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Item 1A. Risk Factors

2024-07-24 compared with 2024-04-25 · 85 added, 68 removed, 964 unchanged (14% of the section changed)

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Risk Factor Summary

• We are a clinical-stage company, have a very limited operating history and are expected to incur significant operating losses during the next stages of our corporate development.

• We are a clinical-stage company, have a limited operating history and are expected to incur significant operating losses during the next stages of our corporate development.

• We are substantially dependent on technologies we licensed from Ligand Pharmaceuticals Incorporated, or Ligand, and if we lose the license to such technologies or our master license agreement with Ligand, or the Master License Agreement, is terminated for any reason, our ability to develop existing and new drug candidates would be harmed, and our business, financial condition and results of operations would be materially and adversely affected.

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Risks Relating to Our Business

*We are a clinical-stage company, have a very limited operating history and are expected to incur significant operating losses during the next stages of our corporate development.

*We are a clinical-stage company, have a limited operating history and are expected to incur significant operating losses during the next stages of our corporate development.

We are a clinical-stage company.

Since our incorporation in September 2012, our operations have been limited to raising capital, building infrastructure, obtaining the worldwide rights to certain technology from Ligand Pharmaceuticals Incorporated, or Ligand, and planning, preparing and conducting preclinical studies and clinical trials of our drug candidates, including VK2809, VK2735 subcutaneous, VK5211 and VK0612, which are currently in Phase 2 clinical development, VK2735, for which we recently completed an oral Phase 1 SAD/MAD clinical trial, and VK0214, currently in a Phase 1b clinical trial, as well as the diacylglycerol acyltransferase-1, or DGAT-1 and erythropoietin receptor, or EPOR, programs, which are each currently in preclinical development.

Since our incorporation in September 2012, our operations have been limited to raising capital, building infrastructure, obtaining the worldwide rights to certain technology from Ligand Pharmaceuticals Incorporated, or Ligand, and planning, preparing and conducting preclinical studies and clinical trials of our drug candidates, including VK2735 subcutaneous, VK2809, VK5211 and VK0612, which are currently in Phase 2 clinical development, VK2735, for which we continue to conduct an oral Phase 1 SAD/MAD clinical trial, and VK0214, currently in a Phase 1b clinical trial, as well as the diacylglycerol acyltransferase-1, or DGAT-1, erythropoietin receptor, or EPOR, and our dual amylin and calcitonin receptor agonist, or DACRA, programs, which are each currently in preclinical development.

We have not yet demonstrated an ability to obtain marketing approval for any of our drug candidates or successfully overcome the risks and uncertainties frequently encountered by companies in the biopharmaceutical industry.

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, 2024, we had an accumulated deficit of $405.3 million.

As of June 30, 2024, we had an accumulated deficit of $427.6 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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*We are dependent on the success of one or more of our current drug candidates and we cannot be certain that any of them will receive regulatory approval or be commercialized.

We have spent significant time, money and effort on the licensing and development of our core metabolic and endocrine disease assets, VK2809, VK2735, VK0214, VK5211, VK0612 and our earlier-stage assets, our DGAT-1 and EPOR programs.

We have spent significant time, money and effort on the licensing and development of our core metabolic and endocrine disease assets, VK2735, VK2809, VK0214, VK5211, VK0612 and our earlier-stage assets, our DGAT-1, EPOR and DACRA programs.

To date, no pivotal clinical trials designed to provide clinically and statistically significant proof of efficacy, or to provide sufficient evidence of safety to justify approval, have been completed with any of our drug candidates.

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Positive results obtained during early development do not necessarily mean later development will succeed or that regulatory clearances will be obtained.

Our drug development efforts may not lead to commercial drugs, either because our drug candidates fail to be safe and effective or because we have inadequate financial or other resources to advance our drug candidates through the clinical development

and approval processes.

Our drug development efforts may not lead to commercial drugs, either because our drug candidates fail to be safe and

effective or because we have inadequate financial or other resources to advance our drug candidates through the clinical development and approval processes.

If any of our drug candidates fail to demonstrate safety or efficacy at any time or during any phase of development, we would experience potentially significant delays in, or be required to abandon, development of the drug candidate.

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*If development of our drug candidates does not produce favorable results, we and our collaborators, if any, may be unable to commercialize these products.

To receive regulatory approval for the commercialization of our core metabolic and endocrine disease assets, VK2809, VK2735, VK0214, VK5211, VK0612 and our earlier-stage assets, our DGAT-1 and EPOR programs, or any other drug candidates that we may develop, adequate and well-controlled clinical trials must be conducted to demonstrate safety and efficacy in humans to the satisfaction of the FDA, EMA and comparable foreign authorities.

To receive regulatory approval for the commercialization of our core metabolic and endocrine disease assets, VK2735, VK2809, VK0214, VK5211, VK0612 and our earlier-stage assets, our DGAT-1.

EPOR and DACRA programs, or any other drug candidates that we may develop, adequate and well-controlled clinical trials must be conducted to demonstrate safety and efficacy in humans to the satisfaction of the FDA, EMA and comparable foreign authorities.

In order to support marketing approval, these agencies typically require successful results in one or more Phase 3 clinical trials, which our current drug candidates have not yet reached and may never reach.

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In February 2024, we reported positive top-line results from the VENTURE Phase 2 clinical trial for VK2735 in patients with obesity.

In May 2023, we reported positive top-line results from the VOYAGE Phase 2b clinical trial for VK2809.

In May 2023, we reported positive top-line results from the VOYAGE Phase 2b clinical trial for VK2809 and in June 2024, we announced positive 52-week histologic data from the VOYAGE study.

In late 2017, we reported positive top-line results from a Phase 2 clinical trial for VK5211.

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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, 2024, we had cash, cash equivalents and investments totaling $963.0 million.

Although we received net proceeds of $597.1 million in the March 2024 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, 2024, we had cash, cash equivalents and investments totaling $942.3 million.

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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Any shares offering and sold in ATM Offering will be issued pursuant to the ATM Prospectus and the At-The-Market Equity Offering Sales Agreement, dated July 28, 2021, as amended on July 26, 2023, among us and the ATM Agents.

As of March 31, 2024, we may sell shares of our common stock for remaining gross proceeds of up to $151.9 million from time to time pursuant to the ATM Prospectus.

As of June 30, 2024, we may sell shares of our common stock for remaining gross proceeds of up to $151.9 million from time to time pursuant to the ATM Prospectus.

On March 4, 2024, we completed an underwritten public offering of our common stock, or the March 2024 Offering, pursuant to the 2023 Shelf Registration Statement.

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This drug candidate development risk is heightened by any changes in the planned clinical trials compared to the completed clinical trials.

As product candidates are developed through preclinical to early to late stage clinical trials towards approval and

commercialization, it is customary that various aspects of the development program, such as manufacturing and methods of administration, are altered along the way in an effort to optimize processes and results.

As product candidates are developed through preclinical to early to late stage clinical trials towards approval and commercialization, it is customary that various aspects of the development program, such as manufacturing and methods of administration, are altered along the way in an effort to optimize processes and results.

While these types of changes are common and are intended to optimize the product candidates for late stage clinical trials, approval and commercialization, such changes carry the risk that they will not achieve these intended objectives.

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In addition, our CROs may need to make certain adjustments to the operation of our trials in an effort to ensure the monitoring and safety of patients and minimize risks to trial integrity during the pandemic in accordance with the guidance issued by the FDA on March 18, 2020 and generally, and may need to make further adjustments in the future.

Many of these adjustments are new and untested, may not be effective, and may have unforeseen effects on the enrollment, progress and completion of these trials and the findings from these trials.

Many of these adjustments are new and

untested, may not be effective, and may have unforeseen effects on the enrollment, progress and completion of these trials and the findings from these trials.

Our drug candidates are subject to extensive regulation under the FDA, EMA or comparable foreign authorities, which can be costly and time consuming, cause unanticipated delays or prevent the receipt of the required approvals to commercialize our drug candidates.

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

to obtain regulatory approval in other countries or any delay seeking or obtaining such approval would impair our ability to develop foreign markets for our drug candidates.

Failure to obtain regulatory approval in other countries or any delay seeking or obtaining such approval would impair our ability to develop foreign markets for our drug candidates.

Even if any of our drug candidates receive regulatory approval, our drug candidates may still face future development and regulatory difficulties.

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If a regulatory agency discovers previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured, a regulatory agency may impose restrictions on that product, our collaborators or us, including requiring withdrawal of the product from the market.

Our drug candidates will also be subject to ongoing FDA, EMA or comparable foreign authorities’ requirements for the labeling, packaging, storage, advertising, promotion, record-keeping and submission of safety and other post-market information on the drug.

Our drug candidates will also be subject to ongoing FDA, EMA or comparable foreign authorities’ requirements for the

labeling, packaging, storage, advertising, promotion, record-keeping and submission of safety and other post-market information on the drug.

If our drug candidates fail to comply with applicable regulatory requirements, a regulatory agency may:

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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.

Smaller or early-stage companies

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

Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies.

Our competitors may succeed in developing technologies and therapies that are more effective, better tolerated or less costly than any which we are developing, or that would render our drug candidates obsolete and noncompetitive.

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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.

VK2735, if approved, will compete against therapies that are already approved and marketed for obesity, including Semaglutide (Wegovy®) and liraglutide (Saxenda®) from Novo Nordisk A/S, and tirzepatide (Zepbound) from Eli Lilly and Company.

also aware of several programs targeting obesity that are in the late development stage that will compete against VK2735, if approved, including CagriSema from Novo Nordisk A/S, orforglipron and retatrutide from Eli Lilly and Company, and survodutide (BI 456906) from Boehringer Ingelheim International GmbH.

In addition, we are aware of active programs at Altimmune, Inc., Amgen Inc., AstraZeneca, BioAge Labs, Inc., Biophytis SA, D&D Pharmatech, Inc., ERX Pharmaceuticals Inc., F.

Hoffmann-La Roche Ltd, Hanmi Pharmaceutical Co., Ltd., Kallyope Inc., Pfizer Inc., Regeneron Pharmaceuticals Inc., Rivus Pharmaceuticals Inc., Scholar Rock, Inc., Structure Therapeutics Inc., Terns Pharmaceuticals, Inc., Ventyx Biosciences, Inc., and Zealand Pharma A/S.

Resmetirom (Rezdiffra), another agonist of the thyroid hormone receptor beta, or TRß, from Madrigal Pharmaceuticals, Inc., is the only therapy currently approved in the U.S.

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Zydus Cadila).

We are also aware of several programs targeting obesity that are in the late development stage that will compete against VK2735, if approved, including CagriSema from Novo Nordisk A/S, orforglipron and retatrutide from Eli Lilly and Company, and survodutide (BI 456906) from Boehringer Ingelheim International GmbH.

In addition, we are aware of active programs at Altimmune, Inc., Amgen Inc., AstraZeneca, BioAge Labs, Inc., Biophytis SA, D&D Pharmatech, Inc., ERX Pharmaceuticals Inc., F.

In the U.S., there are currently no marketed therapies for the treatment of X-ALD.

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In the U.S., there are currently no marketed therapies for the maintenance or improvement of lean body mass, bone mineral density or physical function in patients recovering from non-elective hip fracture surgery.

However, VK5211, if approved, will face competition from experimental therapies that are in various stages of clinical development for conditions characterized by muscle wasting by

companies including Biophytis SA, Helsinn Group, MyMD Pharmaceuticals, Inc., and Pluri Inc.

However, VK5211, if approved, will face competition from experimental therapies that are in various stages of clinical development for conditions characterized by muscle wasting by companies including Biophytis SA, Helsinn Group, MyMD Pharmaceuticals, Inc., and Pluri Inc.

(formerly Pluristem Therapeutics Inc.).

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The applicable exclusivity period is seven years in the United States and ten years in Europe.

The European exclusivity period can be reduced to six years if a drug no longer meets the criteria for orphan drug designation or if the drug is sufficiently profitable so that market exclusivity is no longer justified.

exclusivity period can be reduced to six years if a drug no longer meets the criteria for orphan drug designation or if the drug is sufficiently profitable so that market exclusivity is no longer justified.

Orphan drug exclusivity may be lost if the FDA or the EMA determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantity of the drug to meet the needs of patients with the rare disease or condition.

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We do not have any control over the process or timing of the acquisition of these raw materials by our manufacturers.

trial due to the need to replace a third-party manufacturer could considerably delay completion of our clinical trials, product testing and potential regulatory approval of our drug candidates, which could harm our business, financial condition and results of operations.

Although we generally do not begin a clinical trial unless we believe we have a sufficient supply of a drug candidate to complete such clinical trial, any significant delay or discontinuity in the supply of a drug candidate, or the raw material components thereof, for an ongoing clinical trial due to the need to replace a third-party manufacturer could considerably delay completion of our clinical trials, product testing and potential regulatory approval of our drug candidates, which could harm our business, financial condition and results of operations.

We and our contract manufacturers are subject to significant regulation with respect to manufacturing our drug candidates.

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The facilities and quality systems of some or all of our third-party contractors must pass a pre-approval inspection for compliance with the applicable regulations as a condition of regulatory approval of our drug candidates or any of our other potential products.

In addition, the regulatory authorities may, at any time, audit or inspect a manufacturing facility involved with the preparation of our drug candidates or any of our other potential products or the associated quality systems for compliance with the regulations applicable to the activities being conducted.

to the activities being conducted.

Although we oversee the contract manufacturers, we cannot control the manufacturing process of, and are completely dependent on, our contract manufacturing partners for compliance with the regulatory requirements.

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We believe our drugs will be priced significantly higher than existing generic drugs and consistent with current branded drugs.

If we are unable to show a significant benefit relative to existing generic drugs, Medicare, Medicaid and private payors may not be willing to provide reimbursement for our drugs, which would significantly reduce the likelihood of our products gaining market acceptance.

If we are unable to show a significant benefit relative to existing generic drugs, Medicare,

Medicaid and private payors may not be willing to provide reimbursement for our drugs, which would significantly reduce the likelihood of our products gaining market acceptance.

We expect that private insurers will consider the efficacy, cost-effectiveness, safety and tolerability of our potential products in determining whether to approve reimbursement for such products and at what level.

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In March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, collectively the PPACA, was enacted.

healthcare and health insurance industries, impose new taxes and fees on the health industry and impose additional health policy reforms.

The PPACA was intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against healthcare fraud and abuse, add new transparency requirements for healthcare and health insurance industries, impose new taxes and fees on the health industry and impose additional health policy reforms.

The PPACA increased manufacturers’ rebate liability under the Medicaid Drug Rebate Program by increasing the minimum rebate amount for both branded and generic drugs and revised the definition of “average manufacturer price,” or AMP, which may also increase the amount of Medicaid drug rebates manufacturers are required to pay to states.

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Violations of fraud and abuse laws may be punishable by criminal or civil sanctions, including penalties, fines or exclusion or suspension from federal and state healthcare programs such as Medicare and Medicaid and debarment from contracting with the U.S.

In addition, private individuals have the ability to bring actions on behalf of the government under the federal False Claims Act as well as under the false claims laws of several states.

private individuals have the ability to bring actions on behalf of the government under the federal False Claims Act as well as under the false claims laws of several states.

Many states have adopted laws similar to the federal Anti-Kickback Statute, some of which apply to the referral of patients for healthcare services reimbursed by any source, not just governmental payors.

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Globally, virtually every jurisdiction in which we operate has established its own data security and privacy frameworks with which we must comply.

For example, the collection, use, disclosure, transfer, or other processing of personal data regarding individuals in the European Union, the EU, including personal

health data, is subject to the EU General Data Protection Regulation, or the GDPR, which took effect across all member states of the European Economic Area, or the EEA, in May 2018.

For example, the collection, use, disclosure, transfer, or other processing of personal data regarding individuals in the European Union, the EU, including personal health data, is subject to the EU General Data Protection Regulation, or the GDPR, which took effect across all member states of the European Economic Area, or the EEA, in May 2018.

The GDPR is wide-ranging in scope and imposes numerous requirements on companies that process personal data, including requirements relating to processing health and other sensitive data, obtaining consent of the individuals to whom the personal data relates, providing information to individuals regarding data processing activities, implementing safeguards to protect the security and confidentiality of personal data, providing notification of data breaches, and taking certain measures when engaging third-party processors.

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In addition, the GDPR provides that EU member states may make their own additional laws and regulations limiting the processing of personal data, including genetic, biometric or health data.

The European Data Protection Board continues to release guidelines for industries and impose fines related to the GDPR, some of which have been very significant.

To improve coordination among EU supervisory authorities, the European Commission has proposed a new regulation that would help to streamline enforcement of the GDPR in cross-border cases.

Meanwhile, there continues to be persistent uncertainty relating to the transfer of personal data from Europe to the U.S., or other non-adequate countries, following the Schrems II decision.

On July 10, 2023, the European Commission adopted its adequacy decision on the EU-U.S.

Data Privacy Framework, or DPF.

The decision, which took effect on the day of its adoption, concludes that the United States ensures an adequate level of protection for personal data transferred from the EEA to companies certified to the DPF.

However, it remains too soon to tell

how the future of Privacy Shield 2.0 will evolve and what impact it will have on our international activities.

At least one challenge to the DPF is pending before the Court of Justice of the European Union.

Further, Brexit has led and could also lead to legislative and regulatory changes that may increase our compliance costs.

As of January 1, 2021 and the expiry of transitional arrangements agreed to between the UK and the EU, data processing in the UK is governed by a UK version of the GDPR (combining the GDPR and the Data Protection Act 2018), exposing us to two parallel regimes, each of which authorizes similar fines and other potentially divergent enforcement actions for certain violations.

On June 28, 2021, the European Commission adopted an Adequacy Decision for the UK, allowing for the relatively free exchange of personal information between the EU and the UK (as the UK correspondingly allows transfers back to the EU).

However, the European Commission may suspend the Adequacy Decision if it considers that the UK no longer provides for an adequate level of data protection.

A bill to amend the existing UK framework has been reintroduced (in a different form) by the new UK Government and was announced as a bill which will be introduced into Parliament at the King’s Speech on July 17, 2024.

At this time, there is no specific clarity on the provisions of the bill, or the extent to which it will amend the UK framework, beyond general descriptions on its intended purpose.

Similar actions are either in place or under way in the United States.

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Similar laws passed in Virginia, Colorado, Connecticut, and Utah took effect in 2023.

Additionally, Delaware, Indiana, Iowa, Montana, Oregon, Tennessee and Texas have adopted privacy laws, which take effect from July 1, 2024 through 2026.

Further, Washington’s My Health My Data Act, taking effect July 1, 2024, imposes similar requirements specific to consumer health data.

Additionally, Delaware, Florida, Indiana, Iowa, Montana, Oregon, Tennessee, Texas and others have adopted privacy laws, which take effect from July 1, 2024 through 2026.

Some state laws also minimize what data can be collected from consumers and how businesses may use and disclose it.

These state privacy laws also require businesses to make disclosures to consumers about data collection, use and sharing practices.

In addition, some of these laws (including the CPRA), along with other standalone health privacy laws, subject health-related information to additional safeguards and disclosures and some specifically regulate consumer health data, such as the Washington My Health My Data Act, which became effective in 2023 and 2024.

Additionally, a broad range of legislative measures also have been introduced at the federal level.

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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, 2024, we had twenty-eight 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, 2024, we had twenty-eight 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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We have experienced cybersecurity incidents in the past and expect that we will experience cybersecurity incidents in the future.

If we were to experience a significant cybersecurity

breach of our information systems or data, the costs associated with the investigation, remediation and potential notification of the breach to counter-parties and data subjects could be material.

If we were to experience a significant cybersecurity breach of our information systems or data, the costs associated with the investigation, remediation and potential notification of the

breach to counter-parties and data subjects could be material.

To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability and our development programs and the development of our drug candidates could be delayed.

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We may also be exposed to legal or regulatory action or claims as a result of these new regulations.

Separately, the SEC has also announced that it is

scrutinizing existing climate-change related disclosures in public filings, increasing the potential for enforcement if the SEC were to allege our existing climate disclosures are misleading or deficient.

Separately, the SEC has also announced that it is scrutinizing existing climate-change related disclosures in public filings, increasing the potential for enforcement if the SEC were to allege our existing climate disclosures are misleading or deficient.

All of these risks could have a material adverse effect on our business, financial position, and/or stock price.

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

As of March 31, 2024, we owned or co-owned 110 patent applications and 26 patents.

As of June 30, 2024, we owned or co-owned 111 patent applications and 27 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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Changes in either the patent laws or interpretations of patent laws in the U.S.

and other countries may diminish the value of our

licensed or owned intellectual property or create uncertainty.

and other countries may diminish the value of our licensed or owned intellectual property or create uncertainty.

In addition, publication of information related to our current drug candidates and potential products may prevent us from obtaining or enforcing patents relating to these drug candidates and potential products, including without limitation composition-of-matter patents, which are generally believed to offer the strongest patent protection.

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, 2024, 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 three U.S.

patents, six U.S.

As of June 30, 2024, for each of VK2809 and VK0214, we in-licensed three patents in the U.S.

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

patents, four U.S.

patent applications, and additional patents and patent applications in certain foreign jurisdictions.

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patents, two PCT applications, and several patent applications in the U.S.

and certain foreign jurisdictions directed to VK2809 as of March 31, 2024.

For VK5211, as of March 31, 2024, we in-licensed ten patents and one patent application in the U.S.

and certain foreign jurisdictions directed to VK2809 as of June 30, 2024.

For VK5211, as of June 30, 2024, we in-licensed ten patents and one patent application in the U.S.

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

As of March 31, 2024, for our GLP-1 program, we own one U.S.

patent, three PCT applications, and several patent applications in the U.S.

As of June 30, 2024, for our GLP-1 program, we own one U.S.

patent, additional patents in certain foreign jurisdictions, three PCT applications, and several patent applications in the U.S.

and certain foreign jurisdictions.

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Our competitors may seek to market generic versions of any approved products by submitting abbreviated new drug applications to the FDA in which our competitors claim that our licensed patents or any future patents we may own are invalid, unenforceable or not infringed.

Alternatively, our competitors may seek approval to market their own

products similar to or otherwise competitive with our products.

Alternatively, our competitors may seek approval to market their own products similar to or otherwise competitive with our products.

In these circumstances, we may need to defend or assert our licensed patents or any future patents we may own, including by filing lawsuits alleging patent infringement.

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For example, we were previously aware of at least two third-party companies that were selling products in the U.S.

bearing the name “LGD-4033,” which is the name previously used by Ligand to refer to VK5211, without authority from either us or Ligand, and we may experience other

potential intellectual property infringement in the future.

bearing the name “LGD-4033,” which is the name previously used by Ligand to refer to VK5211, without authority from either us or Ligand, and we may experience other potential intellectual property infringement in the future.

In addition, in December 2022, we filed suit against Ascletis Bioscience Co., Ltd., Gannex Pharma Co., Ltd., Ascletis Pharmaceuticals Co., Ltd., Ascletis Pharma Inc., and Jinzi Jason Wu, or the Ascletics Defendants, in the Southern District of California, San Diego division, alleging, among other things:

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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 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.

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Competitors may use our licensed and owned technologies in jurisdictions where we have not licensed or obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where we may obtain or license patent protection, but where patent enforcement is not as strong as that in the U.S.

These products may compete with our products in jurisdictions where we do not have any issued or licensed patents and any future patent claims or other intellectual property rights may not be effective or sufficient to prevent them from so competing.

These products may compete with our products in

jurisdictions where we do not have any issued or licensed patents and any future patent claims or other intellectual property rights may not be effective or sufficient to prevent them from so competing.

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions.

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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, 2024, 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.

In those countries, as of June 30, 2024, 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.

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We may be subject to claims challenging the inventorship of our licensed patents, any future patents we may own and other intellectual property.

Although we are not currently experiencing any claims challenging the inventorship of our licensed patents or our licensed or owned intellectual property, we may in the future be subject to claims that former employees, collaborators or other third parties have an

interest in our licensed patents or other licensed or owned intellectual property as an inventor or co-inventor.

For example, we may have inventorship disputes arise from conflicting obligations of consultants or others who are involved in developing our drug candidates.

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*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 March 31, 2024, our executive officers, directors and 5% or greater stockholders beneficially owned 39.7% of our common stock.

As of June 30, 2024, our executive officers, directors and 5% or greater stockholders beneficially owned 32.8% 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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We are no longer a “smaller reporting company” within the meaning of the Securities Act of 1933, as amended, and as a result we are subject to certain enhanced disclosure requirements which will require us to incur significant expenses and expend time and resources.

404(b) of the Sarbanes-Oxley Act of 2002, as amended, or the Sarbanes-Oxley Act, the requirement that we hold a nonbinding advisory vote on executive compensation and obtain shareholder approval of any golden parachute payments not previously approved, the requirement to provide full and more detailed executive compensation disclosure and the reduction in the amount of time for filing our periodic and annual reports.

We are no longer a “smaller reporting company,” as of January 1, 2024 and, as a result, we are or will be required to comply with various disclosure and compliance requirements that did not previously apply, such as the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002, as amended, or the Sarbanes-Oxley Act, the requirement that we hold a nonbinding advisory vote on executive compensation and obtain shareholder approval of any golden parachute payments not previously approved, the requirement to provide full and more detailed executive compensation disclosure and the reduction in the amount of time for filing our periodic and annual reports.

Compliance with these additional requirements increases our legal and financial compliance costs and causes management and other personnel to divert attention from operational and other business matters to these additional public company reporting requirements.

In addition, if we are not able to comply with changing requirements in a timely manner, the market price of our stock could decline and we could be subject to delisting proceedings by the stock exchange on which our common shares are listed, or sanctions or investigations by the SEC or other regulatory authorities, which would require additional financial and management resources.

We became a large-accelerated filer effective January 1, 2024.

We reassessed, as of June 30, 2024, and determined that we continue to qualify as a large accelerated filer for filings beyond the fiscal year ending December 31, 2024.

We will need to reassess, as of June 30, 2025, whether we will continue to qualify as a large accelerated filer for filings beyond the fiscal year ending December 31, 2025.

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During the fiscal year 2023, our management was required to report, on a quarterly basis, on the effectiveness of our internal control over financial reporting.

Commencing with the fiscal year ending December 31, 2023, in addition to our management’s report on the effectiveness of our internal controls over financial reporting, 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.

Commencing with the fiscal year ended December 31, 2023, in addition to our management’s report on the effectiveness of our internal controls over financial reporting, 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 and our independent registered public accounting firm to assess our internal control over financial reporting are complex and require significant documentation, testing and possible remediation.

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In addition, a stockholder that is unable to bring a claim in the judicial forum of its choosing may be required to incur additional costs in the pursuit of actions that are subject to these exclusive forum provisions, particularly if the stockholder does not reside in or near Delaware.

additional costs associated with resolving such matters in other jurisdictions, which could materially and adversely affect our business, financial condition and results of operations.

Alternatively, if a court were to find this provision of our amended and restated bylaws inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could materially and adversely affect our business, financial condition and results of operations.

Unregistered Sales of Equi ty Securities and Use of Proceeds

Not applicable.

Defaults Upo n Senior Securities

Not applicable.

Mine Saf ety Disclosures

Not applicable.

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