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The risks and uncertainties described below are not the only ones we face.
−Removed: You should carefully consider the following factors and other information in this annual report.
+Added: You should carefully consider the following factors and other information in this Annual Report on Form 10-K.
If any of the negative events referred to below occur, our business, financial condition and results of operations could suffer.
In any such case, the trading price of our common stock could decline.
−Removed: Risk Factors Summary
−Removed: Our business is subject to numerous risks and uncertainties that you should be aware of in evaluating our business.
−Removed: These risks include, but are not limited to, the following:
−Removed: • We will need substantial additional funding to fund our operations, and there is substantial doubt about our ability to continue as a going concern.
−Removed: If we cannot obtain substantial additional funding, we could be forced to delay, reduce or terminate our research and development activities which would have a material adverse effect on our financial condition;
−Removed: • Our business is substantially dependent on the successful development of our BET inhibitor product candidates;
−Removed: • We may be unable to develop a lead molecule for the VYN202 program and exercise our option to license the applicable BET inhibitor compounds from Tay;
−Removed: • We may encounter delays in enrolling patients and successfully completing clinical trials for our product candidates, and may even be prevented from commencing such trials due to factors that are largely beyond our control;
−Removed: • Clinical drug development is very expensive, time-consuming and uncertain.
−Removed: Our clinical trials may fail to adequately demonstrate the safety and efficacy of our current or any future product candidates, which could prevent or delay regulatory approval and commercialization;
−Removed: • New chemical entities may require more time and resources for development, testing and regulatory approval;
−Removed: • Our clinical trials may fail to demonstrate the safety and efficacy of our product candidates, or serious adverse or unacceptable side effects may be identified during the development of our product candidates, which could result in the abandonment or limitation of the development of our product candidates or prevent or delay our ability to pursue strategic alternatives for our product candidates;
−Removed: • Results obtained in non-clinical studies and completed clinical trials may not predict success in later clinical trials;
−Removed: • Topline and preliminary data from our clinical trials that we announce or publish from time to time may change as additional data become available and are subject to audit and verification procedures that could result in material changes in the final data;
−Removed: • We have a limited history as a clinical-stage biopharmaceutical company developing product candidates for immuno-inflammatory conditions, which may make it difficult to assess our future viability;
−Removed: • We may spend our limited resources to pursue a particular product candidate or indication and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success;
−Removed: • We are subject to various risks and uncertainties arising out of the completed divestiture of our commercial business;
−Removed: • We have not obtained regulatory approvals to market our other pipeline product candidates, and we may be delayed in obtaining or fail to obtain such regulatory approvals and to commercialize these product candidates;
−Removed: • Our failure to successfully in-license, acquire, develop and market additional product candidates or approved products could impair our ability to grow our business;
−Removed: • We intend to engage in strategic transactions, which could impact our liquidity, increase our expenses and present significant distractions to our management;
−Removed: • We may decide not to continue developing any of our product candidates at any time during development or of any of our products after approval, which would reduce or eliminate our potential return on investment for those product candidates or products;
−Removed: • The COVID-19 pandemic could adversely affect our operations, including at our clinical trial sites, as well as the business or operations of our manufacturers, contract research organizations or other third parties with whom we conduct business;
−Removed: • We are subject to various U.S.
−Removed: federal, state, local and foreign health care fraud and abuse laws, including anti-kickback, self-referral, false claims and fraud laws, health information privacy and security, and transparency laws, and any violations by us of such laws could result in substantial penalties or other consequences including criminal sanctions, civil penalties, contractual damages, reputational harm, and diminished profits and future earnings.
−Removed: Additionally, any challenge to or investigation into our practices under these laws could cause adverse publicity and be costly to respond to, and thus could harm our business;
−Removed: • Legislative or regulatory healthcare reforms in the United States may make it more difficult and costly for us to obtain regulatory clearance or approval of our product candidates and to produce, market, and distribute our products after clearance or approval is obtained;
−Removed: • The trading price of the shares of our common stock is volatile, and stockholders could incur substantial losses.
−Removed: Risks Related to our Financial Position and Need for Capital
−Removed: We will need substantial additional funding to fund our operations, and there is substantial doubt about our ability to continue as a going concern.
−Removed: If we cannot obtain substantial additional funding, we could be forced to delay, reduce or terminate our research and development activities which would have a material adverse effect on our financial condition.
−Removed: Developing and commercializing biopharmaceutical products and conducting preclinical studies and clinical trials is an expensive and highly uncertain process that takes years to complete.
−Removed: As of December 31, 2022, we had approximately $31.0 million in cash, cash equivalents and restricted cash.
−Removed: We received an additional $5.0 million deferred payment in January 2023 from the sale of our MST Franchise.
−Removed: Based on our current operating plan, we do not have sufficient cash and cash equivalents to fund our anticipated level of operations as they become due during the twelve months following the date of the issuance of the financial statements included herein.
−Removed: Our estimates may prove to be wrong, and we could use our available capital resources sooner than we currently expect.
−Removed: Further, changing circumstances, some of which may be beyond our control, could cause us to consume capital significantly faster than we currently anticipate, and we may need to seek additional funds sooner than planned.
−Removed: The aforementioned factors raise substantial doubt about our ability to continue as a going concern, as reflected in the audit report included with the audited financial statements included elsewhere in this report.
−Removed: In addition, see “Part II.
−Removed: Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity” for further discussion regarding our liquidity.
−Removed: We may not be able to raise any proceeds from financing transactions.
−Removed: Accordingly, additional funds may not be obtained for our ongoing operations and we may not succeed in our future operations.
−Removed: Unless we are able to raise additional capital to finance our operations, our long-term business plan may not be accomplished, and we may be forced to cease, reduce, or delay operations, including our product candidate programs.
−Removed: Our future capital requirements depend on many factors, including:
−Removed: • milestone payments associated with our development programs;
−Removed: • the number and development requirements of the product candidates that we may pursue;
−Removed: • the scope, progress, results and costs of preclinical development, laboratory testing and conducting preclinical and clinical trials for our product candidates;
−Removed: • the costs, timing and outcome of regulatory review of our product candidates;
−Removed: • the extent to which we in-license or acquire additional product candidates and technologies;
−Removed: • the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims;
−Removed: • the impact on the timing of our preclinical studies, on the recruitment, enrollment, conduct and timing of our clinical trials, and on our business, due to the COVID-19 pandemic or any other external or macroeconomic factors;
−Removed: • our headcount and associated costs as we expand our research and development infrastructure;
−Removed: • our ability to identify and consummate transactions with third-party partners to further develop, obtain marketing approval for and/or commercialize our product candidates, and earn revenue from such arrangements;
−Removed: • the ongoing costs of operating as a public company.
−Removed: Additional capital may not be available when we need it, on terms that are acceptable to us or at all.
−Removed: If adequate funds are not available to us on a timely basis, we may be required to revise our operating plan in order to:
−Removed: • delay, limit, reduce or terminate our research and development activities;
−Removed: • delay, limit, reduce or terminate preclinical studies, clinical trials or other development activities for our product candidates.
−Removed: If we raise additional capital through collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish certain valuable rights to our product candidates, technologies, future revenue streams or research programs or grant licenses on terms that may not be favorable to us.
−Removed: If we raise additional capital through public or private equity offerings, the ownership interest of our existing shareholders will be diluted and the terms of any new debt securities or equity securities may have a preference over our common stock.
−Removed: In addition, if we issue warrants or preferred stock in connection with our financing activities, such securities may include terms that are unfavorable to our stockholders, including anti-dilution provisions and other preferences.
−Removed: In addition, any holders of preferred stock may receive preferential voting rights that are superior to the voting rights of holders of our common stock.
−Removed: If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt or making capital expenditures or specified financial ratios, any of which could restrict our ability to operate our business.
−Removed: We have incurred significant losses since our inception and we anticipate that we will continue to incur significant losses for the foreseeable future, which could harm our future business prospects.
−Removed: We have historically incurred substantial net losses, including net losses of $23.2 million and $73.3 million for the years ended December 31, 2022 and 2021, respectively.
−Removed: As of December 31, 2022, we had an accumulated deficit of $662.7 million.
−Removed: We expect our losses to continue as we continue to devote a substantial portion of our resources to our research and development efforts.
−Removed: These losses have had, and will continue to have, an adverse effect on our working capital, total assets, and shareholders’ equity.
−Removed: Because of the numerous risks and uncertainties associated with our research and development, we are unable to predict when we will become profitable, and we may never become profitable.
−Removed: Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis.
−Removed: Our inability to achieve and then maintain profitability would negatively affect our business, financial condition, results of operations, and cash flows.
−Removed: We anticipate that our expenses will increase substantially if and as we:
−Removed: • continue to develop product candidates and conduct preclinical studies and clinical trials;
−Removed: • initiate and continue research and development, including preclinical, clinical and discovery efforts for any future product candidates;
−Removed: • seek to identify additional product candidates;
−Removed: • seek regulatory approvals for our product candidates that may successfully complete clinical development;
−Removed: • add operational, financial and management information systems and personnel, including personnel to support our product candidate development and help us comply with our obligations as a public company;
−Removed: • hire and retain additional personnel, such as clinical, quality control, scientific, and administrative personnel;
−Removed: • maintain, expand and protect our intellectual property portfolio;
−Removed: • add equipment and physical infrastructure to support our research and development; and
−Removed: • acquire or in-license other product candidates and technologies.
−Removed: Our expenses could increase beyond our expectations if we are required by the U.S.
−Removed: Food and Drug Administration (the “FDA”), or other regulatory authorities to perform clinical trials in addition to those that we currently expect.
−Removed: SEC regulations limit the amount of funds we can raise during any 12-month period pursuant to our shelf registration statement on Form S-3.
−Removed: SEC regulations limit the amount that companies with a public float of less than $75 million may raise during any 12-month period pursuant to a shelf registration statement on Form S-3, referred to as the baby shelf rules.
−Removed: As of the filing of this Annual Report on Form 10-K, we are subject to such rules.
−Removed: Under these instructions, the amount of funds we can raise through primary public offerings of securities in any 12-month period using our registration statement on Form S-3, including our at-the-market equity offering program under which Cantor Fitzgerald is acting as our sales agent, is limited to one-third of the aggregate market value of the shares of our common stock held by our non-affiliates.
−Removed: Therefore, we will be limited in the amount of proceeds we are able to raise by selling shares of our common stock using our Form S-3 until such time as our public float exceeds $75 million.
−Removed: Furthermore, if we are required to file a new registration statement on another form, we may incur additional costs and be subject to delays due to review by the SEC staff.
−Removed: In addition, on March 15, 2022, we entered into a purchase agreement (the "Equity Purchase Agreement") with Lincoln Park Capital Fund, LLC ("Lincoln Park") which provides that, upon the terms and subject to the conditions and limitations set forth therein, we have the right, but not the obligation, to sell to Lincoln Park up to $30.0 million of shares of our common stock over the 36-month term of the Equity Purchase Agreement.
−Removed: Upon execution of the Equity Purchase Agreement, we issued 92,644 shares of our common stock to Lincoln Park as commitment shares in accordance with the closing conditions contained within the Equity Purchase Agreement.
−Removed: We may be limited in the amount of shares we can sell pursuant to the terms of the Equity Purchase Agreement.
−Removed: For example, we are prohibited from directing Lincoln Park to purchase shares under the Equity Purchase Agreement if such purchase would result in Lincoln Park beneficially owning more than 9.99% of our total outstanding shares.
−Removed: In addition, under applicable rules of Nasdaq, in no event may we issue or sell to Lincoln Park under the Equity Purchase Agreement shares of our common stock, including the commitment shares, in excess of 19.99% of the shares of our common stock outstanding immediately prior to the execution of the Equity Purchase Agreement (the "Exchange Cap") unless (i) we obtain stockholder approval to issue shares of our common stock in excess of the Exchange Cap or (ii) the average price of all applicable sales of our common stock to Lincoln Park under the Equity Purchase Agreement equals or exceeds the minimum price per share as mandated by Nasdaq rules.
−Removed: If any of the foregoing occur, we will be limited in the amount of proceeds we will be able to raise under the Equity Purchase Agreement which could have a material adverse effect on our financial condition and liquidity.
−Removed: Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish proprietary rights.
−Removed: We currently expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements.
−Removed: To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted and the terms of these securities may include liquidation, anti-dilution protection or other preferences that adversely affect your rights as a stockholder.
−Removed: 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.
−Removed: In addition, we may opportunistically seek additional capital due to favorable market conditions or strategic considerations, even if we believe that we have sufficient funds for our current or future operating plans.
−Removed: If we raise additional funds through collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us.
−Removed: If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, reduce or terminate our product development or grant rights to third parties to develop product candidates that we would otherwise prefer to develop ourselves.
Risks Related to Development of Our Product Candidates
−Removed: We may be unable to develop a lead molecule for the VYN202 program and exercise our Option to license the applicable Oral BETi Compounds from Tay.
−Removed: As discussed in "Item 1.
−Removed: Business—Development and License Agreements—Agreements with Tay Therapeutics," under the terms of the Option Agreement, as amended, our Option to exercise our rights with respect to Tay's highly selective BET inhibitor compounds expires on April 30, 2023.
−Removed: We are currently working with Tay to complete our assessment of several compounds that may be suitable for the program.
−Removed: However, we may be unable to select a viable lead molecule in a timely manner or at all.
−Removed: If we are unable to exercise the Option, we may be forced to terminate the program and would have a material adverse effect on our ability to execute our strategy of enhancing our pipeline.
−Removed: Our product candidates are in early stages of development and may fail in development or suffer delays that materially and adversely affect their commercial viability.
+Added: Our business is substantially dependent on the successful development of our BET inhibitor product candidates.
+Added: Our current development pipeline consists of our BET inhibitor product candidates, VYN201 and VYN202, which we are developing for the treatment of immuno-inflammatory diseases.
+Added: The success of our business is dependent on our successful development and/or our ability to pursue strategic initiatives, including identifying and consummating transactions with third-party partners, to further develop, obtain marketing approval for and/or commercialize, these product candidates.
+Added: Our ability to successfully progress these candidates may be hampered for many reasons, including:
+Added: • a product candidate may in a preclinical study or clinical trial be shown to have harmful side effects or other characteristics that indicate it is unlikely to be effective or otherwise does not meet applicable regulatory criteria;
+Added: • competitors may develop alternatives that render our product candidates obsolete or less attractive;
+Added: • product candidates we develop may nevertheless be covered by third parties’ patents or other proprietary rights;
+Added: • a product candidate may not be capable of being produced in commercial quantities at an acceptable cost, or at all;
+Added: • a product candidate may not be accepted as safe and effective by patients, the medical community or third party payors, if applicable;
+Added: • creation of intellectual property rights, such as patents, which are necessary to protect our interests in a product candidate, can be challenging in relation to pharmaceutical formulations and their uses with known active pharmaceutical ingredients and generally used combinations of inactive ingredients approved by the FDA;
+Added: • intellectual property rights, such as patents, which are necessary to protect our interests in a product candidate, may be difficult to obtain or unobtainable or if obtained may be difficult to enforce or unenforceable;
+Added: • intellectual property rights, such as patents, may fail to provide adequate protection, may be challenged and one or more claims may be revoked or the patent may be held to be invalid.
+Added: Furthermore, VYN201 and VYN202 are early stage programs.
+Added: The development of these new chemical entities carries even greater risk and a higher probability of failure.
+Added: Our failure to successfully develop our product candidates will have a material adverse effect on our business and financial condition.
+Added: Our product candidates are in early stages of development and may fail in development or suffer delays that materially and adversely affect their viability.
If we are unable to complete development of, or commercialize our product candidates, or experience significant delays in doing so, our business will be materially harmed.
−Removed: All of our product candidates are in early stages of development.
−Removed: We only recently commenced a Phase 1a/b clinical trial evaluating our lead candidate, VYN201, for the treatment of nonsegmental vitiligo in November 2022.
−Removed: In addition, our VYN202 program is in preclinical development and may never advance to clinical-stage development.
+Added: Each of our product candidates is in the early stage of development.
+Added: We are preparing to initiate a Phase 2b trial for VYN201 in nonsegmental vitiligo and a first-in-human Phase 1a trial for VYN202 in the second quarter of 2024.
Our ability to achieve and sustain profitability depends on obtaining regulatory approvals for, and successfully commercializing our product candidates, either alone or with third parties, and we cannot guarantee you that we will ever obtain regulatory approval for any of our product candidates.
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Before obtaining regulatory approval for the commercial distribution of our product candidates, we or an existing or future collaborator must conduct extensive preclinical tests and clinical trials to demonstrate the safety and efficacy in humans of our product candidates.
−Removed: We may not have the resources to advance the development of our therapeutics candidates if we experience issues that delay or prevent the regulatory approval of, or our ability to commercialize, our product candidates, including:
−Removed: • negative or inconclusive results from our clinical trials, leading to a decision or requirement to conduct additional preclinical testing or clinical trials or abandon a program;
+Added: We may not have the resources to advance the development of our product candidates if we experience issues that delay or prevent their regulatory approval, or our ability to commercialize them, including:
• preclinical study results, including toxicology data, may show the product candidate to be less effective than desired or to have harmful or problematic side effects;
+Added: • negative or inconclusive results from our clinical trials, leading to a decision or requirement to conduct additional preclinical testing or clinical trials or abandon a program;
• product-related side effects experienced by patients in our clinical trials or by individuals using drugs or therapeutics similar to our product candidates;
−Removed: • our third-party manufacturers’ inability to successfully manufacture our therapeutics in sufficient quantities or at all;
+Added: • our third-party manufacturers’ inability to successfully manufacture our product candidates in sufficient quantities or at all;
• inability of any third-party contract manufacturer to scale up manufacturing of our product candidates and those of our collaborators to supply the needs of clinical trials;
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• manufacturing costs, formulation issues, pricing or reimbursement issues, or other factors that no longer make a product candidate economically feasible;
−Removed: • delays and changes in regulatory requirements, policy and guidelines, including the imposition of additional regulatory oversight around clinical testing generally or with respect to our technology in particular or as a result of the impacts of the COVID-19 pandemic;
+Added: • delays and changes in regulatory requirements, policy and guidelines, including the imposition of additional regulatory oversight around clinical testing generally or with respect to our technology;
• varying interpretations of our data by the FDA and similar foreign regulatory agencies.
Our inability to advance or complete the development of our product candidates, or significant delays in doing so, could have a material and adverse effect on our business, financial condition, results of operations and prospects.
−Removed: Our business is substantially dependent on the successful development of our BET inhibitor product candidates.
−Removed: In January 2022, we divested our commercial business, the MST Franchise, in order to focus our efforts and resources on drug development.
−Removed: Our current development pipeline primarily consists of our BET inhibitor product candidates, VYN201 and VYN202, which we are developing for the treatment of immuno-inflammatory diseases.
−Removed: The success of our business is dependent on our successful development and/or our ability to pursue strategic initiatives, including identifying and consummating transactions with third-party partners, to further develop, obtain marketing approval for and/or commercialize, these product candidates.
−Removed: Our ability to successfully progress these candidates may be hampered for many reasons, including:
−Removed: • a product candidate may in a clinical trial be shown to have harmful side effects or other characteristics that indicate it is unlikely to be effective or otherwise does not meet applicable regulatory criteria;
−Removed: • competitors may develop alternatives that render our product candidates obsolete or less attractive;
−Removed: • product candidates we develop may nevertheless be covered by third parties’ patents or other proprietary rights;
−Removed: • a product candidate may not be capable of being produced in commercial quantities at an acceptable cost, or at all;
−Removed: • a product candidate may not be accepted as safe and effective by patients, the medical community or third party payors, if applicable;
−Removed: • creation of intellectual property rights, such as patents, which are necessary to protect our interests in a product candidate, can be challenging in relation to pharmaceutical formulations and their uses with known active pharmaceutical ingredients and generally used combinations of inactive ingredients approved by the FDA;
−Removed: • intellectual property rights, such as patents, which are necessary to protect our interests in a product candidate, may be difficult to obtain or unobtainable or if obtained may be difficult to enforce or unenforceable;
−Removed: • intellectual property rights, such as patents, may fail to provide adequate protection, may be challenged and one or more claims may be revoked or the patent may be held to be invalid.
−Removed: Furthermore, VYN201 and VYN202 are very early stage programs.
−Removed: The development of these new chemical entities carries even greater risk and a higher probability of failure.
−Removed: Our failure to successfully develop our product candidates will have a material adverse effect on our business and financial condition.
−Removed: We may encounter delays in enrolling patients and successfully completing clinical trials for our product candidates and may even be prevented from commencing such trials due to factors that are largely beyond our control.
−Removed: We have in the past experienced and may in the future experience delays in completing clinical trials and in commencing future clinical trials, including due to reasons associated with COVID-19.
−Removed: For example, in 2022, we experienced delays in enrolling patients in our Phase 2a clinical trial evaluating FMX114 for the treatment of atopic dermatitis ("AD"), a program for which we are not currently making any additional investment in, due to COVID-19 related issues.
−Removed: We rely on contract research organizations ("CROs") and clinical trial sites to ensure the proper and timely conduct of our clinical trials.
−Removed: While we have agreements governing the committed activities of our CROs, we have limited influence over their actual performance.
−Removed: A failure of one or more of our clinical trials can occur at any time during the clinical trial process.
+Added: We may encounter delays in enrolling patients and successfully completing clinical trials for our product candidates and may be delayed in, or prevented from, commencing such trials due to factors that are largely beyond our control.
+Added: We have in the past experienced and may in the future experience delays in completing clinical trials and in commencing future clinical trials.
Clinical trials can be delayed or aborted for a variety of other reasons, including delay or failure to:
• obtain regulatory approval to commence a trial;
−Removed: • reach agreement on acceptable terms with prospective CROs and clinical trial sites, the terms of which may be subject to extensive negotiation and vary significantly among different CROs and trial sites;
+Added: • reach agreement on acceptable terms with prospective contract research organizations ("CROs") and clinical trial sites, the terms of which may be subject to extensive negotiation and vary significantly among different CROs and trial sites;
• obtain approval from an institutional review board (“IRB”) at each site;
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Patient enrollment is also a significant factor in the timing of clinical trials and is affected by many factors, including the size and nature of the patient population, the proximity of patients to clinical sites, the eligibility criteria for the trial, the design of the clinical trial, competing clinical trials and clinicians’ and patients’ perceptions as to the potential advantages of the drug being studied in relation to available alternatives, including any new drugs or treatments that may be approved for the indications we are investigating.
+Added: We may be delayed in commencing our clinical trials if the FDA, or other applicable regulatory authority, finds deficiencies or requests additional information with respect to our INDs.
+Added: A protocol for each clinical trial and any subsequent protocol amendments must be submitted to the FDA as part of the IND.
+Added: An IND becomes effective 30 days after receipt by the FDA, unless before that time the FDA raises concerns or questions related to a proposed clinical trial and places the trial on clinical hold.
+Added: In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin.
+Added: For VYN202, we submitted an IND to the FDA in December 2023 and had planned to commence a Phase 1a clinical trial in the first quarter of 2024.
+Added: However, we recently received correspondence from the FDA informing us that our Phase 1a clinical trial is on hold and requesting that we submit additional nonclinical information, which delayed our plans to initiate the trial.
+Added: We have completed the additional nonclinical study and expect to submit the requested information to the FDA by the end of the first quarter of 2024 in order to initiate the clinical trial in the second quarter of 2024, if cleared by the FDA.
We may also encounter delays if a clinical trial is suspended or terminated by us, the IRB of the institutions in which such trials are being conducted, by the trial’s data safety monitoring board, or by the FDA.
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If we experience delays in carrying out or completing any clinical trial of our product candidates, the commercial prospects of our product candidates may be harmed, and our ability to generate product revenues from any of these product candidates will be delayed.
−Removed: In addition, any delays in completing our clinical trials will increase our costs, slow down our product candidate
−Removed: development and approval process and jeopardize our ability to commence product sales and generate revenues.
+Added: In addition, any delays in completing our clinical trials will increase our costs, slow down our product candidate development and approval process and jeopardize our ability to commence product sales and generate revenues.
Any of these occurrences may significantly harm our business and financial condition.
In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our product candidates.
−Removed: Clinical drug development is very expensive, time-consuming and uncertain.
−Removed: Our clinical trials may fail to adequately demonstrate the safety and efficacy of our current or any future product candidates, which could prevent or delay regulatory approval and commercialization.
−Removed: Clinical drug development is very expensive, time-consuming and difficult to design and implement, and its outcome is inherently uncertain, particularly as it relates to new chemical entities.
−Removed: Before obtaining regulatory approval for the commercial sale of a product candidate, we must demonstrate through clinical trials that a product candidate is both safe and effective for use in the target indication.
+Added: Drug development is very expensive, time-consuming and uncertain.
+Added: Our preclinical studies and clinical trials may fail to adequately demonstrate the safety and efficacy of our current or any future product candidates, or serious adverse side effects could be identified.
+Added: Any of these outcomes could prevent or delay regulatory approval and commercialization or harm our ability to pursue strategic alternatives for our product candidates.
+Added: Drug development is very expensive, time-consuming and difficult to design and implement, and its outcome is inherently uncertain, particularly as it relates to new chemical entities.
+Added: Before obtaining regulatory approval for the commercial sale of a product candidate, we must demonstrate through preclinical studies and clinical trials that a product candidate is both safe and effective for use in the target indication.
Most product candidates that commence clinical trials are never approved by regulatory authorities for commercialization.
The clinical trials for these product candidates may take significantly longer than expected to complete.
−Removed: In addition, we, any partner with which we may in the future collaborate, the FDA, an IRB or other regulatory authorities, including state and local agencies and counterpart agencies in foreign countries, may suspend, delay, require modifications to or terminate our clinical trials at any time, for various reasons, including:
+Added: In addition, we, any partner with which we may in the future collaborate, the FDA, an IRB or other
+Added: regulatory authorities, including state and local agencies and counterpart agencies in foreign countries, may prevent, suspend, delay, require modifications to or terminate our clinical trials at any time, for various reasons, including:
• lack of effectiveness of any product candidate during clinical trials or the failure of a product candidate to meet specified endpoints;
• discovery of serious or unexpected side effects experienced by trial participants, toxicities or other safety issues;
−Removed: • slower than expected rates of subject recruitment and patient enrollment in clinical trials resulting from numerous factors, including COVID-19 or the prevalence of clinical trials for our competitors for their product candidates treating the same indication;
+Added: • slower than expected rates of subject recruitment and patient enrollment in clinical trials resulting from numerous factors, including the prevalence of clinical trials for our competitors for their product candidates treating the same indication;
• difficulty in retaining subjects who have initiated participation in a clinical trial but may withdraw at any time due to adverse side effects from the therapy, insufficient efficacy, fatigue with the clinical trial process or for any other reason;
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If we experience delays in the completion of, or if we terminate, any of our future clinical trials, our business, financial condition, operating results and prospects would be adversely affected.
−Removed: New chemical entities may require more time and resources for development, testing and regulatory approval.
−Removed: Our BET inhibitor program is in the early stages of development, involves a novel therapeutic approach and new chemical entities, requires significant further research and development and regulatory approvals and is subject to the risks of failure inherent in the development of products based on innovative approaches.
−Removed: New chemical entities derived from our InhiBET platform are molecules that have not previously been approved and marketed as therapeutics.
−Removed: As a result, the product candidates from our InhiBET platform may face greater risk of unanticipated safety issues or other side-effects, or may not demonstrate efficacy.
−Removed: Further, the regulatory pathway for our new chemical entities may be more demanding.
−Removed: Our clinical trials may fail to demonstrate the safety and efficacy of our product candidates, or serious adverse or unacceptable side effects may be identified during the development of our product candidates, which could result in the abandonment or limitation of the development of our product candidates or prevent or delay our ability to pursue strategic alternatives for our product candidates.
−Removed: If our product candidates are associated with side effects in preclinical studies and/or clinical trials or have characteristics that are unexpected, our development costs could increase or we may need to abandon development activities or limit development to more narrow uses in which the side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective.
−Removed: The FDA or an IRB may also require that we suspend, discontinue, or limit our clinical trials based on safety information.
−Removed: Such findings could result in regulatory authorities failing to provide marketing authorization for our product candidates.
−Removed: Many product candidates that initially showed promise in early stage testing have later been found to cause side effects that prevented further development of the product candidate.
−Removed: Before any potential third-party partners can obtain marketing approvals for the commercial sale of our product candidates, we must demonstrate through lengthy, complex and expensive preclinical testing and clinical trials that our product candidates are both safe and effective for use in each target indication, and failures can occur at any stage of testing.
−Removed: Additionally, if we or others identify undesirable side effects caused by our drugs, a number of potentially significant negative consequences could result, including:
+Added: In addition, product candidates that initially showed promise in early stage testing have later been found to cause side effects that prevented further development of the product candidate.
+Added: For example, some systemic BET inhibitors have been linked to tolerability issues, particularly in the gastrointestinal tract and bone marrow suppressive effects like thrombocytopenia.
+Added: If our product candidates are associated with side effects in preclinical studies and/or clinical trials or have characteristics that are unexpected, a number of potentially significant negative consequences could result, including:
+Added: • our development costs could increase;
+Added: • we may need to abandon development activities or limit development to more narrow uses in which the side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective;
• we may need to abandon the development or limit the further development of our product candidates, including in various populations and for certain indications;
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• our reputation may suffer;
+Added: • regulatory authorities may require that we suspend, discontinue, or limit our clinical trials based on safety information;
• regulatory authorities may withdraw approval to market such product;
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• a medication guide outlining the risks of such side effects for distribution to patients may be required;
−Removed: • our ability to pursue strategic alternatives, including identifying and consummating transactions with third-party partners, to further develop, obtain marketing approval for and/or commercialize our product candidates would be harmed.
+Added: • market acceptance of any products that do obtain regulatory approval could be inhibited.
Any of these events could prevent us from pursuing strategic alternatives, including identifying and consummating transactions with third-party partners, to further develop, obtain marketing approval for and/or commercialize the particular product candidate and could significantly harm our business, results of operations and prospects.
+Added: New chemical entities may require more time and resources for development, testing and regulatory approval.
+Added: Each of our BET inhibitor programs is in the early stages of development, involves a novel therapeutic approach and new chemical entity, requires significant further research and development and regulatory approvals and is subject to the risks of failure inherent in the development of products based on innovative approaches.
+Added: New chemical entities derived from our InhiBET platform are molecules that have not previously been approved and marketed as therapeutics.
+Added: As a result, the product candidates from our InhiBET platform may face greater risk of unanticipated safety issues or other side-effects, or may not demonstrate efficacy.
+Added: For example, systemic BET inhibitors have historically targeted both BD1 and BD2 less selectively, causing gastrointestinal toxicity and bone marrow suppressive effects like thrombocytopenia.
+Added: While we believe VYN202’s high selectivity for BD2 may alleviate the therapeutic limiting toxicities observed by other less BD2-selective BET inhibitors, we may need to spend more time and greater resources verifying any toxicity associated with VYN202.
+Added: Accordingly, the regulatory pathway for our new chemical entities may be more demanding and take a longer period of time.
Results obtained in preclinical studies and completed clinical trials may not predict success in later clinical trials.
−Removed: Success in preclinical testing, such as testing for VYN201, and early clinical trials does not ensure that later clinical trials will be successful, and any other clinical trials that we may conduct may not demonstrate consistent or adequate efficacy and safety to obtain regulatory approval to market our product candidates in any indication.
−Removed: We and other companies in the biopharmaceutical industry have frequently suffered significant setbacks in later clinical trials, even after achieving promising results in earlier non-clinical studies or clinical trials.
−Removed: For example, in August 2022, our Phase 2a clinical trial for FMX114 did not meet its primary endpoint of improving symptoms and severity of AD after four weeks of treatment.
−Removed: In addition, Phase 3 clinical trials often produce unsatisfactory results even though prior clinical trials were successful.
+Added: Success in preclinical testing and early clinical trials does not ensure that later clinical trials will be successful, and any future clinical trials that we may conduct may not demonstrate consistent or adequate efficacy and safety to obtain regulatory approval to market our product candidates in any indication.
+Added: Companies in the biopharmaceutical industry frequently suffer significant setbacks in later-stage clinical trials, even after achieving promising results in preclinical studies or earlier clinical trials.
+Added: Phase 3 clinical trials often produce unsatisfactory results even though prior clinical trials were successful.
Any of these events could prevent us from pursuing strategic alternatives, including identifying and consummating transactions with third-party partners, to further develop, obtain marketing approval for and/or commercialize a particular product candidate and could significantly harm our business, results of operations and prospects.
−Removed: Topline and preliminary data from our clinical trials that we announce or publish from time to time may change as additional data become available and are subject to audit and verification procedures that could result in material changes in the final data.
−Removed: We may publicly disclose topline or preliminary data from our clinical trials which are based on a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change following a complete analysis of all data related to the trial.
+Added: Top line and preliminary data from our clinical trials that we announce or publish from time to time may change as additional data become available and are subject to audit and verification procedures that could result in material changes in the final data.
+Added: We may publicly disclose top line or preliminary data from our clinical trials based on a preliminary analysis of then-available data.
+Added: In that case, the results and related findings and conclusions remain subject to change following a complete analysis of all data related to the trial.
We also make certain assumptions, estimations, calculations and conclusions as part of our analyses of data, and we may not have received or had the opportunity to fully and carefully evaluate all data.
−Removed: As a result, the topline or preliminary results that we report may differ from future results of the same trials, or different conclusions or considerations may qualify such results, once additional data have been received and fully evaluated.
−Removed: Topline data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published.
−Removed: Accordingly, topline and preliminary data should not be considered complete and should be viewed with caution
−Removed: until the final data are available.
+Added: As a result, the top line or preliminary results that we report may differ from future results of the same trials, or different conclusions or considerations may qualify such results, once additional data have been received and fully evaluated.
+Added: Top line data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published.
+Added: Accordingly, top line and preliminary data should not be considered complete and should be viewed with caution until the final data are available.
We may also disclose interim data from our clinical trials.
Interim data from clinical trials that we may complete are subject to the risk that one or more of the clinical outcomes may materially change as subject enrollment continues and more subject data become available.
−Removed: Adverse differences between interim, topline or preliminary data and final data could significantly harm our reputation and business prospects.
−Removed: Further, disclosure of interim, topline or preliminary data by us or by our competitors could result in volatility in the price of our common stock.
+Added: Adverse differences between interim, top line or preliminary data and final data could significantly harm our reputation and business prospects.
+Added: Further, disclosure of interim, top line or preliminary data by us or by our competitors could result in volatility in the price of our common stock.
Further, others, including regulatory agencies, may not accept or agree with our assumptions, estimates, calculations, conclusions or analyses or may interpret or weigh the importance of data differently, which could impact the potential of the particular program, the likelihood of marketing approval or commercialization of the particular product candidate, any approved product, and our company in general.
In addition, the information we choose to publicly disclose regarding a particular study or clinical trial is derived from information that is typically extensive, and you or others may not agree with what we determine is material or otherwise appropriate information to include in our disclosure, and any information we determine not to disclose may ultimately be deemed significant with respect to future decisions, conclusions, views, activities or otherwise regarding a particular program, product candidate or our business.
−Removed: If the interim, topline or preliminary data that we report differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to pursue strategic alternatives, including identifying and consummating transactions with third-party partners to further develop, obtain marketing approval for and/or commercialize our product candidates may be harmed, which could harm our business, operating results, prospects or financial condition.
−Removed: Our current and future clinical trials or those of any future collaborators may reveal significant adverse events not seen in our preclinical studies and may result in a safety profile that could inhibit regulatory approval or market acceptance of any of our product candidates.
−Removed: If significant adverse events or other side effects are observed in any of our current or future clinical trials, we may have difficulty recruiting patients to such trials, patients may drop out of our trials, or we may be required to abandon the trials or our development efforts of one or more product candidates altogether.
−Removed: For example, certain BET inhibitors have been linked to tolerability issues, particularly in the gastrointestinal tract.
−Removed: We, the FDA or other applicable regulatory authorities, or an IRB may suspend any clinical trials of any product candidate at any time for various reasons, including a belief that subjects or patients in such trials are being exposed to unacceptable health risks or adverse side effects.
−Removed: Some potential therapeutics developed in the biotechnology industry that initially showed therapeutic promise in early-stage trials have later been found to cause side effects that prevented their further development.
−Removed: Even if the side effects do not preclude the product candidate from obtaining or maintaining marketing approval, undesirable side effects may inhibit market acceptance of the approved therapeutic due to its tolerability versus other therapies.
−Removed: Any of these developments could materially harm our business, financial condition and prospects.
+Added: If the interim, top line or preliminary data that we report differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to pursue strategic alternatives, including identifying and consummating transactions with third-party partners to further develop, obtain marketing approval for and/or commercialize our product candidates may be harmed, which could harm our business, operating results, prospects or financial condition.
We have a limited history as a clinical-stage biopharmaceutical company developing product candidates for immuno-inflammatory conditions, which may make it difficult to assess our future viability.
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We may spend our limited resources to pursue a particular product candidate or indication and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success.
−Removed: We have chosen to evaluate VYN201 in the treatment of nonsegmental vitiligo.
+Added: We have chosen to initially evaluate VYN201 in the treatment of nonsegmental vitiligo, and we intend to initially evaluate VYN202 in the treatment of moderate-to-severe plaque psoriasis and moderate-to-severe adult-onset rheumatoid arthritis.
As a result, we may forego or delay pursuit of opportunities with other product candidates or for other indications that later prove to have greater commercial potential.
−Removed: For example, during 2022, we decided not to pursue further development of FMX114 for the treatment of AD and instead to focus our research and development efforts on VYN201 and VYN202.
Our resource allocation decisions may cause us to fail to capitalize on viable commercial drugs or profitable market opportunities.
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We face competition from entities that have developed or may develop product candidates for the diseases addressed by our product candidates, including companies developing novel treatments and technology platforms.
−Removed: If these companies develop
−Removed: technologies or product candidates more rapidly than we do or their technologies are more effective, our ability to develop and successfully commercialize product candidates may be adversely affected.
+Added: If these companies develop technologies or product candidates more rapidly than we do or their technologies are more effective, our ability to develop and successfully commercialize product candidates may be adversely affected.
The development and commercialization of drugs is extremely competitive.
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Our competitors have developed, are developing or will develop product candidates and processes competitive with our product candidates and processes.
−Removed: Competitive therapeutic treatments include those that have already been approved and accepted by the medical community and any new treatments, including those based on novel technology platforms that enter the market.
+Added: Competitive therapeutic treatments, such as OPZELURA (ruxolitinib) cream, include those that have already been approved and accepted by the medical community and any new treatments, including those based on novel technology platforms that enter the market.
We believe that a significant number of products are currently under development, and may become commercially available in the future, for the treatment of conditions for which we are trying, or may try, to develop product candidates.
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Competition from many sources exists or may arise in the future.
−Removed: Our competitors include larger and better funded biopharmaceutical, biotechnological and therapeutics companies, including companies focused on therapeutics for autoimmune diseases, fibrosis and cancer, as well as numerous small companies.
+Added: Our competitors include larger and better funded biopharmaceutical, biotechnological and therapeutics companies, including companies focused on therapeutics for autoimmune diseases.
Moreover, we also compete with current and future therapeutics developed at universities and other research institutions.
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Furthermore, the research, testing, manufacturing, labeling, marketing, sale and distribution of drugs are subject to extensive and rigorous regulation by the FDA.
−Removed: We are not permitted to market any of our product candidates in the United States until we receive approval of the applicable NDA from the FDA.
+Added: We are not permitted to market any of our product candidates in the United States until we receive approval of the applicable NDA from
To gain approval of an NDA or other equivalent regulatory approval, we must provide the FDA with clinical data and other information that demonstrates the continued safety and efficacy of the product for the intended indication.
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If any of these outcomes occur, we would not receive approval for our other product candidates and may need to discontinue the development of such product candidates.
−Removed: The COVID-19 pandemic could adversely affect our operations, including at our clinical trial sites, as well as the business or operations of our manufacturers, contract research organizations or other third parties with whom we conduct business.
−Removed: Our business has been adversely affected by the effects of the COVID-19 pandemic, which has resulted in a variety of restrictions in order to reduce the spread of the disease, which, among other things, direct businesses and governmental agencies to cease non-essential operations at physical locations, prohibit certain non-essential gatherings, and order cessation of non-essential travel.
−Removed: For example, enrollment and other operations related to our Phase 1b/2a clinical trial for FMX114 in Australia were negatively impacted by the COVID-19 pandemic and restrictions imposed by Australian authorities in 2022.
−Removed: In addition, some of our third-party preclinical science partners and manufacturers which we use for the supply of materials for our product candidates or other materials necessary to manufacture drug product to conduct preclinical studies and clinical trials are located in countries affected by COVID-19, particularly in China, and should they experience disruptions, such as lockdowns, temporary closures or suspension of services, we would likely experience delays in advancing these studies and trials.
−Removed: Any delay in the development of our product candidates could have a material adverse effect on our business and results of operations.
Even if our product candidates receive marketing approval, we may continue to face future developmental and regulatory difficulties.
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Costs arising out of any regulatory developments could be time-consuming and expensive and could divert management resources and attention and, consequently, could adversely affect our business operations and financial performance.
−Removed: We expect to rely on third parties to conduct, supervise and monitor our clinical studies, and if these third parties perform in an unsatisfactory manner, it may harm our business.
−Removed: We also rely on medical institutions, clinical investigators, contract laboratories, collaborative partners and other third parties, such as CROs, to assist us in conducting our clinical trials for our other product candidates.
+Added: We rely on third parties to conduct, supervise and monitor our clinical studies, and if these third parties perform in an unsatisfactory manner, it may harm our business.
+Added: We rely on medical institutions, clinical investigators, contract laboratories, collaborative partners and other third parties, such as CROs, to assist us in conducting our clinical trials for our other product candidates.
While we will have agreements governing their activities, we will have limited influence over their actual performance.
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Nevertheless, we will be responsible for ensuring that each of our clinical studies is conducted in accordance with the applicable protocol, legal, regulatory and scientific standards, and our reliance on the CROs does not relieve us of our regulatory responsibilities.
−Removed: We and our CROs are required to comply with the FDA’s and other regulatory authorities’ good clinical practices ("GCPs") for conducting, recording and reporting the results of clinical studies to assure that the data and reported results are credible and accurate, and that the rights, integrity and confidentiality of clinical trial participants are protected.
+Added: We and our CROs are required to comply with the FDA’s and other regulatory authorities’ good clinical practices ("GCPs") for conducting, recording and reporting the results of clinical studies to assure that the data and reported results are credible and
+Added: accurate, and that the rights, integrity and confidentiality of clinical trial participants are protected.
If we or our CROs fail to comply with applicable GCPs, the clinical data generated in our future clinical studies may be deemed unreliable and the FDA and other regulatory authorities may require us to perform additional clinical studies before approving any marketing applications.
If the third parties or consultants that assist us in conducting our clinical trials do not perform their contractual duties or obligations, experience work stoppages, do not meet expected deadlines, terminate their agreements with us or need to be replaced, or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical trial protocols or GCPs, or for any other reason, we may need to conduct additional clinical trials or enter into new arrangements with alternative third parties, which could be difficult, costly or impossible, and our clinical trials may be extended, delayed or terminated or may need to be repeated.
−Removed: If any of the foregoing were to occur, we may not be able to
−Removed: obtain, or may be delayed in obtaining, regulatory approval for the product candidates being tested in such trials, and will not be able to, or may be delayed in our efforts to, successfully commercialize these product candidates.
−Removed: Changes in methods of product candidate manufacturing or formulation may result in additional costs or delay.
−Removed: As product candidates are developed through preclinical studies to late-stage clinical trials towards approval and commercialization, it is common that various aspects of the development program, such as manufacturing methods and formulation, are altered in an effort to optimize processes and results.
+Added: If any of the foregoing were to occur, we may not be able to obtain, or may be delayed in obtaining, regulatory approval for the product candidates being tested in such trials, and will not be able to, or may be delayed in our efforts to, successfully commercialize these product candidates.
+Added: Changes in methods of product candidate manufacturing or formulation may result in additional costs or delays.
+Added: As product candidates are developed through preclinical studies to later-stage clinical trials towards approval and commercialization, it is common that various aspects of the development program, such as manufacturing methods and formulation, are altered in an effort to optimize processes and results.
+Added: For example, we intend to evaluate a gel formulation of VYN201 in our planned Phase 2b trial rather than an ointment, which was used in our completed Phase 1b trial.
Such modifications carry the risk that they will not achieve these intended objectives, and may also require additional testing, FDA notification or FDA approval.
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This could delay completion of clinical trials, require the conduct of bridging clinical trials or the repetition of one or more clinical trials, increase clinical trial costs, delay approval of our product candidates and jeopardize our ability to pursue strategic alternatives, including identifying and consummating transactions with third-party partners to further develop, obtain marketing approval for and/or commercialize our product candidates.
+Added: Risks Related to our Financial Position and Need for Capital
+Added: We will need substantial additional funding to pursue our business objectives.
+Added: If we are unable to raise capital when needed, we could be forced to curtail our planned operations.
+Added: Identifying potential product candidates and conducting preclinical testing and clinical trials is a time-consuming, expensive and uncertain process that takes years to complete.
+Added: We may never generate the necessary data or results required to obtain marketing approval for and/or commercialize our product candidates or identify and consummate transactions with third-party partners to further develop our product candidates.
+Added: We expect to incur significant expenses and operating losses for the foreseeable future as we advance our product candidates from discovery through preclinical and clinical development.
+Added: In addition, we may not be able to identify and consummate transactions with third-party partners to further develop, obtain marketing approval for and/or commercialize our product candidates, and our product candidates, if approved, may not achieve commercial success.
+Added: Furthermore, we incur and expect to continue to incur significant costs associated with operating as a public company, including legal, accounting, investor relations and other expenses.
+Added: We also expect to add additional personnel to support our operational plans and strategic direction as needed.
+Added: As of December 31, 2023, we had $93.3 million in cash, cash equivalents, restricted cash and marketable securities.
+Added: We believe these resources will enable us to fund our operating expenses and capital expenditure requirements for a period of at least 12 months from the date of this Annual Report on Form 10-K based on our current operating assumptions.
+Added: These assumptions may prove to be wrong, however, and we could use our available capital resources sooner than we expect.
+Added: Changes may occur beyond our control that would cause us to consume our available capital before that time, including changes in and progress of our development activities, acquisitions of additional products or product candidates, and changes in regulation.
+Added: Our future capital requirements depend on many factors, including:
+Added: • milestone payments associated with our development programs;
+Added: • the number and development requirements of the product candidates that we may pursue;
+Added: • the scope, progress, results and costs of preclinical development, laboratory testing and conducting preclinical and clinical trials for our product candidates;
+Added: • costs associated with manufacturing and supplying our product candidates;
+Added: • the costs, timing and outcome of regulatory review of our product candidates;
+Added: • the extent to which we in-license or acquire additional product candidates and technologies;
+Added: • the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims;
+Added: • the impact on the timing of our preclinical studies, on the recruitment, enrollment, conduct and timing of our clinical trials, and on our business, due to external or macroeconomic factors;
+Added: • our headcount and associated costs as we expand our research and development infrastructure;
+Added: • our ability to identify and consummate transactions with third-party partners to further develop, obtain marketing approval for and/or commercialize our product candidates, and earn revenue from such arrangements;
+Added: • the ongoing costs of operating as a public company.
+Added: Additional capital may not be available when we need it, on terms that are acceptable to us or at all.
+Added: If adequate funds are not available to us on a timely basis, we may be required to revise our operating plan in order to:
+Added: • delay, limit, reduce or terminate our research and development activities;
+Added: • delay, limit, reduce or terminate preclinical studies, clinical trials or other development activities for our product candidates.
+Added: If we raise additional capital through collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish certain valuable rights to our product candidates, technologies, future revenue streams or research programs or grant licenses on terms that may not be favorable to us.
+Added: If we raise additional capital through public or private equity offerings, the ownership interest of our existing stockholders will be diluted and the terms of any new debt securities or equity securities may have a preference over our common stock.
+Added: In addition, if we issue warrants or preferred stock in connection with our financing activities, such securities may include terms that are unfavorable to our stockholders, including anti-dilution provisions and other preferences.
+Added: In addition, any holders of preferred stock may receive preferential voting rights that are superior to the voting rights of holders of our common stock.
+Added: If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt or making capital expenditures or specified financial ratios, any of which could restrict our ability to operate our business.
+Added: We have incurred significant losses since our inception and we anticipate that we will continue to incur significant losses for the foreseeable future, which could harm our future business prospects.
+Added: We have historically incurred substantial net losses, including net losses of $28.5 million and $23.2 million for the years ended December 31, 2023 and 2022, respectively.
+Added: As of December 31, 2023, we had an accumulated deficit of $691.3 million.
+Added: We expect our losses to continue as we continue to devote a substantial portion of our resources to our research and development efforts.
+Added: These losses have had, and will continue to have, an adverse effect on our working capital, total assets, and shareholders’ equity.
+Added: Because of the numerous risks and uncertainties associated with our research and development, we are unable to predict when we will become profitable, and we may never become profitable.
+Added: Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis.
+Added: Our inability to achieve and then maintain profitability would negatively affect our business, financial condition, results of operations, and cash flows.
+Added: We anticipate that our expenses will increase substantially if and as we:
+Added: • continue to develop product candidates and conduct preclinical studies and clinical trials;
+Added: • initiate and continue research and development, including preclinical, clinical and discovery efforts for any future product candidates;
+Added: • seek to identify additional product candidates;
+Added: • seek regulatory approvals for our product candidates that may successfully complete clinical development;
+Added: • add personnel to support our product candidate development;
+Added: • hire and retain additional personnel, such as clinical, quality control, scientific, and administrative personnel;
+Added: • maintain, expand and protect our intellectual property portfolio; and
+Added: • acquire or in-license other product candidates and technologies.
+Added: Our expenses could increase beyond our expectations if we are required by the FDA or other regulatory authorities to perform clinical trials in addition to those that we currently expect.
+Added: SEC regulations limit the amount of funds we can raise during any 12-month period pursuant to our shelf registration statement on Form S-3.
+Added: SEC regulations limit the amount that companies with a public float of less than $75 million may raise during any 12-month period pursuant to a shelf registration statement on Form S-3, referred to as the baby shelf rules.
+Added: As of the filing of this Annual
+Added: Report on Form 10-K, we are subject to such rules.
+Added: Under these rules, the amount of funds we can raise through primary public offerings of securities in any 12-month period using our registration statement on Form S-3, including our at-the-market equity offering program, will be limited to one-third of the aggregate market value of the shares of our common stock held by our non-affiliates.
+Added: Therefore, we will be significantly limited in the amount of proceeds we are able to raise by selling shares of our common stock using our Form S-3 until such time as our public float exceeds $75 million.
+Added: Furthermore, if we are required to file a new registration statement on another form, we may incur additional costs and be subject to delays due to review by the SEC staff.
+Added: Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish proprietary rights.
+Added: We currently expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements.
+Added: To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted and the terms of these securities may include liquidation, anti-dilution protection or other preferences that adversely affect your rights as a stockholder.
+Added: 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.
+Added: In addition, we may opportunistically seek additional capital due to favorable market conditions or strategic considerations, even if we believe that we have sufficient funds for our current or future operating plans.
+Added: If we raise additional funds through collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us.
+Added: If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, reduce or terminate our product development or grant rights to third parties to develop product candidates that we would otherwise prefer to develop ourselves.
Other Risks Related to Our Business and Financial Operations
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We are subject to various risks and uncertainties arising out of the completed divestiture of our commercial business, any of which could materially and adversely affect our business and operations, and our stock price.
−Removed: We completed the sale of our commercial business on January 12, 2022.
−Removed: Pursuant to the terms of the Asset Purchase Agreement, we are eligible to receive sales milestone payments of up to $450.0 million in the aggregate upon the achievement of specified levels of net sales on a product-by-product basis, beginning with annual net sales exceeding $100.0 million.
+Added: We completed the sale of our prior commercial business in January 2022.
+Added: Pursuant to the terms of the Asset Purchase Agreement entered into in connection with the purchase of that business by Journey Medical Corporation ("Journey"), we are eligible to receive sales milestone payments of up to $450.0 million in the aggregate upon the achievement of specified levels of net sales on a product-by-product basis, beginning with annual net sales exceeding $100.0 million.
In addition, we are entitled to receive certain payments from any licensing or sublicensing of the assets by Journey outside of the United States.
−Removed: Per the terms of the agreement, Journey does not have any diligence obligations to achieve any such net sales milestones and no assurance can be given that such milestones will be met.
−Removed: Furthermore, Journey may decide not to license or sublicense the assets in any territory outside of the United States and therefore we may not receive any additional related payments.
+Added: Under the terms of the agreement, Journey does not have any diligence obligations to achieve any such net sales milestones, and we can provide no assurance that such milestones will ever be met.
+Added: Furthermore, Journey may decide not to license or sublicense the assets in any territory outside of the United States, in which case we would not receive any additional related payments.
If any of the foregoing events occur, we will not realize all of the benefits of the sale.
−Removed: In addition, we are still subject to distractions and potential liabilities relating to our historical commercial business operations that were subject to the Asset Purchase Agreement.
+Added: In addition, we are still subject to potential liabilities relating to our historical commercial business operations that were subject to the Asset Purchase Agreement.
Under the terms of the Asset Purchase Agreement, we retained and are responsible for historical liabilities of the commercial business operations based on events occurring prior to the sale other than those liabilities expressly assumed by Journey.
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See "Part II—Item 8.
−Removed: Financial Statements—Note 2 - Significant Accounting Policies—Revenue Recognition—Product Sales Provisions." We are also obligated to indemnify Journey against certain potential liabilities and for breaches of representations, warranties and covenants under the agreement up to certain caps, and those liabilities may be set off against any future payments owed to us by Journey.
−Removed: In addition to direct expenditures for damages, settlement and defense costs, there is a possibility of adverse publicity as a result of such claims, any of which could have a material adverse effect on our business and stock price.
−Removed: In addition, we remain subject to potential investigation or inquiry with respect to our legacy commercial business operations, which may result in potential liabilities.
+Added: Financial Statements—Note 2 - Significant Accounting Policies—Revenue Recognition—Product Sales Provisions." We are also obligated to indemnify Journey against certain potential liabilities and for breaches of certain representations, warranties and covenants under the agreement up to certain caps, and those liabilities may be set off against any future payments owed to us by Journey.
+Added: In addition to direct expenditures for damages, settlement and defense costs, there is the possibility of adverse publicity as a result of any such claims, any of which could have a material adverse effect on our business and stock price.
+Added: In addition, we remain subject to potential investigation or inquiry by regulatory authorities with respect to our legacy commercial business operations, which could result in additional distraction to our management and could ultimately result in further liabilities.
Our failure to successfully in-license, acquire, develop and market additional product candidates or approved products could impair our ability to grow our business.
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Accordingly, there can be no assurance that we will undertake or successfully complete any transactions of the nature described above, and any transaction that we do complete could harm our business, financial condition, operating results and prospects.
−Removed: We have no current plan, commitment or obligation to enter into any transaction described above.
We may decide not to continue developing any of our product candidates at any time during development or of any of our products after approval, which would reduce or eliminate our potential return on investment for those product candidates or products.
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• labor interruptions;
+Added: • insufficient raw and intermediate materials necessary for production;
• changes in our sources for manufacturing;
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• conditions affecting the cost and availability of raw materials, including inflationary factors;
−Removed: • business interruptions resulting from geopolitical actions, including war, such as the current Russia-Ukraine war, and terrorism, COVID-19 or another outbreak of a contagious disease, or natural disasters including earthquakes, typhoons, floods and fires.
+Added: • business interruptions resulting from geopolitical actions, including war, such as the current Russia-Ukraine war and Israel-Hamas war, and terrorism, outbreak of a contagious disease, or natural disasters including earthquakes, typhoons, floods and fires.
+Added: Furthermore, the primary manufacturer of the active pharmaceutical ingredient ("API") in our product candidates is located in China.
+Added: Therefore, we are exposed to the possibility of product supply disruption and increased costs in the event of changes in the policies of the United States or Chinese governments or political unrest or unstable economic conditions in China.
+Added: If we are required to change manufacturers for any reason, we will be required to verify that the new manufacturer maintains facilities and procedures that comply with quality standards and with all applicable regulations and guidelines.
Production of product is necessary to perform preclinical activities and clinical trials and successful registration batches are necessary to file for approval to commercially market and sell product candidates.
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We might not be able to utilize a significant portion of our net operating loss carryforwards and research and development tax credit carryforwards.
−Removed: As of December 31, 2022, we had federal and state net operating loss carryforwards of $318.3 million and $90.4 million, respectively, of which $44.3 million and $89.0 million of these carryforwards will begin to expire in 2031 for federal and state purposes, respectively.
−Removed: As of December 31, 2022, we had federal and state research and development tax credit carryforwards of $6.6 million and $1.2 million, respectively.
−Removed: The federal credits begin to expire in 2031 and the state research credits have no expiration dates.
+Added: As of December 31, 2023, we had federal and state net operating loss carryforwards of $331.1 million and $41.7 million, respectively, of which $44.3 million will begin to expire in 2031 for federal and $21.3 million will begin to expire in 2040 for state purposes.
+Added: As of December 31, 2023, we had federal research and development tax credit carryforwards of $6.9 million which will begin to expire in 2031.
+Added: We have no state research and development tax credit carryforwards.
These net operating loss and tax credit carryforwards could expire unused and be unavailable if we do not generate sufficient taxable income prior to their expiration.
+Added: Under current law, our U.S.
+Added: federal net operating losses incurred in the taxable years beginning after December 31, 2017 may be carried forward indefinitely, but the ability to utilize such federal net operating loss carryforwards to offset taxable income is limited to 80% of our current year taxable income.
In addition, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, and corresponding provisions of state law, if a corporation undergoes an “ownership change” (generally defined as a greater than 50 percentage point change, by value, in its equity ownership by significant stockholders over a three-year period) the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change income or tax liability may be limited.
−Removed: We have not determined if we have experienced Section 382 ownership changes in the past and if a portion of our net operating loss and tax credit carryforwards are subject to an annual limitation under Sections 382 or 383.
−Removed: We may have experienced ownership changes in the past, including in connection with our initial public offering and the Merger, and we may experience ownership changes in the future as a result of subsequent shifts in our stock ownership, some of which may be outside of our control.
−Removed: As a result, even if we earn net taxable income, our ability to use the net operating loss and tax credit carryforwards may be materially limited, which could harm our future operating results by effectively increasing our future tax obligations.
+Added: We have not completed a 382 study through December 31, 2023, however, we may have experienced ownership changes in the past, including in connection with the 2020 merger between Menlo Therapeutics (our predecessor company) and Foamix Pharmaceuticals Ltd.
+Added: In addition, our private placement transaction in November 2023 likely resulted in an ownership change for purposes of Section 382.
+Added: We may also experience ownership changes in the future as a result of the subsequent shifts in our stock ownership, some of which may be outside of our control.
+Added: As a result, even if we earn taxable income , our ability to use the net operating loss and tax credit carryforwards may be materially limited, which could harm our future operating results by effectively increasing our future tax obligations.
The Israeli Tax Authority may disagree with our conclusions regarding certain tax positions, resulting in unanticipated costs, taxes or non-realization of expected benefits.
In December 2020, we initiated a voluntary liquidation of our Israeli subsidiary in order to consolidate the ownership of our intellectual property.
−Removed: In connection therewith, the intellectual property and other assets owned by our Israeli subsidiary was assigned to us.
+Added: In connection with the liquidation, the intellectual property and other assets owned by our Israeli subsidiary were assigned to us.
Based on our analysis, we notified the Israeli Tax Authority that the gains realized by our Israeli subsidiary from the transfer of its assets to us were offset by net operating losses and that the liquidation did not result in tax in Israel under Israeli tax law.
−Removed: In the event that the Israeli Tax Authority does not agree with our analysis, we may be subject to a material tax amount and/or fail to realize the expected benefits of the transaction.
+Added: In the event that the Israeli Tax Authority does not agree with our analysis, we may be subject to a material tax liability.
In addition, we may incur additional costs associated with defending our position.
−Removed: Such tax liability and increase in costs may have a material adverse effect on our financial results.
+Added: Any such outcome may have a material adverse effect on our financial results.
If we fail to attract and keep senior management and key scientific personnel, we may be unable to successfully execute our strategy.
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All such lawsuits and investigations are inherently unpredictable and, regardless of the merits of the claims, litigation may be expensive, time-consuming and disruptive to our operations and distracting to management.
−Removed: If resolved against us, such lawsuits could result in excessive verdicts, injunctive relief or other
−Removed: equitable relief that may affect how we operate our business.
+Added: If resolved against us, such lawsuits could result in excessive verdicts, injunctive relief or other equitable relief that may affect how we operate our business.
Similarly, if we settle such lawsuits, it may affect how we operate our business.
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If we incur liability that exceeds our insurance coverage or that is not within the scope of the coverage in lawsuits brought against us, it could have a material adverse effect on our business, results of operations and financial condition.
−Removed: Our business and operations could suffer in the event of failure, invasion, corruption, destruction or interruption of our or our partners’ critical information technology systems or infrastructure.
+Added: If our information technology systems or those of third parties upon which we rely or our data are, or were, compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions, litigation, fines and penalties, disruptions of our business operations, reputational harm, loss of revenue or profits and other adverse consequence.
+Added: In the ordinary course of our business, we and the third parties upon which we rely process proprietary, confidential, and sensitive data, including personal data (such as health-related data), intellectual property, and trade secrets (collectively, sensitive information).
Despite the implementation of security measures, our information technology systems and infrastructure, and those of our current and any future partners, contractors and consultants, are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures.
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During times of war and other major conflicts, we, the third parties upon which we rely, may be vulnerable to a heightened risk of these attacks, including retaliatory cyber-attacks, that could materially disrupt our systems and operations, supply chain, and ability to produce, sell and distribute our goods and services.
−Removed: We and the third parties upon which we rely may be subject to a variety of evolving threats, including but not limited to social-engineering attacks (including through phishing attacks), malicious code (such as viruses and worms), malware (including as a result of advanced persistent threat intrusions), denial-of-service attacks (such as credential stuffing), credential harvesting, personnel misconduct or error, ransomware attacks, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data or other information technology assets, adware, telecommunications failures, and other similar threats.
+Added: We and the third parties upon which we rely may be subject to a variety of evolving threats, including but not limited to social-engineering attacks (including through phishing attacks), malicious code (such as viruses and worms), malware (including as a result of advanced persistent threat intrusions), denial-of-service attacks (such as credential stuffing), credential harvesting, personnel misconduct or error, ransomware attacks, supply-chain attacks, software bugs, server malfunctions, software or
+Added: hardware failures, loss of data or other information technology assets, adware, telecommunications failures, attacks enhanced or facilitated by artificial intelligence, and other similar threats.
In particular, severe ransomware attacks are becoming increasingly prevalent and can lead to significant interruptions in our operations, loss of sensitive data and income, reputational harm, and diversion of funds.
Extortion payments may alleviate the negative impact of a ransomware attack, but we may be unwilling or unable to make such payments due to, for example, applicable laws or regulations prohibiting such payments.
−Removed: We are increasingly dependent upon information technology systems, infrastructure and data to operate our business, particularly during the COVID-19 pandemic.
+Added: We are increasingly dependent upon information technology systems, infrastructure and data to operate our business.
Remote work has become more common and has increased risks to our information technology systems and data, as more of our employees utilize network connections, computers and devices outside our premises or network, including working at home, while in transit and in public locations.
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In addition, the Federal Reserve has raised, and may again raise, interest rates in response to concerns about inflation, which coupled with reduced government spending and volatility in financial markets may have the effect of further increasing economic uncertainty and heightening these risks.
−Removed: Additionally, financial markets around the world experienced volatility following the invasion of Ukraine by Russia in February 2022.
+Added: Additionally, global commerce has
+Added: experienced periods of volatility and interruption following the invasion of Ukraine by Russia in February 2022 and the escalation of conflict in the Middle East in October 2023.
Any of the foregoing could harm our business and we cannot anticipate all of the ways in which the current economic climate and financial market conditions could adversely impact our business.
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Proof of intent to deceive is not required to establish liability under the civil False Claims Act;
−Removed: • HIPAA, which imposes criminal and civil liability for, among other things, executing or attempting to execute a scheme to defraud any healthcare benefit program, including any third party payors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense, and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statements or representations, or making false statements relating to healthcare benefits, items or services.
+Added: • HIPAA, which imposes criminal and civil liability for, among other things, executing or attempting to execute a scheme to defraud any healthcare benefit program, including any third party payors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare
+Added: offense, and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statements or representations, or making false statements relating to healthcare benefits, items or services.
Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation;
−Removed: • HIPAA, as amended by HITECH, and their respective implementing regulations, including the Final Omnibus Rule published on January 25, 2013, which impose, among other things, obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information held by certain healthcare providers, health plans and healthcare clearinghouses, known as “covered entities,” and “business associates.” Among other things, HITECH made certain aspects of HIPAA’s rules (notably the Security Rule) directly applicable to business associates - independent contractors or agents of covered entities that receive or obtain individually identifiable health information in connection with providing a service on behalf of a covered entity.
+Added: • HIPAA, as amended by HITECH, and their respective implementing regulations, including the Final Omnibus Rule published on January 25, 2013, which impose, among other things, obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information held by certain healthcare providers, health plans and healthcare clearinghouses, known as “covered entities,” and “business associates.” Among other things, HITECH made certain aspects of HIPAA’s rules (notably the Security Rule) directly applicable to business associates - independent contractors or agents of covered entities that receive or obtain individually identifiable health information in connection with providing a service on behalf of a covered entity, and their covered subcontractors.
HITECH also created four new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal court to enforce the federal HIPAA laws and seek attorney’s fees and costs associated with pursuing federal civil actions.
The Department of Health and Human Services Office for Civil Rights ("OCR") has increased its focus on compliance and continues to train state attorneys general for enforcement purposes.
−Removed: The OCR has recently increased both its efforts to audit HIPAA compliance and its level of enforcement, with one penalty amounting to $16 million.
+Added: The OCR has increased both its efforts to audit HIPAA compliance and its level of enforcement, with one penalty amounting to $16 million.
In addition, according to the United States Federal Trade Commission ("FTC") failing to take appropriate steps to keep consumers’ personal information secure constitutes unfair acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act ("FTCA") 15 USC § 45(a).
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and state laws related to insurance fraud in the case of claims involving private insurers.
−Removed: • data privacy and security laws and regulations in foreign jurisdictions that may be more stringent than those in the United States, such as the European Union, which adopted the General Data Protection Regulation (GDPR), which became effective in May 2018.
−Removed: The GDPR, which is wide-ranging in scope, imposes several requirements relating to the consent of the individuals to whom the personal data relates, the information provided to the individuals, the security and confidentiality of the personal data, data breach notification and the use of third party processors in connection with the processing of personal data.
−Removed: The GDPR also imposes strict rules on the transfer of personal data out of the European Union to the United States, provides an enforcement authority and imposes large penalties for noncompliance, including the potential for fines of up to €20 million or 4% of the annual global revenues of the noncompliant company, whichever is greater.
−Removed: The recent implementation of the GDPR has increased our responsibility and liability in relation to personal data that we process, including in clinical trials, and we may in the future be required to put in place additional mechanisms to ensure compliance with the GDPR, which could divert management’s attention and increase our cost of doing business;
−Removed: • state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, and may apply more broadly than HIPAA, thus complicating compliance efforts – for example, the California Consumer Privacy Act ("CCPA") which became effective on January 1, 2020.
−Removed: The CCPA, among other things, creates new data privacy obligations for covered companies and provides new privacy rights to California residents, including the right to opt out of certain disclosures of their information.
−Removed: The CCPA also creates a private right of action with statutory damages for certain data breaches, thereby potentially increasing risks associated with a data breach.
−Removed: The California Attorney General has issued clarifying regulations, and in November 2020, California voters approved the California Privacy Rights Act of 2020 which modified and expanded the CCPA and created the California Privacy Protection Agency to implement and enforce the CCPA.
−Removed: Although the law includes limited exceptions, including for certain information collected as part of clinical trials as specified in the law, it may regulate or impact our processing of personal information depending on the context.
−Removed: It remains unclear what, if any, further modifications will be made to this legislation or how it will be interpreted.
These and similar laws may be subject to amendment or reinterpretation, and implementing regulations may be revised or reinterpreted, in ways that may significantly affect our business.
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It is possible that governmental authorities will conclude that our business practices do not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and
−Removed: If our operations are found to be in violation of any of the health regulatory laws described above or any other laws or regulations that apply to us, we may be subject to penalties, including criminal, civil and administrative penalties, damages, fines, disgorgement, individual imprisonment, exclusion from participation in government healthcare programs, debarment from contracting with the U.S.
+Added: If our operations are found to be in violation of any of the health regulatory laws described above or any other laws or regulations that apply to us, we may be subject to significant penalties, including criminal, civil and administrative penalties, damages, fines, disgorgement, individual imprisonment, exclusion from participation in government healthcare programs, debarment from contracting with the U.S.
government, injunctions and private qui tam actions brought by individual whistleblowers in the name of the government.
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equivalents of the healthcare laws mentioned above, among other non-U.S.
+Added: We are subject to stringent and evolving U.S.
+Added: and foreign laws, regulations, and rules, contractual obligations, industry standards, policies and other obligations related to data privacy and security.
+Added: Our actual or perceived failure to comply with such obligations could lead to regulatory investigations or actions;
+Added: litigation (including class claims) and mass arbitration demands;
+Added: fines and penalties;
+Added: disruptions of our business operations;
+Added: reputational harm;
+Added: loss of revenue or profits;
+Added: and other adverse business consequences.
+Added: In the ordinary course of business, we collect, receive, store, process, generate, use, transfer, disclose, make accessible, protect, secure, dispose of, transmit, and share (collectively, process) personal data and other sensitive information, including proprietary and confidential business data, trade secrets, intellectual property, data we collect about trial participants in connection with clinical trials, sensitive third-party data, business plans, transactions, and financial information.
+Added: Our data processing activities subject us to numerous data privacy and security obligations, such as various laws, regulations, guidance, industry standards, external and internal privacy and security policies, contractual requirements, and other obligations relating to data privacy and security.
+Added: In the United States, federal, state, and local governments have enacted numerous data privacy and security laws, including data breach notification laws, personal data privacy laws, consumer protection laws (e.g., Section 5 of the Federal Trade Commission Act), and other similar laws.
+Added: In the past few years, numerous U.S.
+Added: states—including California, Virginia, Colorado, Connecticut, and Utah—have enacted comprehensive privacy laws that impose certain obligations on covered businesses, including providing specific disclosures in privacy notices and affording residents with certain rights concerning their personal data.
+Added: As applicable, such rights may include the right to access, correct, or delete certain personal data, and to opt-out of certain data processing activities, such as targeted advertising, profiling, and automated decision-making.
+Added: The exercise of these rights may impact our business and ability to provide our products and services.
+Added: Certain states also impose stricter requirements for processing certain personal data, including sensitive information, such as conducting data privacy impact assessments.
+Added: These state laws allow for statutory fines for noncompliance.
+Added: For example, the California Consumer Privacy Act of 2018, as amended by the California Privacy Rights Act of 2020 (“CPRA”), (collectively, “CCPA”) applies to personal data of consumers, business representatives, and employees who are California residents, and requires businesses to provide specific disclosures in privacy notices and honor requests of such individuals to exercise certain privacy rights.
+Added: The CCPA provides for fines of up to $7,500 per intentional violation and allows private litigants affected by certain data breaches to recover significant statutory damages.
+Added: Although the CCPA exempts some data processed in the context of clinical trials, the CCPA increases compliance costs and potential liability with respect to other personal data we maintain about California residents.
+Added: Similar laws are being considered in several other states, as well as at the federal and local levels, and we expect more states to pass similar laws in the future.
+Added: While these states, like the CCPA, also exempt some data processed in the context of clinical trials, these developments further complicate compliance efforts, and increase legal risk and compliance costs for us, and the third parties upon whom we rely.
+Added: Outside the United States, an increasing number of laws, regulations, and industry standards govern data privacy and security.
+Added: For example, the European Union’s General Data Protection Regulation (“EU GDPR”), the United Kingdom’s GDPR (“UK GDPR”), Brazil’s General Data Protection Law, and China’s Personal Information Protection Law (“PIPL”) impose strict requirements for processing personal data.
+Added: For example, under the GDPR, companies may face temporary or definitive bans on data processing and other corrective actions;
+Added: fines of up to 20 million Euros under the EU GDPR, 17.5 million pounds sterling
+Added: under the UK GDPR or, in each case, 4% of annual global revenue, whichever is greater;
+Added: or private litigation related to processing of personal data brought by classes of data subjects or consumer protection organizations authorized at law to represent their interests.
+Added: In the ordinary course of business, we may transfer personal data from Europe and other jurisdictions to the United States or other countries.
+Added: Europe and other jurisdictions have enacted laws requiring data to be localized or limiting the transfer of personal data to other countries.
+Added: In particular, the European Economic Area (EEA) and the United Kingdom (UK) have significantly restricted the transfer of personal data to the United States and other countries whose privacy laws it generally believes are inadequate.
+Added: Other jurisdictions may adopt similarly stringent interpretations of their data localization and cross-border data transfer laws.
+Added: Although there are currently various mechanisms that may be used to transfer personal data from the EEA and UK to the United States in compliance with law, such as the EEA standard contractual clauses, the UK’s International Data Transfer Agreement / Addendum, and the EU-U.S.
+Added: Data Privacy Framework and the UK extension thereto (which allows for transfers to relevant U.S.-based organizations who self-certify compliance and participate in the Framework), these mechanisms are subject to legal challenges, and there is no assurance that we can satisfy or rely on these measures to lawfully transfer personal data to the United States.
+Added: If there is no lawful manner for us to transfer personal data from the EEA, the UK or other jurisdictions to the United States, or if the requirements for a legally-compliant transfer are too onerous, we could face significant adverse consequences, including the interruption or degradation of our operations, the need to relocate part of or all of our business or data processing activities to other jurisdictions (such as Europe) at significant expense, increased exposure to regulatory actions, substantial fines and penalties, the inability to transfer data and work with partners, vendors and other third parties, and injunctions against our processing or transferring of personal data necessary to operate our business.
+Added: Additionally, companies that transfer personal data out of the EEA and UK to other jurisdictions, particularly to the United States, are subject to increased scrutiny from regulators, individual litigants, and activist groups.
+Added: When our employees and personnel use generative artificial intelligence (“AI”) technologies to perform their work, the disclosure and use of personal data in generative AI technologies is subject to various privacy laws and other privacy obligations.
+Added: Governments have passed and are likely to pass additional laws regulating generative AI.
+Added: Our use of this technology could result in additional compliance costs, regulatory investigations and actions, and lawsuits.
+Added: If we are unable to use generative AI, it could make our business less efficient and result in competitive disadvantages.
Healthcare reforms by governmental authorities and related reductions in pharmaceutical pricing, reimbursement and coverage by third party payors may adversely affect our business.
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In both the United States and other countries, sales of our products, if approved, will depend in part upon the coverage and adequate reimbursement from third party payors, which include governmental authorities, managed care organizations and other private health insurers.
+Added: Third party payors include government health administrative authorities, managed care providers, private health insurers and other organizations.
+Added: The process for determining whether a payor will provide coverage for a drug product may be separate from the process for setting the price or reimbursement rate that the payor will pay for the drug product.
+Added: Third party payors may limit coverage to specific drug products on an approved list, or formulary, which might not include all of the FDA-approved drug products for a particular indication.
Third party payors are increasingly challenging the price and examining the cost effectiveness of medical products and services.
+Added: A payor may not consider a product to be medically necessary or cost-effective.
+Added: Moreover, a payor’s decision to provide coverage for a drug product does not imply that an adequate reimbursement rate will be approved, or that other payors will similarly provide similar coverage for the product.
+Added: Adequate third-party reimbursement may not be available to enable us to maintain price levels sufficient to realize an appropriate return on our investment in product development.
Increasing expenditures for healthcare have been the subject of considerable public attention in the United States.
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Cost reduction initiatives and changes in coverage implemented through legislation or regulation could decrease utilization of and reimbursement for any approved products, which in turn would affect the price we can receive for those products.
−Removed: Any reduction in reimbursement that results from federal legislation or regulation may also result in a similar reduction in payments from private payors, as private payors often follow Medicare coverage policy and payment limitations in setting their own reimbursement rates.
−Removed: Significant developments that may adversely affect pricing in the United States include the enactment of federal healthcare reform laws and regulations, including the ACA and the Medicare Prescription Drug Improvement and Modernization Act of 2003.
+Added: reduction in reimbursement that results from federal legislation or regulation may also result in a similar reduction in payments from private payors, as private payors often follow Medicare coverage policy and payment limitations in setting their own reimbursement rates.
+Added: Significant developments that may adversely affect pricing in the United States include the enactment of federal healthcare reform laws and regulations.
Changes in the healthcare system enacted as part of healthcare reform in the United States, as well as the increased purchasing power of entities that negotiate on behalf of Medicare, Medicaid, and private sector beneficiaries, may result in increased pricing pressure by influencing, for instance, the reimbursement policies of third party payors.
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While Congress has not passed comprehensive repeal legislation, in December 2017, Congress repealed the tax penalty for an individual's failure to maintain ACA-mandated health insurance, commonly known as the "individual mandate", as part of legislation enacted in 2017, the Tax Cuts and Jobs Act of 2017 (the "Tax Act").
−Removed: On December 14, 2018, a U.S.
−Removed: District Court Judge in the Northern District of Texas ruled that the individual mandate was a critical and inseverable feature of the ACA, and because it was repealed as part of the Tax Act, the remaining provisions of the ACA were invalid as well.
−Removed: Ultimately, on June 17, 2021, the U.S.
+Added: On June 17, 2021, the U.S.
Supreme Court held that state and individual plaintiffs did not have standing to challenge the individual mandate provision of the ACA;
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Further, the IRA, among other things (i) directs HHS to negotiate the price of certain high-expenditure, single-source drugs and biologics covered under Medicare and (ii) imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation.
−Removed: These provisions will take effect progressively starting in fiscal year 2023, although they may be subject to legal challenges.
−Removed: Additionally, the Biden administration released an additional executive order on October 14, 2022, directing HHS to report on how the Center for Medicare and Medicaid Innovation can be further leveraged to test new models for lowering drug costs for Medicare and Medicaid beneficiaries.
+Added: These provisions take effect progressively starting in fiscal year 2023.
+Added: On August 29, 2023, HHS announced the list of the first ten drugs that will be subject to price negotiations, although the Medicare drug price negotiation program is currently subject to legal challenges.
+Added: In response to the Biden administration’s October 2022 executive order, on February 14, 2023, HHS released a report outlining three new models for testing by the CMS Innovation Center which will be evaluated on their ability to lower the cost of drugs, promote accessibility, and improve quality of care.
+Added: It is unclear whether the models will be utilized in any health reform measures in the future.
+Added: Further, on December 7, 2023, the Biden administration announced an initiative to control the price of prescription drugs through the use of march-in rights under the Bayh-Dole Act.
+Added: On December 8, 2023, the National Institute of Standards and Technology published for comment a Draft Interagency Guidance Framework for Considering the Exercise of March-In Rights which for the first time includes the price of a product as one factor an agency can use when deciding to exercise march-in rights.
+Added: While march-in
+Added: rights have not previously been exercised, it is uncertain if that will continue under the new framework.
At the state level, individual states in the United States are also increasingly passing legislation and implementing regulations designed to control product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures.
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Disruptions at the FDA and other agencies may also slow the time necessary for new drugs to be reviewed and/or approved by necessary government agencies, which would adversely affect our business.
−Removed: For example, over the last several years, including beginning on December 22, 2018, the U.S.
+Added: For example, over the last several years, the U.S.
government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough critical government employees and stop critical activities.
−Removed: If a prolonged government shutdown occurs, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, and such
−Removed: delays could have a material adverse effect on our business.
+Added: If a prolonged government shutdown occurs, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, and such delays could have a material adverse effect on our business.
Further, future government shutdowns could impact our ability to access the public markets and obtain necessary capital in order to properly capitalize and continue our operations.
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agencies and other agencies of other jurisdictions where we do business.
−Removed: Customs and Trade Controls relate to a number of aspects of our business, including most notably the sales API as well as the licensing of intellectual property, as provided above.
+Added: Customs and Trade Controls relate to a number of aspects of our business, including most notably the sales of API as well as the licensing of intellectual property.
Compliance with Customs and Trade Controls has been the subject of increasing focus and activity by regulatory authorities, both in the United States and elsewhere, in recent years.
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If our efforts to obtain, protect or enforce our patents and other intellectual property rights related to any of our product candidates are not adequate, we may not be able to compete effectively and we otherwise may be harmed.
−Removed: Our success depends in part on our ability to obtain and maintain patent protection and other intellectual property rights and to utilize trade secret protection for our intellectual property and proprietary technologies, our product candidates and their uses, as
−Removed: well as our ability to operate without infringing upon the proprietary rights of others.
+Added: Our success depends in part on our ability to obtain and maintain patent protection and other intellectual property rights and to utilize trade secret protection for our intellectual property and proprietary technologies, our product candidates and their uses, as well as our ability to operate without infringing upon the proprietary rights of others.
We rely upon a combination of patents, trade secret protection, trademarks, domain names, trade dress, copyright, confidentiality agreements, assignment of invention agreements and other contractual arrangements to protect the intellectual property related to our programs.
Limitations on the scope of our intellectual property rights may limit our ability to defend our product candidates and to prevent third parties from designing around such rights and competing against us.
−Removed: Where we have product candidates which are new chemical entities (compounds) or drugs like VYN201, other parties may compete with us, for example, by independently developing or obtaining competing compounds and formulations and methods of manufacture that design around our various patent claims, or by using formulations from expired patents, but which may contain the same active ingredients, and or by opposing our applications or seeking to invalidate our patents.
+Added: Other parties may compete with us, for example, by independently developing or obtaining competing compounds and formulations and methods of manufacture that design around our various patent claims, or by using formulations from expired patents, but which may contain the same active ingredients, and or by opposing our applications or seeking to invalidate our patents.
In addition, other parties may seek to impede us or limit our ability to operate, and or seek to compete with us, for example, by filing patent applications directed to methods of manufacture of our compounds, directed to methods of use of our compounds, and or directed to formulations for use with our compounds.
−Removed: The pending patent applications in relation to VYN201 are primarily licensed in from the University of Dundee and from Tay and are subject to the terms and conditions of the respective licenses.
+Added: The pending patent applications in relation to VYN201 and VYN202 are primarily licensed in from the University of Dundee and/or from Tay and are subject to the terms and conditions of the respective licenses.
If we were unable to comply with the license terms, we could be at risk of potentially forfeiting the licenses and rights to these pending patent applications, which could revert back to the licensors, and we would then no longer be able to pursue these programs.
−Removed: Moreover, if we are unable to develop a lead candidate for the VYN202 program, we may not exercise our Option, which could cause us to terminate the program and this would have a material adverse effect on our ability to execute our strategy of enhancing our pipeline.
Our ability to file, prosecute and obtain issued patents in the US and in key foreign jurisdictions and the expiration dates of such patents, if granted, will limit our ability to profit from the commercialization of our product candidates, if approved, as may challenges to our patent applications and claims.
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Since patent applications in the United States and most other countries are confidential for a period of time after filing, we cannot be certain that we or our licensor were the first to (i) file any patent application related to our product candidates or (ii) conceive and invent any of the inventions claimed in our patents or patent applications or in our licensed in patents or patent applications.
−Removed: For applications filed before March 16, 2013, or patents issuing from such applications, an interference proceeding can be invoked by a third party, or instituted by the USPTO, to determine who was the first to invent any of the subject matter covered by the patent claims of our applications and patents.
−Removed: An interference is a contest between an application and either another application or a patent in determining priority, that is, which party first invented the commonly claimed invention.
−Removed: A panel of Board members enters final judgment on questions of priority and patentability arising in an interference.
−Removed: As of March 16, 2013, the United States transitioned to a “first-to-file” system for deciding which party should be granted a patent when two or more patent applications are filed by different parties claiming the same invention.
−Removed: A third party that files a patent application in
−Removed: the USPTO under the new first-to-file system before we did, could therefore be awarded a patent covering an invention of ours even if we had made the invention before it was made by the third party.
−Removed: The change to “first-to-file” from “first-to-invent” is one of the changes to the patent laws of the U.S.
−Removed: resulting from the Leahy-Smith America Invents Act ("AIA") signed into law on September 16, 2011.
−Removed: Among some of the other changes to the patent laws are changes that limit where a patentee may file a patent infringement suit and providing opportunities for third parties to challenge any issued patent in the USPTO.
−Removed: Until a few years ago, a lower evidentiary standard was applied in certain USPTO proceedings compared to the evidentiary standard in U.S.
−Removed: federal court necessary to invalidate a patent claim.
−Removed: Under the new final rule, effective for petitions filed on or after November 13, 2018, the USPTO Patent Trial and Appeal Board (PTAB) is to apply the same claim construction standard applied by civil courts under 35 USC §282(b) in IPR , post-grant review, and the transitional program for covered business method patents proceedings.
+Added: The United States utilizes a “first-to-file” system for deciding which party should be granted a patent when two or more patent applications are filed by different parties claiming the same invention.
+Added: A third party that files a patent application in the USPTO under the first-to-file system before us could be awarded a patent covering an invention of ours even if we had made the invention before it was made by the third party.
+Added: Other patent laws limit where a patentee may file a patent infringement suit and provide opportunities for third parties to challenge any issued patent in the USPTO.
+Added: The USPTO Patent Trial and Appeal Board (PTAB) applies the same claim construction standard applied by civil courts under 35 USC §282(b) in IPR , post-grant review, and the transitional program for covered business method patents proceedings.
The impact this may have in practice on the use and outcome of USPTO proceedings is uncertain.
−Removed: The PTAB proceedings continues to be a developing and uncertain area of practice and law.
+Added: PTAB proceedings continue to be a developing and uncertain area of practice and law.
Because of lower costs and the fact that USPTO statistics indicate that a high rate of challenged claims are being invalidated in these USPTO procedures, they may continue to be a popular and effective means of challenging patents.
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Although we make efforts to protect our trade secrets and other confidential information we cannot be certain that all parties that gain access to our proprietary information, or who may be involved in the development of our intellectual property have entered into written confidentiality agreements, or that such agreements will be sufficiently protective, or that they will not be breached.
−Removed: Also, to the extent that our employees, consultants or contractors use any intellectual property owned by others in their work for us, disputes may arise as to the rights in any related or resulting know-how and inventions.
+Added: Also, to the extent that our employees, consultants or contractors use any intellectual property owned by others in their work for us, disputes
+Added: may arise as to the rights in any related or resulting know-how and inventions.
Additionally, others may independently develop the same or substantially equivalent proprietary information and techniques or otherwise gain access to our trade secrets and other confidential information.
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Competitors in the field of topical and oral drugs have developed and may continue to develop large portfolios of patents and patent applications relating to our business.
−Removed: In particular, there are patents and pending patent applications held by third parties that relate to new compounds that act as pan-BD BET inhibitors and also those that relate to BD2 selective BET inhibitors, as well as to methods of manufacture and methods of use for indications we are pursuing, or are considering to pursue with our VYN201 product candidate and in relation to other product candidates and activities that we are considering.
+Added: In particular, there are patents and pending patent applications held by third parties that relate to new compounds that act as pan-BD BET inhibitors and also those that relate to BD2-selective BET inhibitors, as well as to methods of manufacture and methods of use for indications we are pursuing, or are considering to pursue with our VYN201 and VYN202 product candidates.
There may be granted patents with claims that could be asserted against us in relation to such products or product candidates.
There may also be granted patents held by third parties that may be infringed or otherwise violated by our other product candidates and activities, and we do not know whether or to what extent we may be infringing or otherwise violating third party patents.
−Removed: There may also be third party patent applications, some of which may not yet have been published, which if approved and granted as patents may be asserted against us in relation to VYN201 or any of our other product candidates or activities.
+Added: There may also be third party patent applications, some of which may not yet have been published, which if approved and granted as patents may be asserted against us in relation to our product candidates or activities.
Patent applications can take years to issue and there may be applications that are pending and in the course of prosecution claims may change or be added and there may be patents and claims of which we are unaware that may later issue with claims that might be infringed by commercializing a product or product candidate.
−Removed: We may fail to identify applications and granted patents that may be asserted against us in relation to VYN201 or any of our other product candidates or activities.
+Added: We may fail to identify applications and granted patents that may be asserted against us in relation to our product candidates or activities.
Searches and analyses undertaken may miss or not uncover all potential and future threats.
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These licenses may not be available on acceptable terms, or at all.
−Removed: Even if we are able to obtain a license, the license would likely obligate us to pay license fees or royalties or both and may limit us in other ways, and the rights granted to us might be nonexclusive, which could result in our competitors gaining access to the same intellectual property, or such rights might be restrictive and limit our present and future activities.
+Added: Even if we are able to obtain a license, the license would likely obligate us to pay license fees or royalties or both and may limit us in other ways, and the rights granted to us might be nonexclusive, which could result in our competitors gaining access to the same intellectual property, or such rights
+Added: might be restrictive and limit our present and future activities.
Ultimately, we or a licensee could be prevented from commercializing a product or be forced to cease some aspect of our business operations, if, as a result of actual or threatened patent infringement claims, we are unable to enter into licenses on acceptable terms.
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In some jurisdictions, third party observations or pre-grant oppositions may be filed, for example in Europe, India and Israel.
−Removed: A third party may initially sometimes choose to submit exploratory
−Removed: observations or oppositions in one or more foreign jurisdictions prior to commencing proceedings in the United States, where the costs could be higher.
+Added: A third party may initially sometimes choose to submit exploratory observations or oppositions in one or more foreign jurisdictions prior to commencing proceedings in the United States, where the costs could be higher.
The cost and burden to us of any patent litigation or other proceeding, even if resolved in our favor, could be substantial.
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Similarly, we own trademarks that represent our leaf logo which can be and is used with the “VYNE” and “VYNE Therapeutics” trademarks and our VYNE identity and have submitted applications to register these leaf trademarks in the United States and in some other jurisdictions.
−Removed: We have selected the trademark InhiBET for use in relation to our BETi programs and we have applied to register the trademark in Israel and the United States.
−Removed: We have not yet selected or submitted trademark applications for a proposed commercial trade name for any of our product candidates or activities in the United States or elsewhere and failure to do so and secure registrations could adversely affect our business.
+Added: We have selected the trademark InhiBET for use in relation to our BET inhibitor programs and we have applied to register the trademark in Israel and the United States.
+Added: We have not yet selected or submitted trademark applications for a proposed commercial trade name for any
+Added: of our product candidates or activities in the United States or elsewhere and failure to do so and secure registrations could adversely affect our business.
Applications for trademarks may be rejected during prosecution and we may be unable to overcome such proceedings or we may have to narrow or limit the scope of the applications or rely on a lower level of protection provided by common law unregistered trademark rights, if any.
Opposition or cancellation proceedings may be filed against our trademarks, which may not survive such proceedings or we may have to narrow or limit their scope.
−Removed: In the US the FDA evaluates and must approve any trademark we propose to use with products for which we seek regulatory approval regardless of whether we have registered it, or applied to register it, as a trademark.
+Added: In the United States, the FDA evaluates and must approve any trademark we propose to use with products for which we seek regulatory approval regardless of whether we have registered it, or applied to register it, as a trademark.
The FDA review will include an evaluation of potential for confusion with other product names.
Selecting a product trademark can be an expensive process.
−Removed: the FDA objects to proposed trademarks this could delay regulatory approval and we may be required to expend significant resources in an effort to identify suitable substitutes that would qualify as a registerable trademark, not infringe any existing third party trademark rights and be acceptable to the FDA.
+Added: If the FDA objects to proposed trademarks this could delay regulatory approval and we may be required to expend significant resources in an effort to identify suitable substitutes that would qualify as a registerable trademark, not infringe any existing third party trademark rights and be acceptable to the FDA.
Although we take steps to monitor the possible infringement or misuse of our trademarks, it is possible that third parties may infringe, dilute or otherwise violate our trademark rights.
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Moreover, proceedings may be appealed and obtaining a final resolution can take a long time and substantial resources.
−Removed: We may not be able, alone or with our licensors or licensees, to prevent misappropriation of our proprietary rights, particularly in countries where the laws may not protect such rights as fully as in the U.S.
+Added: We may not be able, alone or with our licensors or licensees, to prevent misappropriation of our proprietary rights, particularly in countries where the laws may not protect such rights as fully as in the United States.
Furthermore, because of the substantial amount and extent of discovery required in connection with intellectual property litigation or other proceedings, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation or proceedings.
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We primarily file patent applications in the United States and may file in some other selected jurisdictions on a case-by-case basis.
−Removed: In general, we may on a case-by-case basis file national applications more narrowly in respect of patent applications directed to compositions of matter and methods of treatment than for those concerning new chemical entities.
+Added: In general, we may on a case-by-case basis file national applications more narrowly in respect of patent applications directed to compositions of matter and methods of treatment than for those concerning new
+Added: chemical entities.
As a result, our intellectual property rights in countries outside the United States are generally significantly less extensive than those in the United States.
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Competitors may use our technologies in jurisdictions where we have not sought or obtained patent protection to develop their own products and further, may export otherwise infringing products to territories where we have patent protection, but protection and enforcement is not as strong or effective as that in the United States.
−Removed: products may compete with our product candidates, if approved, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.
+Added: These products may compete with our product candidates, if approved, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.
Moreover, competitors or others may raise legal challenges to our intellectual property rights or may infringe upon our intellectual property rights, including through means that may be difficult to prevent or detect.
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These agreements generally prohibit our employees, if they cease working for us, from competing directly with us or working for our competitors or clients for a limited period.
−Removed: We may be unable to enforce these agreements under the laws of the jurisdictions in which our employees work and it may be difficult for us to restrict our competitors from benefitting from the expertise our former employees or consultants developed while working for us.
−Removed: For example, Israeli labor courts place emphasis on freedom of employment and have required employers seeking to enforce non-compete undertakings of a former employee to demonstrate that the competitive activities of the former employee will harm one of a limited number of material interests of the employer which have been recognized by the courts, such as the protection of a company’s trade secrets or other intellectual property.
−Removed: Risks Related to the Securities Markets and Ownership of Our Common Stock
+Added: We may be unable to enforce these agreements under the laws of the jurisdictions in which our employees work and it may be difficult for us to restrict our competitors from benefiting from the expertise our former employees or consultants developed while working for us.
+Added: Risks Related to the Ownership of Our Common Stock
The trading price of the shares of our common stock is volatile, and stockholders could incur substantial losses.
1 unchanged sentence
The stock market in general, and the market for biopharmaceutical companies in particular, have experienced extreme volatility that has often been unrelated to the operating performance of particular companies.
−Removed: For example, our stock price, and the stock price of many other public companies, experienced a period of high volatility in 2021 and 2022.
+Added: For example, our stock price, and the stock price of many other public companies, experienced a period of high volatility in recent years.
Such volatility resulted in rapid and substantial increases and decreases in our stock price that may or may not be related to our operating performance or prospects.
1 unchanged sentence
In addition, in the past, stockholders have initiated class action lawsuits against pharmaceutical and biotechnology companies, including us, following periods of volatility in the market prices of these companies’ common stock.
−Removed: If we are subject to future lawsuits we would be subject to additional risks as described in “We may become subject to lawsuits that could have a material adverse impact on our business, results of operations and financial condition” above.
+Added: If we are subject to future lawsuits we would be subject to additional risks as described in “We may
+Added: become subject to lawsuits that could have a material adverse impact on our business, results of operations and financial condition” above.
The market price for our common stock may be influenced by many factors, including:
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• our sale or proposed sale, or the sale by our significant stockholders, of our common stock or other securities in the future;
−Removed: • general political and economic conditions, including the impact of COVID-19 or of another pandemic or epidemic on our business and the broader economy as a whole;
+Added: • general political and economic conditions;
• the sentiment of the retail investor community;
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Claims for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us and may reduce the amount of money available to us.
+Added: Our directors and executive officers may be subject to litigation for a variety of claims or disputes.
Our amended and restated certificate of incorporation and amended and restated bylaws provide that we will indemnify our directors and officers, in each case to the fullest extent permitted by Delaware law.
7 unchanged sentences
• We may not retroactively amend our amended and restated bylaw provisions to reduce our indemnification obligations to directors, officers, employees and agents.
+Added: While we maintain directors’ and officers’ liability insurance, such insurance may not be adequate to cover all liabilities that we may incur, which may reduce our available funds to satisfy third-party claims and could harm our business, results of operations, and financial condition.
+Added: Further, a stockholder’s investment may be harmed to the extent that we pay the costs of settlement and damage awards against our directors and executive officers as required by these indemnification provisions.
Our amended and restated certificate of incorporation and our amended and restated bylaws contain exclusive forum selection clauses, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a breach of fiduciary duty, any action asserting a claim against us arising pursuant to the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws, any action to interpret, apply, enforce, or determine the validity of our amended and restated certificate of incorporation or our amended and restated bylaws, or any action asserting a claim against us that is governed by the internal affairs doctrine.
−Removed: In addition, our amended and restated bylaws provide that unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States is the exclusive forum
−Removed: for resolving any complaint asserting a cause of action arising under the Securities Act of 1933, as amended, against us, our officers, directors, employees or underwriters.
+Added: In addition, our amended and restated bylaws provide that unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States is the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act of 1933, as amended, against us, our officers, directors, employees or underwriters.
These choice of forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and other employees.
Alternatively, if a court were to find the choice of forum provision contained in our amended and restated certificate of incorporation or our amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business and financial condition.
−Removed: We are an “emerging growth company” and, as a result of the reduced disclosure and governance requirements applicable to emerging growth companies, our common stock may be less attractive to investors.
−Removed: We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act") and we intend to take advantage of some of the exemptions from reporting requirements that are applicable to other public companies that are not emerging growth companies, including:
−Removed: • not being required to comply with the auditor attestation requirements in the assessment of our internal control over financial reporting;
−Removed: • not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements;
−Removed: • reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements;
−Removed: • not being required to hold a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
−Removed: Decreased disclosures in our SEC filings due to our status as an emerging growth company may make it harder for investors to analyze our results of operations and financial prospects.
−Removed: Investors may find our common stock less attractive as a result of our reliance on these exemptions.
−Removed: If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our share price may be more volatile.
−Removed: We may take advantage of these reporting exemptions until we are no longer an emerging growth company.
−Removed: We will remain an emerging growth company until December 31, 2023.
−Removed: Under Section 107(b) of the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies.
−Removed: We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.
+Added: We are eligible to report as a “smaller reporting company,” and as a result of the reduced reporting requirements applicable to such companies, our securities may be less attractive to investors.
+Added: We are eligible to report as a smaller reporting company.
+Added: For as long as we continue to be eligible to report as a “smaller reporting company,” we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not “smaller reporting companies,” including not being required to comply with the auditor attestation requirements in the assessment of our internal control over financial reporting, as well as reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements.
+Added: We may take advantage of these reporting exemptions until we are no longer a smaller reporting company.
+Added: We will remain a smaller reporting company until the last day of any fiscal year for so long as either (1) the market value of our shares of common stock held by non-affiliates does not equal or exceed $250.0 million as of the prior June 30 th , or (2) our annual revenues did not equal or exceed $100.0 million during such completed fiscal year and the market value of our shares of common stock held by non-affiliates did not equal or exceed $700.0 million as of the prior June 30 th .
+Added: We cannot predict if investors will find our common stock less attractive because we will rely on these exemptions.
+Added: If some investors find our securities less attractive because we rely on any of these exemptions, there may be a less active trading market for our securities and the price of our securities may be more volatile.
General Risk Factors
3 unchanged sentences
The lack of an active market may also reduce the fair market value of our common stock, and may cause the trading price of our common stock to be more volatile.
−Removed: The lack of an active market may contribute to volatility of our stock price, impair our ability to raise capital and may impair our ability to acquire other businesses, applications or technologies using our shares as consideration.
+Added: The lack of an active market may contribute to volatility of our stock price and impair our ability to raise capital.
If equity research analysts do not publish research or reports, or publish unfavorable research or reports, about us, our business or our market, our stock price and trading volume could decline.
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The impact of these events could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, on committees of our board of directors or as members of senior management.
−Removed: ITEM 1B - UNRESOLVED STAFF COMMENTS
+Added: We are subject to risks related to climate change in the long term.
+Added: We are subject to transitional and physical risks related to climate change.
+Added: Transitional risks include, for example, a disorderly global transition away from fossil fuels that may result in increased energy prices;
+Added: customer preference for low or no-carbon products;
+Added: stakeholder pressure to decarbonize assets;
+Added: or new legal or regulatory requirements that result in new or expanded carbon pricing, taxes, restrictions on greenhouse gas emissions, and increased greenhouse gas disclosure and transparency.
+Added: These risks could increase operating costs, including the cost of our electricity and energy use, or other compliance costs.
+Added: Physical risks to our operations include water stress and drought;
+Added: flooding and storm surge;
+Added: extreme temperatures and storms, which could impact trials, increase costs, or disrupt supply chains.
+Added: Our supply chain is likely subject to these same transitional and physical risks and would likely pass along any increased costs to us.
+Added: We do not anticipate that these risks will have a material financial impact to the company in the near term.
+Added: Governmental authorities, non-governmental organizations, customers, investors, employees, and other stakeholders are increasingly sensitive to environmental, social and governance (ESG) matters, such as equitable access to medicines and vaccines, product quality and safety, diversity, equity and inclusion, environmental stewardship, support for local communities, value chain environmental and social due diligence, corporate governance and transparency, and addressing human capital factors in our operations.
+Added: In addition, governments and the public expect companies to report on our business practices with respect to human rights, responsible sourcing and environmental impact, as well as the actions of our third-party contractors and suppliers around the world.
+Added: This focus on ESG matters may lead to new expectations or requirements that could result in increased costs associated with research and development of our products.
+Added: Our ability to compete could also be affected by changing customer preferences and requirements, such as growing demand for companies to establish validated Net Zero emissions targets or offer more sustainable products.
+Added: If we do not meet, or are perceived not to meet, stakeholder expectations in key ESG areas, we risk negative stakeholder reaction, including from proxy advisory services, as well as damage to our brand and reputation, or other negative impacts on our business and operations.
+Added: While we monitor ESG matters, we cannot be certain that we will manage such matters successfully, or that we will successfully meet the expectations of investors, employees, consumers, governments and other stakeholders.
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.