we obtain and require additional expenditures of resources to comply with applicable requirements.

For more information relating to our internal controls and disclosure controls and procedures, and the remediation plan undertaken by us, see Item 9A, “Controls and Procedures” of the Annual Report for the year ended December 31, 2020.

We cannot assure you that material weaknesses or material deficiencies will not occur in the future and that we will be able to remediate such weaknesses or deficiencies in a timely manner, which could impair our ability to accurately and timely report our financial position, results of operations or cash flows.

See the related risk factor included in this Annual Report on Form 10-K.We are in the process of designing and implementing measures to remediate the underlying causes of the control deficiencies that gave rise to the material weakness.

In addition, we are providing in-house

accounting personnel training to ensure that they have the relevant expertise related to the monitoring and oversight of expensing third party clinical trial costs.

We will continue to monitor the effectiveness of these controls and will make any further changes management determines appropriate.

The Tax Cuts and Jobs Act, signed into law in 2017 could adversely affect our business and financial condition.

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The CARES Act, enacted in 2020, modified certain of these tax changes, and enacted other tax changes applicable to corporations.

Notwithstanding the reduction in the corporate income tax rate, the overall impact of the Tax Act and the CARES Act is uncertain and our business and financial condition could be adversely affected.

Notwithstanding the reduction in the corporate income tax rate, the overall impact of the

Tax Act and the CARES Act is uncertain and our business and financial condition could be adversely affected.

In addition, it is uncertain if and to what extent various states will conform to the Tax Act or the CARES Act.

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We urge our stockholders to consult with their legal and tax advisors with respect to this legislation and the potential tax consequences of investing in or holding our common stock.

RISKS RELATED TO INDEBTEDNESS

We have incurred indebtedness, the funding of which is, in part, dependent on our future performance and our ability to raise additional capital .

On August 6, 2021, we, as borrower, entered into a loan and security agreement with Silicon Valley Bank, as lender, which agreement provides for term loans in an aggregate principal amount of up to $50.0 million, or the SVB Facility.

The SVB Facility consists of two tranches of term loans, the first of which was funded on August 6, 2021 and the second of which is conditioned upon achieving certain milestones.

Several of those milestones relate to the performance of certain drugs in development, and one milestone relates to the receipt of additional capital.

If we do not reach those milestones, we will be unable to draw on the second term loan tranche, thereby reducing our liquidity, and we will be required to make principal payments on the SVB Facility beginning one year earlier than if we were to draw on the second term loan tranche.

We have incurred indebtedness to increase liquidity and servicing our debt will require a significant amount of cash.

We may not have sufficient cash flow from our operations to pay our substantial debt.

Our ability to make scheduled payments of the principal of, to pay interest on or to further refinance our indebtedness depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control as well as our ability to raise additional capital.

We may also seek additional debt financing to meet the financing milestone under the SVB Facility and to support our ongoing activities.

Debt financing can have significant adverse consequences for our business, including:

requiring us to dedicate a substantial portion of cash flows from operations to payment on our debt, which would reduce available funds for further research and development;

increasing the amount of interest that we must pay on debt with variable interest rates, if market rates of interest increase;

subjecting us to restrictive covenants that reduce our ability to take certain corporate actions, acquire companies, products or technology, or obtain further debt financing;

requiring us to pledge our non-intellectual property assets as collateral, which could limit our ability to obtain additional debt financing;

requiring us to cash collateralize a portion of the SVB Facility if we do not raise additional capital prior to the end of the year.

We may not have sufficient funds or be able to obtain additional financing to pay the amounts due under our indebtedness.

In addition, failure to comply with the covenants and payment obligations under the SVB Facility could result in an event of default under that agreement.

An event of default could result in the acceleration of amounts due under the SVB Facility and a cross default and acceleration under other debt agreements, and we may not have sufficient funds to pay or be able to obtain additional financing to make any accelerated payments.

Under these circumstances, our lenders could seek to enforce security interests in our assets securing our indebtedness.

Our current indebtedness restricts and any additional debt financing may restrict the operation of our business and limit the cash available for investment in our business operations.

The SVB Facility includes a $25 million term loan, which was funded on the effective date of the facility, and the ability to borrow an additional $25 million term loan, subject to the achievement of certain milestones.

We may also seek additional debt financing to meet the financing milestone under the SVB Facility and to support our ongoing activities.

Debt financing can have significant adverse consequences for our business, including:

the ability to enter into certain licensing arrangements;

the ability to maintain flexible cash management arrangements;

the payment obligations under our indebtedness;

the scope, progress, results and costs of our development activities.

Unregistered Sale of Equity Securities and Use of Proceeds

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

What changed 10-Q

Item 1A. Risk Factors