What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2022-03-28 compared with 2021-03-18 · 74 added, 105 removed, 624 unchanged (22% of the section changed)

9 unchanged sentences

● Our approach to the treatment of cancer through cell death, inhibition of tumor growth, and the disruption of the tumor microenvironment is relatively unproven, and we do not know whether we will be able to develop any products of significant commercial value.

● We will continue to need substantial additional funding.

If we are unable to raise capital when needed, we would be forced to delay, reduce or eliminate our product development programs or commercialization efforts, including for VS-6766.

● We may need additional funding.

If we are unable to raise capital if needed, we would be forced to delay, reduce or eliminate our product development programs or commercialization efforts, including for VS-6766.

● Raising additional capital or entering into certain licensing arrangements may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our product candidates.

13 unchanged sentences

● We have incurred significant losses since our inception.

We expect to incur losses for the foreseeable future and may never achieve or maintain profitability.

We may incur losses for the foreseeable future and may never achieve or maintain profitability.

● Because we do not anticipate paying any cash dividends on our capital stock in the foreseeable future, capital appreciation, if any, will be the source of gain for our stockholders.

1 unchanged sentence

We may not be successful in obtaining necessary rights to compounds and product candidates for our development pipeline through acquisitions and in-licenses.

(Pfizer) and Chugai Pharmaceutical Co., Ltd (Chugai) to research, develop, commercialize, and manufacture products in oncology indications containing defactinib and VS-6766, respectively.

We may seek to acquire new compounds and product candidates from other pharmaceutical and biotechnology companies, academic scientists and other researchers, such as our exclusive in-license from Pfizer, and Chugai to research, develop, commercialize, and manufacture products in oncology indications containing defactinib and VS-6766, respectively.

The success of this strategy depends partly upon our ability to identify, select, discover and acquire promising pharmaceutical product candidates and products.

80 unchanged sentences

Our approach to the treatment of cancer through cell death, inhibition of tumor growth, and disruption of the tumor microenvironment is relatively unproven, and we do not know whether we will be able to develop any products of significant commercial value.

We are developing product candidates to treat cancer by using targeted agents to cause cell death, inhibition of tumor growth, and disruption of the tumor microenvironment and thereby thwart their growth and proliferation of cancer cells.

We are developing product candidates to treat cancer by using targeted agents to cause cell death, inhibition of tumor growth, and disruption of the tumor microenvironment, and thereby thwart the growth and proliferation of cancer cells.

Research on the use of small molecules to cause cell death, inhibition of tumor growth, and disruption of the tumor microenvironment is an emerging field and, consequently, there is still uncertainty about whether defactinib and VS-6766 are effective in improving outcomes for patients with cancer.

15 unchanged sentences

We face competition with respect to our current product candidates and will face competition with respect to any product candidates that we may seek to develop or commercialize in the future, from major pharmaceutical companies, specialty pharmaceutical companies and biotechnology companies worldwide.

There are a number of large pharmaceutical and biotechnology companies that currently market and sell products or are pursuing the development of products for the treatment of the disease indications for which we are developing our product candidates, including Novartis AG, Pfizer, Genentech, Inc., AstraZeneca PLC, Mirati Therapeutics, Inc., Amgen, Inc., Revolution Medicines, Inc., Relay Therapeutics, Inc., Boehringer Ingelheim, Moderna, Inc.

There are a number of large pharmaceutical and biotechnology companies that currently market and sell products or are pursuing the development of products for the treatment of the disease indications for which we are developing our product candidates, including Novartis AG, Pfizer, Genentech, Inc., AstraZeneca PLC, Mirati, Amgen, Revolution Medicines, Inc., Relay Therapeutics, Inc., Boehringer Ingelheim, Moderna, Inc.

Some of these competitive products and therapies are based on scientific approaches that are the same as or similar to our approach, and others are based on entirely different approaches.

7 unchanged sentences

We expect that our product candidates, if approved, will be priced at a significant premium over competitive generic products.

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

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

Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in even more resources being concentrated among a smaller number of our competitors.

82 unchanged sentences

Examples of both include:

● Reductions in patient visits for clinical trials.

Clinical investigators have reduced patient visits for in-process clinical trials and have transitioned to remote patient visits where possible.

Further, we had seen a reduction in site initiation, participant recruitment and enrollment, due to the COVID-19 pandemic, which could further pause or delay our clinical trials.

In addition, participant dosing, study monitoring and data analysis may be paused or delayed due to changes in hospital or academic institution policies, federal, state or local regulations, prioritization of hospital resources toward pandemic efforts, or other reasons related to the COVID-19 pandemic.

● Shortages of personnel at clinical trial sites and delay in startup activities.

Shortages in personnel in clinics and hospitals have cause some United States sites to institute limits on new clinical trials which could impact our ability to open new sites for our clinical trials.

Clinics in Europe and United States continue to have delays in startup activities due to the ongoing pandemic and the increase in COVID-19 variant infections.

In addition, participant dosing, study monitoring and data analysis may be paused or delayed due to changes in hospital or academic institution policies, federal, state, or local regulations, prioritization of hospital resources toward pandemic efforts, or other reasons related to the COVID-19 pandemi c.

● Accessibility limitations on our contract research organizations (CROs).

The ability of principal investigators and site staff to perform their functions, who as healthcare providers, may have heightened exposure to COVID-19, could be disrupted and cause elongation or de-prioritization of our

clinical trials, increase the costs related to such development, and materially adversely impact our clinical trial operations.

The ability of principal investigators and site staff to perform their functions, who, as healthcare providers, may have

heightened exposure to COVID-19, could be disrupted and cause elongation or de-prioritization of our clinical trials, increase the costs related to such development, and materially adversely impact our clinical trial operations.

● Capital markets volatility.

2 unchanged sentences

We currently utilize third parties to, among other things, supply raw materials, produce drug substance, drug product, and drug packaging.

Some of our third party manufacturers and distributors may in the future be limited and, at times, precluded from delivering us raw materials, drug substance, drug product, and drug packaging on a timely basis, for a variety of reasons, including without limitation an evolving understanding of how international, federal, and/or state authorities define “essential business”, their inability to remain open due to lost business in other parts of their portfolios, or because of international, federal, and/or state prioritization orders requiring our manufacturers to produce for and our distributors to distribute to governmental entities, competitors and/or other companies before they produce for us.

Some of our third party manufacturers and distributors may in the future be limited and, at times, precluded from delivering us raw materials, drug substance, drug product, and drug packaging on a timely basis, for a variety of reasons, including without limitation to an evolving understanding of how international, federal, and/or state authorities define “essential business”, their inability to remain open due to lost business in other parts of their portfolios, or because of international, federal, and/or state prioritization orders requiring our manufacturers to produce for and our distributors to distribute to governmental entities, competitors and/or other companies before they produce for us.

● Health risks for our employees.

1 unchanged sentence

● Work-from-home limitations.

We have asked most employees to work from home, which could impact our ability to effectively plan, execute, communicate and maintain our corporate culture.

We have asked most employees to primarily work from home, which could impact our ability to effectively plan, execute, communicate, and maintain our corporate culture.

The remote working environment could increase our cyber security risk, create data accessibility concerns, and make us more susceptible to communication disruptions.

6 unchanged sentences

Risks Related to Our Commercial Agreements

We depend on Secura.

for the achievement and payment of the contingent consideration under the asset purchase agreement between us and Secura pursuant to which we sold the COPIKTRA assets to Secura.

We depend on Secura for the achievement and payment of the contingent consideration under the asset purchase agreement between us and Secura pursuant to which we sold the COPIKTRA assets to Secura.

If Secura is unsuccessful in developing and commercializing COPIKTRA, we may not receive such payments or otherwise capitalize on the market potential of COPIKTRA.

On September 30, 2020, we completed the disposition of the Company’s rights, title and interest in and to COPIKTRA to Secura Bio, Inc.

On September 30, 2020, we completed the disposition of the Company’s rights, title, and interest in and to COPIKTRA to Secura.

Under the terms of the asset purchase agreement with Secura, we are entitled to contingent consideration, including milestone payments and royalties, dependent upon the further development and commercial success of COPIKTRA.

17 unchanged sentences

We have incurred significant losses since our inception.

We expect to incur losses for the foreseeable future and may never achieve or maintain profitability.

We may incur losses for the foreseeable future and may never achieve or maintain profitability.

Since inception, we have incurred significant operating losses.

3 unchanged sentences

We have devoted substantially all of our efforts to research and development.

We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future.

We expect to continue to incur significant expenses and may incur operating losses for the foreseeable future.

The net losses we incur may fluctuate significantly from quarter to quarter.

12 unchanged sentences

A decline in the value of our company could also cause you to lose all or part of your investment.

We will continue to need substantial additional funding.

If we are unable to raise capital when needed, we would be forced to delay, reduce or eliminate our product development programs or commercialization efforts, including for VS-6766.

We may need additional funding.

If we are unable to raise capital if needed, we would be forced to delay, reduce, or eliminate our product development programs or commercialization efforts, including for VS-6766.

We expect our expenses to increase in connection with our ongoing activities, particularly as we continue the clinical development of our product candidates.

We expect our existing cash resources at December 31, 2020 will be sufficient to fund our current operating plan and capital expenditure requirements beyond the next twelve months from the issuance date of these financial statements.

We will need to obtain substantial additional funding in connection with our continuing operations, including for our clinical development programs.

We expect our existing cash resources at December 31, 2021 will be sufficient to fund our current operating plan and capital expenditure requirements through at least next twelve months from the issuance date of these financial statements.

We may need to obtain additional funding in connection with our continuing operations, including for our clinical development programs.

Our future capital requirements will depend on many factors, including:

7 unchanged sentences

Our commercial revenues will be derived from sales of products.

It will take several years to achieve sales, and we will need to continue to rely on additional financing to further our clinical development objectives.

Even if our product candidates gain approval, it may take several years to achieve a significant level of sales, and as a result we may need to continue to rely on additional financing to further our clinical development objectives.

Adequate additional financing may not be available to us on acceptable terms, or at all.

Our ability to use our net operating loss carry-forwards may be limited.

Unfavorable economic conditions could have a material adverse effect on our business, financial condition, results of operations, or cash flows.

Unfavorable macroeconomic conditions and other adverse macroeconomic factors have resulted, among other matters, in tightening in the debt and equity markets, and high levels of inflation.

For example, tightening of the equity markets, makes it more difficult to raise capital at a reasonable valuation or at all.

In addition, the U.S.

Bureau of Labor Statistics has reported for the period from January 2021 to January 2022, the Consumer Price Index for All Urban Consumers rose 7.5 percent, which is the largest 12-month increase since the 12 month period ended February 1982.

If the inflationary pressure continues for a prolonged period, it may continue to result in increased costs of labor, cost of clinical trials, and costs of manufacturing which could adversely affect our results of operations.

Our ability to use our net operating loss carryforwards may be limited.

As of December 31, 2021, we had U.S.

2 unchanged sentences

The NOL and tax credit carryforwards will expire at various dates through 2041, except for $214.9 million of federal NOL carryforwards which may be carried forward indefinitely.

Sections 382 and 383 of the Internal Revenue Code and similar provisions under state law limits the annual use of NOL carry-forwards and tax credit carry-forwards, respectively, following an ownership change pursuant to section 382 of the Internal Revenue Code and similar state provisions.

In general, an ownership change occurs for purposes of Section 382 if there is certain cumulative changes in the ownership interest of significant stockholders over a three-year period in excess of 50%.

Based on our analysis under Section 382, we believe that $41.4 million of our federal NOL carryforwards and $168.0 million of our state NOL carryforwards are limited by Section 382 and similar provisions under state law as of December 31, 2020 and have been written off in the year end December 31, 2020.

Due to limitations under Section 382 we believe that our research & development and orphan drug credits will be limited as of December 31, 2020.

The portion of research and development and orphan drug credits that were determined to be limited by

Section 382 have been written off as of December 31, 2020.

Sections 382 and 383 of the Internal Revenue Code and similar provisions under state law limits the annual use of NOL carry-forwards and tax credit carryforwards, respectively, following an ownership change pursuant to section 382 of the Internal Revenue Code and similar state provisions.

In general, an ownership change occurs for purposes of Section 382 if there are certain cumulative changes in the ownership interest of significant stockholders over a three-year period in excess of 50%.

Based on our analysis under Section 382, we believe that our federal NOL carryforwards, state NOL carryforwards, research and development credits, and orphan drug credits are limited by Section 382 and similar provisions under state law as of December 31, 2021.

The portion of federal NOL carryforwards, state NOL carryforwards, research and development credits, and orphan drug credits that were determined to be limited by Section 382 and similar provisions under state law have been written off as of December 31, 2021.

Future changes in our stock ownership, some of which are outside of our control, could result in ownership changes in the future.

We may not be able to use some or all of our NOL and tax credit carryforwards, even if we attain profitability.

Risks Related to Our Indebtedness

Our level of indebtedness and debt service obligations could adversely affect our financial condition and may make it more difficult for us to fund our operations.

As of December 31, 2020, we had an aggregate principal of $28.3 million of debt outstanding, consisting of $0.3 million in 2018 Notes and $28.0 million of 2020 issued 5.00% Convertible Senior Notes due 2048 (the 2020 Notes).

We may not have cash available in an amount sufficient to enable us to make interest or principal payments on our indebtedness when due.

The 2018 Notes are governed by the terms of a base indenture for senior debt securities (the Base Indenture), as supplemented by the first supplemental indenture thereto (the Supplemental Indenture and together with the Base Indenture, the 2018 Indenture).

The 2020 Notes are governed by the terms of an indenture (the 2020 Indenture, and together with the 2018 Indenture, referred to as the Indentures).

Failure to satisfy our current and future debt obligations under the Indentures or breaching any covenants under the Indentures subject to specified cure periods with respect to certain breaches, could result in an event of default and, as a result, could accelerate all of the amounts due.

Further, the 2018 Notes and 2020 Notes (together referred to as the Notes) are subject to repurchase by us, at the option of the holders, at certain dates as specified within the Indentures prior to maturity in 2048.

In the event of an acceleration of amounts due under the Indentures, we may not have enough available cash or be able to raise additional funds through equity or debt financings to repay such indebtedness at the time of such acceleration.

In that case, we may be required to delay, limit, reduce or terminate our product candidate development or grant to others the rights to develop and market our product candidates that we would otherwise prefer to develop and market internally.

Our business, financial condition and results of operations could be materially adversely affected as a result of any of these events.

We are subject to certain restrictive covenants which, if breached, could have a material adverse effect on our business and prospects.

Risks Related to Our Dependence on Third Parties

8 unchanged sentences

Regulatory authorities enforce these GCP requirements through periodic inspections of trial sponsors, principal investigators, and trial sites.

If we or any of our CROs fail to comply with applicable GCP

requirements, the clinical data generated in our clinical trials may be deemed unreliable and the FDA or other regulatory authorities may require us to perform additional clinical trials before approving our marketing applications.

If we or any of our CROs fail to comply with applicable GCP requirements, the clinical data generated in our clinical trials may be deemed unreliable, and the FDA or other regulatory authorities may require us to perform additional clinical trials before approving our marketing applications.

We cannot assure you that upon inspection by a given regulatory authority, such regulatory authority will determine that any of our clinical trials comply with GCP requirements.

26 unchanged sentences

● disruptions to the operations of our manufacturers or suppliers caused by conditions unrelated to our business or operations, including the bankruptcy of the manufacturer or supplier or a catastrophic event affecting our manufacturers or suppliers.

Third-party manufacturers may not be able to comply with current good manufacturing practices (cGMP) regulations or similar regulatory requirements outside the United States.

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

Our failure, or the failure of our third-party manufacturers, to comply with applicable regulations could result in sanctions being imposed on us, including fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of product candidates or products, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect supplies of our products and harm our business and results of operations.

12 unchanged sentences

If we are not able to establish collaborations, we may have to alter our development and commercialization plans.

Our drug development programs and the potential commercialization of our product candidates will require substantial additional cash to fund expenses.

For some of our product candidates, we may decide to collaborate with

pharmaceutical and biotechnology companies for the development and potential commercialization of those product candidates.

Our drug development programs and the potential commercialization of our product candidates will require additional cash to fund expenses.

For some of our product candidates, we may decide to collaborate with pharmaceutical and biotechnology companies for the development and potential commercialization of those product candidates.

We face significant competition in seeking appropriate collaborators.

Whether we reach a definitive agreement for a collaboration will depend, among other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration, and the proposed collaborator's evaluation of a number of factors.

Those factors may include the design or results of clinical trials, the likelihood of approval by the FDA or similar regulatory authorities outside the United States, the potential market for the subject product candidate, the costs and complexities of manufacturing and delivering such product candidate to patients, the potential of competing products, the existence of uncertainty with respect to our ownership of technology, which can exist if there is a challenge to such ownership without regard to the merits of the challenge and industry and market conditions generally.

Those factors may include the design or results of clinical trials, the likelihood of approval by the FDA or similar regulatory authorities outside the United States, the potential market for the subject product candidate, the costs and complexities of manufacturing and delivering such product candidate to patients, the potential of competing products, and the existence of uncertainty with respect to our ownership of technology, which can exist if there is a challenge to such ownership without regard to the merits of the challenge and industry and market conditions generally.

The collaborator may also consider alternative product candidates or technologies for similar indications that may be available to collaborate on and whether such a collaboration could be more attractive than the one with us for our product candidate.

21 unchanged sentences

Collaboration agreements may not lead to development or commercialization of product candidates in the most efficient manner or at all.

If a future collaborator of ours were to be involved in a business combination, the continued pursuit and emphasis on our product development or commercialization program could be delayed, diminished or terminated.

Our operations in foreign jurisdictions, and those of third parties for which we rely on, may be impacted by economic, political and social conditions in such jurisdictions.

Tensions between the Ukraine and Russia have escalated in recent months, culminating in Russia's recent invasion of the Ukraine.

While we do not currently have clinical trials in Ukraine or Russia, we have clinical trial

sites in Europe.

We also source clinical supply for our product candidates from third party contract manufacturing organizations in Europe.

Furthermore, Secura’s sublicensee, Sanofi, has exclusive rights to develop and commercialize products containing duvelisib in Russia, the Commonwealth of Independent States (CIS) including Ukraine, Turkey, the Middle East and Africa (collectively the “Sanofi Territory”) for which we are entitled to receive future milestones and royalties pursuant to the Secura APA.

The invasion of Ukraine and the retaliatory measures taken or that may be taken by the United States, North Atlantic Treaty Organization (NATO) and others create global security concerns, including the possibility of expanded regional or global conflict, and are likely to have short-term and likely longer-term negative impacts on regional and global economies, any or all of which could disrupt our supply chain, adversely affect our ability to conduct ongoing and future clinical trials of our product candidates, and the recognition of future milestones and royalties pursuant to the Secura APA in the Sanofi Territory.

Risks Related to Our Intellectual Property

17 unchanged sentences

The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complex legal and factual questions, and has in recent years been the subject of much litigation.

As a result, the

issuance, scope, validity, enforceability and commercial value of our and our licensors' patent rights are highly uncertain.

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

Our and our licensors' pending and future patent applications may not result in patents being issued which protect our products or which effectively prevent others from commercializing competitive products.

Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of our patents or narrow the scope of our patent protection.

either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of our patents or narrow the scope of our patent protection.

The laws of foreign countries may not protect our rights to the same extent as the laws of the United States.

21 unchanged sentences

Our commercial success depends upon our ability and the ability of our collaborators to commercialize, develop, manufacture, market, and sell our product candidates without infringing the proprietary rights of third parties.

We have yet to conduct comprehensive freedom to operate searches to determine whether our use of certain of the patent rights owned by or licensed to us would infringe patents issued to third parties.

We have yet to conduct comprehensive freedom to operate searches to determine whether our use of certain

of the patent rights owned by or licensed to us would infringe patents issued to third parties.

We may become party to, or threatened with, future adversarial proceedings or litigation regarding intellectual property rights with respect to our products, including interference proceedings before the U.S.

25 unchanged sentences

We also enter into confidentiality and invention or patent assignment agreements with our employees and consultants.

Despite these efforts, any of these parties may

breach the agreements and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches.

Despite these efforts, any of these parties may breach the agreements and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches.

Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive, and time consuming, and the outcome is unpredictable.

In addition, some courts inside and outside the United States are less willing or unwilling to protect trade secrets.

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

If any of our trade secrets were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent them

from using that technology or information to compete with us.

If any of our trade secrets were to be disclosed to or independently developed by a competitor, our competitive position would be harmed.

18 unchanged sentences

Orphan drug exclusivity grants seven years of marketing exclusivity under the Federal Food, Drug and Cosmetic Act (FDCA), up to ten years of marketing exclusivity in Europe, and five years of marketing exclusivity in Australia.

Other companies have received orphan drug designations for compounds other than defactinib for the same indications for which we may have received orphan drug designation in corresponding

Other companies have received orphan drug designations for compounds other than defactinib for the same indications for which we may have received orphan drug designation in corresponding territories.

While orphan drug exclusivity for defactinib provides market exclusivity against the same active ingredient for the same indication, we would not be able to exclude other companies from manufacturing and/or selling drugs using the same active ingredient for the same indication beyond that timeframe on the basis of orphan drug exclusivity.

Furthermore, the marketing exclusivity in Europe can be reduced from ten years to six years if the orphan designation criteria are no longer met or if the drug is sufficiently profitable so that market exclusivity is no longer justified.

longer justified.

Even if we are the first to obtain marketing authorization for an orphan drug indication, there are circumstances under which the FDA may approve a competing product for the same indication during the seven-year period of marketing exclusivity, such as if the later product is the same compound as our product but is shown to be clinically superior to our product, or if the later product is a different drug than our product candidate.

40 unchanged sentences

● the federal false statements statute prohibits knowingly and willfully falsifying, concealing, or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services;

● the federal anti-kickback prohibition known as Eliminating Kickbacks in Recovery Act or EKRA, enacted in 2018 prohibits certain payments related to referrals of patients to certain providers (recovery homes, clinical treatment facilities and laboratories) and applies to services reimbursed by private health plans as well as government health care programs;

● the federal anti-kickback prohibition known as Eliminating Kickbacks in Recovery Act, or EKRA, enacted in 2018 prohibits certain payments related to referrals of patients to certain providers (recovery

homes, clinical treatment facilities, and laboratories) and applies to services reimbursed by private health plans as well as government health care programs;

● the FDCA, which, among other things, strictly regulates drug product and medical device marketing, prohibits manufacturers from marketing such products for off-label use and regulates the distribution of samples;

2 unchanged sentences

● the so-called federal "sunshine law"

or Open Payments that requires manufacturers of drugs, devices, biologics and medical supplies to report to the Department of Health and Human Services information related to payments and other transfers of value to physicians and teaching hospital and, beginning with transfers of value occurring in 2021, other healthcare practitioners, as well as ownership and investment interests held by physicians and their immediate family members;

or Open Payments that requires manufacturers of drugs, devices, biologics, and medical supplies to report to the Department of Health and Human Services information related to payments and other transfers of value to physicians and teaching hospital and, other healthcare practitioners, as well as ownership and investment interests held by physicians and their immediate family members;

● analogous state laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non- governmental third-party payors, including private insurers, and some state laws regulate interactions between pharmaceutical companies and healthcare providers and require pharmaceutical companies to comply with the pharmaceutical industry's voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government in addition to requiring drug manufacturers to report information related to payments to physicians and other healthcare providers or marketing expenditures and pricing information.

1 unchanged sentence

Similar healthcare and data privacy laws and regulations exist in the European Union and other foreign jurisdictions, including reporting requirements detailing interactions with and payments to healthcare providers and laws governing the privacy and security of certain protected information.

For example, in May 2018, a new privacy regime, the General Data Protection Regulation (GDPR), took effect enhancing our obligations with respect to operations in the European Economic Area, or the EEA, and increasing the scrutiny applied to transfers of personal data from the EEA (including health data from our clinical sites in the EEA) to countries that are considered by the European Commission to lack an adequate level of data protection, such as the United States.

For example, in May 2018, a new privacy regime, the General Data Protection Regulation (GDPR), took effect enhancing our obligations with respect to operations in the European Economic Area (EEA), and increasing the scrutiny applied to transfers of personal data from the EEA (including health data from our clinical sites in the EEA) to countries that are considered by the European Commission to lack an adequate level of data protection, such as the United States.

The compliance obligations imposed by the GDPR have required us to revise our operations and increased our cost of doing business.

In addition, the GDPR imposes substantial fines for breaches of data protection requirements, and it confers a private right of action on data subjects for breaches of data protection requirements.

In connection with the separation from the European Union, the United Kingdom adopted similar legislation.

Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations will involve substantial costs.

1 unchanged sentence

If our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, exclusion from government funded healthcare programs, such as Medicare and Medicaid, additional reporting obligations and oversight if we become subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with these laws, and the curtailment or restructuring of our operations.

If any of the physicians or other providers or entities with whom we expect to do business is found to be not in compliance with applicable laws, they may be subject to criminal, civil or

administrative sanctions, including exclusions from government funded healthcare programs.

If any of the physicians or other providers or entities with whom we expect to do business is found to be not in compliance with applicable laws, they may be subject to criminal, civil, or administrative sanctions, including exclusions from government funded healthcare programs.

Further, defending against any such actions can be costly, time-consuming and may require significant personnel resources.

13 unchanged sentences

The law, for example, increased drug rebates under state Medicaid programs for brand name prescription drugs and extended those rebates to Medicaid managed care and assessed a fee on manufacturers and importers of brand name prescription drugs reimbursed under certain government programs, including Medicare and Medicaid.

The provisions of the Healthcare Reform Act have been subject to judicial and Congressional challenges, as well as efforts by the Trump administration to modify certain requirements of the Healthcare Reform Act by executive branch order.

The provisions of the Healthcare Reform Act have been subject to judicial and Congressional challenges, as well as efforts to modify certain requirements of the Healthcare Reform Act by executive branch order.

For example, on January 20, 2017, President Trump signed an Executive Order directing federal agencies with authorities and responsibilities under the Healthcare Reform Act to waive, defer, grant exemptions from, or delay the implementation of any provision of the Healthcare Reform Act that would impose a fiscal or regulatory burden on states, individuals, healthcare providers, health insurers, or manufacturers of pharmaceuticals or medical devices.

On March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 into law, which eliminates the statutory Medicaid drug rebate cap, currently set at 100% of a drug’s average manufacturer price, for single source and innovator multiple source drugs, beginning January 1, 2024.

In Congress, there have been a number of legislative initiatives to modify, repeal and/or replace portions of the Healthcare Reform Act.

Tax reform legislation enacted at the end of 2017 eliminated the tax penalty for individuals who do not maintain sufficient health insurance coverage beginning in 2019.

The Bipartisan Budget Act of 2018 contained various provisions that affect coverage and reimbursement of drugs, including an increase in the discount that manufacturers of Medicare Part D brand name drugs must provide

to Medicare Part D beneficiaries during the coverage gap from 50% to 70% starting in 2019.

Congress may consider other legislation to modify, repeal and/or replace certain elements of the Healthcare Reform Act.

In December 2018, a federal district court judge, in a challenge brought by a number of state attorneys general, found the Healthcare Reform Act unconstitutional in its entirety because, once Congress repealed the individual mandate provision, there was no longer a basis to rely on Congressional taxing authority to support enactment of the law.

In December 2019, a federal appeals court agreed that the individual mandate provision was unconstitutional but remanded the case back to the district court to assess more carefully whether any provisions of the Healthcare Reform Act were severable and could survive.

In November, the Supreme Court will hear the case.

Pending resolution of the litigation, which could take some time, the Healthcare Reform Act is still operational in all respects.

On June 17, 2021, the U.S.

Supreme Court dismissed the most recent judicial challenge to the

Healthcare Reform Act brought by several states without specifically ruling on the constitutionality of the Healthcare Reform Act.

Prior to the Supreme Court’s decision, President Biden issued an Executive Order to (i) initiate a special enrollment period from February 15, 2021 through August 15, 2021 for purposes of obtaining health insurance coverage through the government marketplace and (ii) instruct 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 Healthcare Reform Act.

We continue to evaluate the effect that the Healthcare Reform Act and its possible repeal, replacement or modification may have on our business.

2 unchanged sentences

The Budget Control Act of 2011, as amended, or the Budget Control Act, includes provisions intended to reduce the federal deficit, including reductions in Medicare payments to providers through 2029.

Pursuant to the CARES Act, as well as subsequent legislation, these reductions were suspended from May 1, 2020 through December 31, 2021 due to the COVID-19 pandemic.

Any significant spending reductions affecting Medicare, Medicaid or other publicly funded or subsidized health programs, or any significant taxes or fees imposed as part of any broader deficit reduction effort or legislative replacement to the Budget Control Act, or otherwise, could have an adverse impact on our anticipated product revenues.

4 unchanged sentences

Risks Related to Employee Matters and Managing Growth

We may experience difficulties in managing restructurings and restructuring activities may not be as effective as anticipated.

From October 2019 to August 2020, we committed to operation plans to reduce overall operating expenses, including the elimination of approximately of 112 positions.

The workforce reductions were designed to streamline operations, speed execution of the Company’s clinical development of defactinib and VS-6766.

We may not realize, in full or in part, the anticipated benefits, savings and improvements in our cost structure from our restructuring efforts due to unforeseen difficulties, delays or unexpected costs.

Furthermore, our restructuring plan may be disruptive to our operations.

If we are unable to realize the expected operational efficiencies and cost savings from the restructuring, our operating results and financial condition would be adversely affected.

There can be no assurance that we will be successful in implementing our restructuring program.

Future growth would impose significant added responsibilities on members of management, including the need to identify, recruit, maintain and integrate additional employees.

Our future financial performance and our ability to develop our product candidates or additional assets will depend, in part, on our ability to effectively manage any future growth or restructuring, as the case may be.

Our future success depends on our ability to retain our chief executive officer and other key executives and to attract, retain and motivate qualified personnel.

16 unchanged sentences

Despite the implementation of security measures, our internal computer systems, and those of our contract research organizations and other third parties on which we rely, are vulnerable to damage from computer viruses, unauthorized access, natural disasters, fire, terrorism, war, and telecommunication and electrical failures.

Cybersecurity breaches may be the result of unauthorized activity by our employees and contractors, as well as by third parties who use cyberattack techniques involving malware, hacking and phishing, among others.

If such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our key business processes and clinical development programs.

5 unchanged sentences

These provisions could also limit the price that investors might be willing to pay in the future for shares of our common stock, thereby depressing the market price of our common stock.

management by making it more difficult for stockholders to replace members of our board of directors.

In addition, because our board of directors is responsible for appointing the members of our management team, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors.

Among other things, these provisions:

29 unchanged sentences

Broad market and industry factors may negatively affect the market price of our common stock, regardless of our actual operating performance.

In the past, following periods of volatility in the market, securities class action litigation has often been instituted against

In the past, following periods of volatility in the market, securities class action litigation has often been instituted against companies.

Such litigation, if instituted against us, could result in substantial costs and diversion of management's attention and resources, which could materially and adversely affect our business and financial condition.

16 unchanged sentences

Debt 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.

For example, see our risk factors under the heading “Risks Related to Our Indebtedness.”

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

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.

Risks Related to the Notes

Servicing our debt, including the Notes, requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial debt.

Our ability to make scheduled payments of the principal of, to pay interest on or to refinance our indebtedness, including the Notes, depends on the timing of regulatory reviews and approvals and our future performance, which is subject to regulatory, economic, financial, competitive and other factors beyond our control.

We are a clinical stage biopharmaceutical company and we have not yet generated any profit from product sales.

We expect to continue to incur losses as we continue our clinical development of, and seek regulatory approvals for, our product candidates, prepare to commercialize any approved products and add infrastructure and personnel to support our product development efforts and operations.

Accordingly, our business may not generate cash flow from operations in the future sufficient to service our debt and make necessary capital expenditures.

If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt or obtaining additional equity capital on terms that may be onerous or highly dilutive.

Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at such time.

We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations.

The Notes are structurally subordinated to any liabilities of our subsidiaries.

The Notes are our senior, unsecured obligations and are senior in right of payment to our future indebtedness that is expressly subordinated in right of payment to the Notes;

equal in right of payment with our existing and future indebtedness that is not so subordinated, and effectively subordinated to our existing and future secured indebtedness, to the extent of the value of the collateral securing such indebtedness.

The Notes are structurally subordinated to all existing and future indebtedness and other liabilities, including trade payables, and (to the extent we are not a holder thereof) preferred equity, if any, of our subsidiaries.

In the event of our bankruptcy, liquidation, reorganization or other winding up, our assets that secure debt will be available to pay obligations on the Notes only after the secured debt has been repaid in full from these assets, and the assets of our subsidiaries will be available to pay obligations on the Notes only after all claims of such subsidiaries’ creditors, including trade creditors and preferred equity holders have been repaid in full.

There may not be sufficient assets remaining to pay amounts due on any or all of the Notes then outstanding.

The Indentures governing the Notes, does not prohibit us from incurring additional senior debt or secured debt, nor do they prohibit any of our subsidiaries from incurring additional liabilities.

We may still incur substantially more debt or take other actions which would intensify the risks discussed above.

We and our subsidiaries may be able to incur substantial additional debt in the future, subject to the restrictions contained in our debt agreements, including the Indentures, some of which may be secured debt.

Unresolved Staff Comments

2 unchanged sentences

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

What changed 10-K

Item 1A. Risk Factors