What changed in this filing

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Item 1A. Risk Factors

2023-07-26 compared with 2023-04-26 · 70 added, 80 removed, 971 unchanged (13% of the section changed)

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We also have not generated any revenue to date, and we continue to incur significant research and development and other expenses.

As of March 31, 2023, we had an accumulated deficit of $311.6 million.

As of June 30, 2023, we had an accumulated deficit of $330.8 million.

For the foreseeable future, we expect to continue to incur losses, which will increase significantly from historical levels as we expand our drug development activities, seek potential partnering opportunities and/or regulatory approvals for our drug candidates and begin to commercialize them if they are approved by the U.S.

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Since we will be unable to generate sufficient, if any, cash inflows to fund our operations for the foreseeable future, we may need to seek additional equity or debt financing to provide the capital required to maintain or expand our operations.

As of March 31, 2023, we had cash, cash equivalents and investments totaling $135.7 million.

Although we received gross proceeds of $287.5 million in the April 2023 Offering (discussed below), there can be no assurance that we will be able to raise sufficient additional capital on acceptable terms or at all.

As of June 30, 2023, we had cash, cash equivalents and investments totaling $392.9 million.

Although we received gross proceeds of $287.5 million from the April 2023 Offering (discussed below), there can be no assurance that we will be able to raise sufficient additional capital on acceptable terms or at all.

If such additional financing is not available on satisfactory terms, or is not available in sufficient amounts, we may be required to delay, limit or eliminate the development of business opportunities and our ability to achieve our business objectives, our competitiveness, and our business, financial condition and results of operations may be materially adversely affected.

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the amount of revenue, if any, received from commercial sales of our drug candidates, should any of our drug candidates receive marketing approval;

the impacts that the COVID-19 global pandemic may have on our business, financial condition and results of operations;

disruptions to our operations and clinical trials, as well as disruptions or delays with respect to the operations of our service providers, suppliers and contract research organizations, or CROs;

the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing possible patent claims, including litigation costs and the outcome of any such litigation.

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Any ATM Shares offered and sold in the ATM Offering are to be issued pursuant to the Shelf Registration Statement and the 424(b) prospectus supplement relating to the ATM Offering, dated August 11, 2021.

As of March 31, 2023, we may sell shares of our common stock for remaining gross proceeds of up to $110.9 million from time to time pursuant to the ATM Offering.

As of June 30, 2023, we may sell shares of our common stock for remaining gross proceeds of up to $110.9 million from time to time pursuant to the ATM Offering.

On April 3, 2023, we completed an underwritten public offering of our common stock, or the April 2023 Offering, pursuant to the 2021 Shelf Registration Statement.

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Given our need for cash and that equity issuances are the most common type of fundraising for companies like ours, the risk of dilution is particularly significant for stockholders of our company.

Our business may be adversely affected by the effects of health epidemics, including the COVID-19 pandemic.

We are subject to risks and uncertainties as a result of the COVID-19 pandemic.

The extent of the impact of the COVID-19 pandemic on our business is highly uncertain and difficult to predict, as the responses that we, other businesses and governments are taking continue to evolve.

Furthermore, capital markets and economies worldwide have also been negatively impacted by the COVID-19 pandemic, and it is possible that it could cause a local and/or global economic slowdown or recession.

Policymakers around the globe have responded with fiscal policy actions to support the healthcare industry and economy as a whole.

The magnitude and overall effectiveness of these actions remain uncertain.

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

Clinical site initiation and patient enrollment have been, and may continue to be, delayed due to the prioritization of hospital resources toward the COVID-19 pandemic.

Similarly, any inability to recruit and retain patients and principal investigators and site staff who, as healthcare providers, may have heightened exposure to COVID-19, may adversely impact our clinical trial operations.

The spread of COVID-19, which has caused a broad impact globally and led to extreme volatility in capital markets, 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 severity of the impact of the COVID-19 pandemic on our business will depend on a number of factors, including, but not limited to, the duration and severity of the pandemic and the extent and severity of the impact on our service providers, suppliers, contract research organizations, or CROs, and our clinical trials, all of which are uncertain and cannot be predicted, as well as the timing, rollout and availability of vaccines worldwide and the effectiveness thereof, and willingness of the general population to be vaccinated, and the potential emergence and spread of any new variants, including Omicron and sub-variants thereof.

Management continues to monitor the global situation on our financial condition, liquidity, operations, suppliers, industry and workforce, and intends to follow health and safety guidelines as they evolve.

Given the daily evolution of the COVID-19 pandemic and the global responses to curb its spread, we are not currently able to predict how long the pandemic will last, or to estimate the effects of the COVID-19 pandemic on our results of operations, financial condition or liquidity for fiscal year 2023.

Our drug candidates may cause undesirable side effects that could delay or prevent their regulatory approval or commercialization or have other significant adverse implications on our business, financial condition and results of operations.

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Moreover, any drug compounds we recommend for clinical development may not demonstrate, through preclinical studies, indications of safety and potential efficacy that would support advancement into clinical trials.

Such findings would potentially impede our ability to maintain or expand our clinical development

Such findings would potentially impede our ability to maintain or expand our clinical development pipeline.

Our ability to identify new drug compounds and advance them into clinical development also depends upon our ability to fund our research and development operations, and we cannot be certain that additional funding will be available on acceptable terms, or at all.

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Our spending on current and future discovery and preclinical development programs and product candidates for specific indications may not yield any commercially viable products.

In addition, our projections of both the number of people who have the targeted indications, as well as the subset of people with these disorders who have the potential to benefit from treatment with our product candidates, are based on estimates.

If any of our estimates are inaccurate, the market opportunities for any of our product candidates could be significantly diminished and have an adverse material impact on our business.

Additionally, the potentially addressable patient population for our product candidates may be limited, or may not be amenable to treatment with our product candidates.

Delays in the commencement or completion of clinical trials could result in increased costs to us and delay our ability to establish strategic collaborations.

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obtaining institutional review board approval to conduct one or more clinical trials at a prospective site;

recruiting and enrolling patients to participate in one or more clinical trials, especially as patients may be reluctant or unable to visit clinical sites, or may delay seeking treatment for chronic conditions, due to the COVID-19 pandemic or otherwise;

the failure of our collaborators to adequately resource our drug candidates due to their focus on other programs or as a result of general market conditions;

recruiting clinical site investigators, clinical site staff and potential closure of clinical facilities due to the COVID-19 pandemic or otherwise;

changes in regulations as part of a response to the COVID-19 pandemic or otherwise, which may require us to change the ways in which our clinical trials are conducted.

recruiting clinical site investigators, clinical site staff and potential closure of clinical facilities;

changes in regulations, which may require us to change the ways in which our clinical trials are conducted.

In addition, once a clinical trial has begun, it may be suspended or terminated by us, our collaborators, the institutional review boards or data safety monitoring boards charged with overseeing our clinical trials, the FDA, EMA or comparable foreign authorities due to a number of factors, including:

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In addition, the COVID-19 pandemic previously negatively impacted, and may continue to negatively impact, our ability to recruit and enroll patients for our clinical trials, as they may be reluctant or unable to visit clinical sites, or may delay seeking treatment for chronic conditions.

If we fail to enroll and maintain the number of patients for which the clinical trial was designed, the statistical power of that clinical trial may be reduced, which would make it harder to demonstrate that the product candidate being tested in such clinical trial is safe and effective.

and effective.

Additionally, enrollment delays in our clinical trials may result in increased development costs for our product candidates, which would cause the value of our company to decline and limit our ability to obtain additional financing.

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If any of our relationships with these third-party CROs, medical institutions, clinical investigators or contract laboratories terminate, we may not be able to enter into arrangements with alternative CROs on commercially reasonable terms, or at all.

In addition, our

CROs are not our employees, and except for remedies available to us under our agreements with such CROs, we cannot control whether or not they devote sufficient time and resources to our ongoing preclinical and clinical programs.

In addition, our CROs are not our employees, and except for remedies available to us under our agreements with such CROs, we cannot control whether or not they devote sufficient time and resources to our ongoing preclinical and clinical programs.

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

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Approval policies or regulations may change and may be influenced by the results of other similar or competitive products, making it more difficult for us to achieve such approval in a timely manner or at all.

For example, the FDA has released draft guidance regarding clinical trials for drug candidates treating diabetes that may result in more stringent requirements for the clinical trials and regulatory approval of such drug candidates.

For example, the FDA has released draft guidance regarding clinical trials for drug candidates treating diabetes that may result in more stringent

requirements for the clinical trials and regulatory approval of such drug candidates.

This and any future guidance that may result from recent FDA advisory panel discussions on the topic of diabetes, non-alcoholic steatohepatitis, or NASH, and other metabolic indications, may make it more expensive to develop and commercialize such drug candidates for such indications.

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While we believe that our technology, knowledge, experience and scientific resources provide us with competitive advantages, we face potential competition from many different sources, including commercial biopharmaceutical enterprises, academic institutions, government agencies and private and public research institutions.

Any drug candidates that we

successfully develop and commercialize will compete with existing therapies and new therapies that may become available in the future.

Any drug candidates that we successfully develop and commercialize will compete with existing therapies and new therapies that may become available in the future.

Many of our competitors have significantly greater financial resources and expertise in research and development, manufacturing, preclinical studies, clinical trials, regulatory approvals and marketing approved products than we do.

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The key competitive factors affecting the success of each of our drug candidates, if approved, are likely to be its efficacy, safety, tolerability, frequency and route of administration, convenience and price, the level of branded and generic competition and the availability of coverage and reimbursement from government and other third-party payors.

While no therapies are currently approved for the treatment of non-alcoholic steatohepatitis, we are aware of numerous development-stage programs targeting this disease, including obeticholic acid from Intercept Pharmaceuticals, Inc., resmetirom (MGL-3196) from Madrigal Pharmaceuticals, Inc., arachidyl amido cholanoic acid from Galmed Pharmaceuticals Ltd., belapectin (GR-MD-02) from Galectin Therapeutics Inc., lanifibranor from Inventiva S.A., semaglutide from Novo Nordisk A/S, firsocostat (GS-0976) and cilofexor (GS-9674) from Gilead Sciences, Inc., tirzepatide from Eli Lilly and Company, ervogastat (PF-06865571) and clesacostat (PF-05221304) from Pfizer Inc., MK-6024 (efinopegdutide) from Merck & Co., Inc., efruxifermin (AKR-001) from Akero Therapeutics, Inc., pegozafermin (BIO89-100) from 89bio, Inc., denifanstat (TVB-2640) from Sagimet Biosciences Inc., and GSK4532990 (ARO-HSD) from GlaxoSmithKline plc.

In addition, we are aware of active programs at Aligos Therapeutics, Inc., Alnylam Pharmaceuticals, Inc., Altimmune, Inc., Arrowhead Pharmaceuticals, Inc., Ascletis Biopharmaceutical, AstraZeneca PLC, Boehringer Ingelheim International GmbH, Boston Pharmaceuticals Inc., Bristol Myers Squibb, Can-Fite BioPharma Ltd., ChemomAb Ltd., CohBar, Inc., Corcept Therapeutics Inc., CytoDyn Inc., D&D Pharmatech, Inc., Durect Corporation, Enyo Pharma SA, Inc., Future Medicine Co., Ltd., Galecto, Inc., Gelesis Holdings Inc., Hanmi Pharmaceutical Co., Ltd., Hepagene Therapeutics, Inc., Hepion Pharmaceuticals, Inc., HighTide Therapeutics Inc., Ionis Pharmaceuticals, Inc., Kowa Company, Ltd., MediciNova Inc., NGM Biopharmaceuticals, Inc., NorthSea Therapeutics BV, Novartis Pharmaceuticals Corporation, Pliant Therapeutics, Inc., Poxel SA, Regeneron Pharmaceuticals Inc., Seal Rock Therapeutics, Inc ., Terns Pharmaceuticals, Inc., Theratechnologies Inc., Yuhan Corporation, and Cadila Healthcare Limited (a.k.a.

While no therapies are currently approved for the treatment of non-alcoholic steatohepatitis, we are aware of numerous development-stage programs targeting this disease, including resmetirom (MGL-3196) from Madrigal Pharmaceuticals, Inc., arachidyl amido cholanoic acid from Galmed Pharmaceuticals Ltd., belapectin (GR-MD-02) from Galectin Therapeutics Inc., lanifibranor from Inventiva S.A., semaglutide from Novo Nordisk A/S, firsocostat (GS-0976) and cilofexor (GS-9674) from Gilead Sciences, Inc., tirzepatide from Eli Lilly and Company, ervogastat (PF-06865571) and clesacostat (PF-05221304) from Pfizer Inc., MK-6024 (efinopegdutide) from Merck & Co., Inc., efruxifermin (AKR-001) from Akero Therapeutics, Inc., pegozafermin (BIO89-100) from 89bio, Inc., denifanstat (TVB-2640) from Sagimet Biosciences Inc., and GSK4532990 (ARO-HSD) from GlaxoSmithKline plc.

In addition, we are aware of active programs at Aligos Therapeutics, Inc., Alnylam Pharmaceuticals, Inc., Altimmune, Inc., Arrowhead Pharmaceuticals, Inc., Ascletis Biopharmaceutical, AstraZeneca PLC, Boehringer Ingelheim International GmbH, Boston Pharmaceuticals Inc., Bristol Myers Squibb, Can-Fite BioPharma Ltd., ChemomAb Ltd., CohBar, Inc., Corcept Therapeutics Inc., CytoDyn Inc., D&D Pharmatech, Inc., Durect Corporation, Enyo Pharma SA, Inc., Future Medicine Co., Ltd., Galecto, Inc., Gelesis Holdings Inc., Hanmi Pharmaceutical Co., Ltd., Hepagene Therapeutics, Inc., Hepion Pharmaceuticals, Inc., HighTide Therapeutics Inc., Ionis Pharmaceuticals, Inc., Kowa Company, Ltd., MediciNova Inc., NGM Biopharmaceuticals, Inc., NorthSea Therapeutics BV, Pliant Therapeutics, Inc., Poxel SA, Regeneron Pharmaceuticals Inc., Seal Rock Therapeutics, Inc ., Terns Pharmaceuticals, Inc., Theratechnologies Inc., Yuhan Corporation, and Cadila Healthcare Limited (a.k.a.

Zydus Cadila).

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The Centers for Medicare & Medicaid Services, or CMS, which administers the Medicaid Drug Rebate Program, also has proposed to expand Medicaid rebates to the utilization that occurs in the territories of the U.S., such as Puerto Rico and the Virgin Islands.

Further, beginning in 2011, the PPACA imposed a significant annual fee on companies that manufacture or import branded prescription drug products and required manufacturers to provide a discount, equal to 70% off, effective as of 2019, the negotiated price of prescriptions filled by beneficiaries in the Medicare Part D coverage gap, referred to as the

“donut hole.”

Legislative and regulatory proposals have been introduced at both the state and federal level to expand post-approval requirements and restrict sales and promotional activities for pharmaceutical products.

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This legislation is designed to advance medical innovation and empower the FDA with the authority to directly hire positions related to drug and device development and review.

However, government proposals to reduce or eliminate budgetary deficits may include reduced allocations to the FDA and other related government agencies.

government proposals to reduce or eliminate budgetary deficits may include reduced allocations to the FDA and other related government agencies.

These budgetary pressures may result in a reduced ability by the FDA to perform its roles, including the related impact to academic institutions and research laboratories whose funding is fully or partially dependent on both the level and timing of funding from government sources.

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Additionally, state legislation continues to be a driving force behind the changing privacy law landscape in the United States.

For example, Virginia passed the Consumer Data Protection Act, which took effect on January 1, 2023, Colorado passed the Colorado Privacy Act and Connecticut passed the Connecticut Data Privacy Act, each of which will become effective on July 1, 2023, and Utah passed the Consumer Privacy Act, which will become effective on December 31, 2023.

For example, Virginia passed the Consumer Data Protection Act, which took effect on January 1, 2023, Colorado passed the Colorado Privacy Act and Connecticut passed the Connecticut Data Privacy Act, each of which became effective on July 1, 2023, and Utah passed the Consumer Privacy Act, which will become effective on December 31, 2023.

A broad range of legislative measures also have been introduced at the federal level.

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Bribery Act 2010, or the Bribery Act, and other anti-corruption laws that apply in countries where we do business and may do business in the future.

The FCPA, the Bribery Act and these other laws generally prohibit us, our officers, and our employees and intermediaries from bribing, being bribed or making other prohibited payments to government officials or other persons to obtain or retain business or gain some other business advantage.

The FCPA, the Bribery Act and these other laws generally prohibit us, our officers, and our employees and intermediaries from

bribing, being bribed or making other prohibited payments to government officials or other persons to obtain or retain business or gain some other business advantage.

Compliance with the FCPA, in particular, is expensive and difficult, particularly in countries in which corruption is a recognized problem.

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Our success depends on our continued ability to attract, retain and motivate highly qualified management and scientific personnel.

As of March 31, 2023, we had 22 full-time employees and a small number of consultants, which may make us more reliant on our individual employees than companies with a greater number of employees.

As of June 30, 2023, we had 22 full-time employees, two part-time employees and a small number of consultants, which may make us more reliant on our individual employees than companies with a greater number of employees.

The loss of any of our key personnel could delay or prevent the development of our drug candidates.

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These demands also may require the hiring of additional senior management personnel or the development of additional expertise by our senior management personnel.

Hiring a significant number of additional employees, particularly those at

the management level, would increase our expenses significantly.

Hiring a significant number of additional employees, particularly those at the management level, would increase our expenses significantly.

Moreover, if we fail to expand and enhance our operational, financial and management systems in conjunction with our potential future growth, it could have a material adverse effect on our business, financial condition and results of operations.

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If an accident occurs, we could be held liable for resulting damages, which could be substantial.

We are also subject to numerous environmental, health and workplace safety laws and regulations, including those governing laboratory procedures, exposure to blood-borne pathogens and the handling of biohazardous materials.

We are also subject to numerous

environmental, health and workplace safety laws and regulations, including those governing laboratory procedures, exposure to blood-borne pathogens and the handling of biohazardous materials.

Additional federal, state and local laws and regulations affecting our operations may be adopted in the future.

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In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, kickbacks, self-dealing and other abusive practices.

and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commissions, customer incentive programs and other business arrangements.

These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commissions, customer incentive programs and other business arrangements.

Employee and consultant misconduct also could involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation.

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A severe or prolonged economic downturn could result in a variety of risks to our business, including our ability to raise additional capital when needed on acceptable terms, if at all.

A weak or declining economy could also strain our suppliers, service providers, manufacturers or other partners and there is a risk that one or more would not survive or be able

to meet their commitments to us under such circumstances.

A weak or declining economy could also strain our suppliers, service providers, manufacturers or other partners and there is a risk that one or more would not survive or be able to meet their commitments to us under such circumstances.

Weakened or declining economic conditions could be caused by a number of factors, including high interest rates, rising inflation, the government closure of Silicon Valley Bank and liquidity concerns at other financial institutions, and the potential for local and/or global economic recession.

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We currently have intellectual property rights to develop our drug candidates through a license from Ligand.

As of March 31, 2023, we owned or co-owned 81 patent applications and 12 patents.

As of June 30, 2023, we owned or co-owned 83 patent applications and 13 patents.

Because our programs require the use of proprietary rights held by Ligand, the growth of our business will likely depend in part on our ability to maintain and exploit these proprietary rights.

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The Master License Agreement imposes, and we expect that future license agreements will impose, various diligence, milestone payment, royalty and other obligations on us.

If we fail to comply with our obligations under these agreements, or if we file for bankruptcy, we may be required to make certain payments to the licensor, we may lose the exclusivity of our license, or the licensor may have the right to terminate the license, in which event we would not be able to develop or market products covered by the license.

may have the right to terminate the license, in which event we would not be able to develop or market products covered by the license.

Additionally, the milestone and other payments associated with these licenses could materially and adversely affect our business, financial condition and results of operations.

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In certain cases, we may control the prosecution of patents resulting from licensed technology.

In the event we

breach any of our obligations related to such prosecution, we may incur significant liability to our licensing partners.

In the event we breach any of our obligations related to such prosecution, we may incur significant liability to our licensing partners.

Licensing of intellectual property is of critical importance to our business and involves complex legal, business and scientific issues.

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and other countries with respect to our proprietary or licensed technology and products.

We currently in-license most of our intellectual property rights to develop our drug candidates and may in-license additional intellectual property rights in the future.

We currently in-license most of our intellectual property rights to develop our drug candidates and may in-license additional intellectual property rights in the

Under the terms of the Master License Agreement, Ligand has the first right to file, prosecute and maintain the patents subject to the Master License Agreement in its name.

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The patents of others from whom we may license technology, and any future patents we may own, may be challenged, narrowed, invalidated or circumvented, which could limit our ability to stop competitors from marketing the same or similar products or limit the length of term of patent protection that we may have for our products.

pending patent applications and potential future patent applications and patents could be reduced or eliminated for non-compliance with these requirements.

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

Periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on patents and/or patent applications will be due to be paid to the U.S.

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Our intellectual property includes licenses covering issued patents and pending patent applications for composition of matter, method of use and method of manufacture.

As of March 31, 2023, for each of VK2809 and VK0214, we in-licensed three patents in the U.S.

As of June 30, 2023, for each of VK2809 and VK0214, we in-licensed three patents in the U.S.

and additional patents in certain foreign jurisdictions, and owned or co-owned and in-licensed one U.S.

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We also in-licensed one additional U.S.

patent and a patent and patent application in certain foreign jurisdictions directed to VK0214;

and owned one additional patent and one patent application in the U.S., one Patent Cooperation Treaty, or PCT, application, and several patent applications in certain foreign jurisdictions directed to VK2809 as of March 31, 2023.

For VK5211, as of March 31, 2023, we in-licensed ten patents and one patent application in the U.S.

patent and a patent and patent application in Japan directed to VK0214;

For VK5211, as of June 30, 2023, we in-licensed ten patents and one patent application in the U.S.

and several other patents and patent applications in certain foreign jurisdictions.

For VK2735, we own four U.S.

patent applications, two PCT applications, and patent applications in certain foreign jurisdictions as of March 31, 2023.

patent applications, two PCT applications, and patent applications in certain foreign jurisdictions as of June 30, 2023.

With respect to our other current drug candidates, we have a license covering several issued patents both in the U.S.

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Even if we are able to obtain a license, it may be non-exclusive, thereby giving our competitors access to the same technologies licensed to us.

We could be forced, including by court order, to cease commercializing

the infringing technology or product.

We could be forced, including by court order, to cease commercializing the infringing technology or product.

In addition, in any such proceeding or litigation, we could be found liable for monetary damages, including treble damages and attorneys’

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*Changes in U.S.

patent law could diminish the value of patents in general, thereby impairing our ability to protect our products.

patent law or the patent law of other countries or jurisdictions could diminish the value of patents in general, thereby impairing our ability to protect our products.

As is the case with other biopharmaceutical companies, our success is heavily dependent on intellectual property, particularly patents.

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Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations.

In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of

patents, once obtained.

In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained.

Depending on decisions by the U.S.

Congress, the federal courts and the USPTO, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce patents that we might obtain in the future.

Similarly, changes in patent law and regulations in other countries or jurisdictions or changes in the governmental bodies that enforce them or changes in how the relevant governmental authority enforces patent laws or regulations may weaken our ability to obtain new patents or to enforce patents that we have licensed or that we may obtain in the future.

For example, the complexity and uncertainty of European patent laws have also increased in recent years.

In Europe, in June 2023, a new unitary patent system was introduced, which will significantly impact European patents, including those granted before the introduction of the system.

Under the unitary patent system, after a European patent is granted, the patent proprietor can request unitary effect, thereby getting a European patent with unitary Effect, or a Unitary Patent.

Each Unitary Patent is subject to the jurisdiction of the Unitary Patent Court, or the UPC.

As the UPC is a new court system, there is no precedent for the court, increasing the uncertainty of any litigation.

Patents granted before the implementation of the UPC will have the option of opting out of the jurisdiction of the UPC and remaining as national patents in the UPC countries.

Patents that remain under the jurisdiction of the UPC may be potentially vulnerable to a single UPC-based revocation challenge that, if successful, could invalidate the patent in all countries who are signatories to the UPC.

We cannot predict with certainty the long-term effects of the new unitary patent system.

We may not be able to protect our intellectual property rights throughout the world.

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Many countries, including European Union countries, India, Japan and China, have compulsory licensing laws under which a patent owner may be compelled under certain circumstances to grant licenses to third parties.

In those countries, as of March 31, 2023, we had several licensed and owned patents and several licensed and owned patent applications and may have limited remedies if such patents are infringed or if we are compelled to grant a license to a third party, which could materially diminish the value of such patents.

This could limit our potential revenue opportunities.

In those countries, as of June 30, 2023, we had several licensed and owned patents and several licensed and owned patent applications and may have limited remedies if such patents are infringed or if we are compelled to grant a license to a third party, which could materially diminish the value of such patents.

could limit our potential revenue opportunities.

Accordingly, our efforts to enforce intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we own or license.

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Litigation may be necessary to defend against these and other claims challenging inventorship.

If we fail in defending any

such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property.

If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property.

Such an outcome could have a material adverse effect on our business, financial condition and results of operations.

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If no active trading market for our common stock is sustained, you may be unable to sell your shares when you wish to sell them or at a price that you consider attractive or satisfactory.

The lack of an active market may also adversely affect our ability to raise capital by selling securities in the future, or impair our ability to acquire or in-license other drug candidates, businesses or technologies using our shares as consideration.

The lack of an active market may also adversely affect our ability to raise capital by

selling securities in the future, or impair our ability to acquire or in-license other drug candidates, businesses or technologies using our shares as consideration.

*Our management owns a significant percentage of our stock and will be able to exert significant control over matters subject to stockholder approval.

As of April 16, 2023, our executive officers, directors and 5% or greater stockholders beneficially owned 15.4% of our common stock.

As of June 30, 2023, our executive officers, directors and 5% or greater stockholders beneficially owned 15.1% of our common stock.

Therefore, our executive officers, directors and 5% or greater stockholders have the ability to influence us through this ownership position.

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In addition, for as long as we are deemed neither a large accelerated filer nor accelerated filer, we will continue to use the exemption from compliance with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended, or the Sarbanes-Oxley Act.

We will remain a smaller reporting company and non-accelerated filer until we have a public float of $700 million or more and annual revenues of less than $100 million, or a public float of $250 million or more and annual revenues of $100 million or more.

We reassessed our public float as of June 30, 2022, and since it was less than $700 million and our annual revenues were less than $100 million, we have determined that we will continue as a smaller reporting company and a non-accelerated filer until at least December 31, 2023.

We will need to reassess, as of June 30, 2023, whether we will continue to qualify as a smaller reporting company and a non-accelerated filer for filings beyond the fiscal year ending December 31, 2023.

We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions.

We will remain a smaller reporting company and non-accelerated filer until December 31, 2023, after which time we will become a large accelerated filer.

We will need to reassess, as of June 30, 2024, whether we will continue to qualify as a large accelerated filer for filings beyond the fiscal year ending December 31, 2024.

In the event we are eligible to rely on the exemptions available to smaller reporting companies, we cannot predict if investors will find our common stock less attractive because we may rely on these exemptions.

If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

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Our management is currently required to report on the effectiveness of our internal control over financial reporting.

However, as a smaller reporting company and a non-accelerated filer and in accordance with new SEC rules effective in 2020, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 for as long as we are not deemed an “accelerated filer”

or “large accelerated filer.”

Commencing with the fiscal year ending December 31, 2023, our independent registered public accounting firm will be required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404.

The rules governing the standards that must be met for our management to assess our internal control over financial reporting are complex and require significant documentation, testing and possible remediation.

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and “non-accelerated filer,”

we will incur significant legal, accounting and other expenses.

In addition, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, as well as rules subsequently implemented by the SEC and The Nasdaq Stock Market LLC have imposed various requirements on public companies.

after December 31, 2023, we will incur significant legal, accounting and other expenses.

In addition, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, as well as rules subsequently implemented by the SEC

and The Nasdaq Stock Market LLC have imposed various requirements on public companies.

There are significant corporate governance and executive compensation related provisions in the Dodd-Frank Act that require the SEC to adopt additional rules and regulations in these areas.

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*Sales of a substantial number of shares of our common stock in the public market by our existing stockholders or future issuances of our common stock or rights to purchase our common stock, could cause our stock price to fall.

Sales of a substantial number of shares of our common stock by our existing stockholders in the public market, or the perception that these sales might occur, could depress the market price of our common stock and could impair our ability to raise capital through the

sale of additional equity securities.

We are unable to predict the effect that such sales may have on the prevailing market price of our common stock.

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Any return to stockholders will therefore be limited to the appreciation of their stock.

Provisions in our amended and restated certificate of incorporation and bylaws, as well as provisions of Delaware law, could make it more difficult or expensive for a third party to acquire us or change our board of directors or current management.

Provisions in our amended and restated certificate of incorporation and our amended and restated bylaws, as well as provisions of Delaware law, could make it more difficult or expensive for a third party to acquire us or change our board of directors or current management.

Some provisions of our charter documents and Delaware law may have anti-takeover effects that could discourage an acquisition of us by others, even if an acquisition would be beneficial to our stockholders and may prevent attempts by our stockholders to replace or remove our current management.

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corporations whose stock is traded on an established securities market.

The excise tax will be imposed on repurchases that occur after December 31, 2022.

The excise tax will be imposed on repurchases that occur after

December 31, 2022.

The imposition of the excise tax on repurchases of our shares will increase the cost to us of making repurchases and may cause us to reduce the number of shares repurchased pursuant to the Repurchase Program.

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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