XBIO filing — read by section

Item 1A. Risk Factors

ITEM 1A – RISK FACTORS 

 Our business is subject to numerous risks.
You should consider carefully the risks and uncertainties described below, in addition to other information contained in this Annual Report
as well as our other public filings with the Securities and Exchange Commission. Any of the following risks could have a material adverse
effect on our business, financial condition, results of operations and prospects and cause the trading price of our common stock to decline. 

 Risks Related to Our Financial Condition and
Capital Requirements 

 We have never been profitable and may never
achieve or sustain profitability. If we are unable to generate sufficient revenue from our operations to pay expenses or we are unable
to obtain additional financing on commercially reasonable terms, our business, financial condition and results of operations may be materially
and adversely affected . 

 We are a clinical-stage biopharmaceutical company
with a limited operating history. Pharmaceutical product and technology development is a highly speculative undertaking and involves a
substantial degree of risk. We have no products approved for commercial sale and have generated only limited revenue to date. Our primary
focus is now on advancing our DNase technology via partnering opportunities or through regulatory approval and commercialization.
We expect to continue to incur significant research and development and other expenses related to our ongoing operations. As a result,
we have never been profitable and we may not achieve profitability in the foreseeable future, if at all. Our ability to generate profits
in the future will depend on a number of factors, including:

 · 
 Funding the costs relating to the research and development, regulatory approval, commercialization and sale and marketing of our drug candidates and technologies; 

 · 
 Market acceptance of our drug candidates and technologies; 

 · 
 Costs of acquiring and developing new drug candidates and technologies; 

 · 
 Ability to bring our drug candidates to market; 

 · 
 General and administrative costs relating to our operations; 

 · 
 Increases in our research and development costs; 

 · 
 Charges related to purchases of technology or other assets; 

 · 
 Establishing, maintaining and protecting our intellectual property rights; 

 · 
 Attracting, hiring and retaining qualified personnel; and 

 · 
 Our ability to raise additional capital. 

 As of December 31, 2024, we had an accumulated
deficit of approximately $197.2 million. We expect to incur additional significant operating losses as we expand our research and development
activities and our commercialization, marketing and sales efforts. We may also encounter unforeseen expenses, difficulties, complications,
delays and other unknown factors that may adversely affect our business. In addition, because of the numerous risks and uncertainties
associated with pharmaceutical product development, including that our current drug candidates may not achieve the clinical endpoints
of applicable trials, we are unable to predict the timing or amount of increased expenses and if or when we will achieve or maintain profitability.
If we are unable to generate sufficient revenue from our operations to pay expenses or we are unable to obtain additional financing on
commercially reasonable terms, our business, financial condition and results of operations may be materially and adversely affected.

 20 

 We will require substantial additional funding
to achieve our goals. Failure to obtain this necessary capital when needed on acceptable terms, or at all, may force us to delay, limit
or terminate our product development efforts, other operations or commercialization efforts. 

 Developing drug candidates is an expensive, risky
and lengthy process, and we expect our expenses to increase in connection with our ongoing activities, particularly as we continue the
research and development of, initiate clinical trials of, and seek marketing approval for, our drug candidates.

 As of December 31, 2024, we had cash of approximately
$6.2 million. We expect that we will require additional capital to commence and complete clinical trials, obtain regulatory approval for,
and to commercialize, our drug candidates, including our other preclinical drug candidates and our future drug candidates. However, our
operating plan may change as a result of many factors currently unknown to us, and we may need to seek additional funds sooner than planned.
Additional funding may come through public or private equity or debt financings, third-party funding, marketing and distribution arrangements
or other collaborations, strategic alliances and licensing arrangements (or a combination of these approaches). In any event, we will
require additional capital to pursue preclinical and clinical activities, pursue regulatory approval for, and to commercialize, our longer
term pipeline drug candidates. Even if we believe we have sufficient funds for our current or future operating plans, we may seek additional
capital if market conditions are favorable or if we have specific strategic considerations.

 Our ability to raise additional funds will depend
on financial, economic, political, and market conditions and other factors over which we may have no or limited control. Market volatility
resulting from economic, political or other factors, such as geopolitical tension, including the conflicts in the Ukraine and the Middle
East, and any resulting sanctions, export controls or other restrictive actions, could also adversely impact our ability to access capital
as and when needed. Additional funds may not be available when we need them, on terms and at a cost that are acceptable to us, or at all.

 Any additional fundraising efforts may divert
our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize our drug candidates.
In addition, we cannot guarantee that future financing will be available in sufficient amounts or on terms acceptable to us, if at all.
Moreover, the terms of any financing may negatively impact the holdings or the rights of our stockholders, and the issuance of additional
securities (whether equity or debt) by us, or the possibility of such issuance, may cause the market price of our shares to decline. The
incurrence of indebtedness could result in increased fixed payment obligations, and we may be required to agree to certain restrictive
covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual
property rights and other operating restrictions that could adversely impact our ability to conduct our business.

 If we are unable to obtain funding on a timely
basis, we may be required to significantly curtail, delay or discontinue our pre-clinical development program or the commercialization
of any drug candidates. We may also be unable to expand our operations or otherwise capitalize on our business opportunities, as desired,
which could harm our business, financial condition and results of operations.

 Raising additional capital may cause dilution
to our stockholders, restrict our operations or require us to relinquish rights to our technologies or drug candidates. 

 Until such time, if ever, as we can generate substantial
product revenues, we expect to finance our cash needs through a combination of equity and debt financings, as well as selectively continuing
to enter into collaborations, strategic alliances and licensing arrangements. We do not currently have any committed external source of
funds. To the extent that we raise additional capital through the sale of equity or convertible debt securities, equity interests will
be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our stockholders.
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. Such debt financing may also be secured by all
or a portion of our assets.

 If we raise funds by selectively continuing to
enter into collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish additional valuable
rights to our technologies, future revenue streams, research programs or drug candidates, or we may have to grant licenses on terms that
may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required
to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market
drug candidates that we would otherwise prefer to develop and market ourselves. If we are unable to raise additional funds through collaborations,
strategic alliances or licensing arrangements, we may be required to terminate product development or future commercialization efforts
or to cease operations altogether.

 21 

 Risks Related to the Discovery and Development
of our Pharmaceutical Products 

 Our business is substantially dependent
on the success of the DNase technology. 

 Our business will substantially depend on the
successful clinical development, regulatory approval and commercialization of the DNase technology. It will require substantial
clinical development and regulatory approval efforts before we are permitted to commence its commercialization, if ever. We have, and
plan to continue to pursue our clinical development strategy through academic and strategic collaborations. If we have difficulty maintaining,
obtaining, or are unable to obtain these collaborations and additional academic collaborations as planned, we may need to delay, limit
or terminate any ongoing or planned clinical development, which would have an adverse effect on our business. The clinical trials and
manufacturing and marketing of DNase and any other product candidates will be subject to extensive and rigorous review and regulation
by numerous government authorities in the U.S., the European Union and other jurisdictions where we intend to test and, if approved, market
our product candidates. Before obtaining regulatory approvals for the commercial sale of any product candidate, we must demonstrate through
preclinical testing and clinical trials that the product candidate is safe and effective for use in each target indication and potentially
in specific patient populations. This process can take many years and may include post-marketing studies and surveillance, which would
require the expenditure of substantial resources beyond the proceeds we have currently raised. Of the large number of drugs in development
for approval in the U.S. and the European Union, only a small percentage successfully complete the FDA or European Medicines Agency regulatory-approval
processes, as applicable, and are commercialized. Accordingly, even if we are able to obtain the requisite financing or identify an academic
or strategic collaboration partner to continue to fund our research, development and clinical programs, we cannot assure you that DNase
or any of our other product candidates will be successfully developed or commercialized.

 We are an early stage company in the business
of developing pharmaceutical products including drug candidates and technologies. Given the uncertainty of such development, our business
operations may never fully materialize and create value for investors. 

 We have invested substantially all of our efforts
and financial resources in developing our products, and we currently do not have any products that have gained marketing approval. Our
revenues currently consist primarily of royalty revenue from a single partner and not from product sales. Our ability to generate product
revenues, which may not occur for several more years, if ever, will depend on the successful development and eventual commercialization
of our drug candidates. We currently generate royalty revenue under a sub-license agreement but do not have revenue from sales of any
drugs, and we may never be able to develop or commercialize a marketable drug. Each of our drug candidates will require development, management
of development and manufacturing activities, marketing approval in multiple jurisdictions, obtaining manufacturing supply, building of
a commercial organization, substantial investment and significant marketing efforts before we generate any revenues from drug sales. We
have not yet demonstrated an ability to successfully overcome many of the risks and uncertainties frequently encountered by companies
in new and rapidly-evolving fields, particularly in the pharmaceutical area. For example, to execute our business plan we will need to
successfully:

 · 
 Execute development activities for our drug candidates, including successful enrollment in and completion of clinical trials; 

 · 
 Obtain required marketing approvals for the development and commercialization of our drug candidates; 

 · 
 Obtain and maintain patent and trade secret protection or regulatory exclusivity for our drug candidates; 

 · 
 Protect, leverage and expand our intellectual property portfolio; 

 · 
 Establish and maintain clinical and commercial manufacturing capabilities or make arrangements with third-party manufacturers for clinical and commercial manufacturing; 

 · 
 Build and maintain robust sales, distribution and marketing capabilities, either on our own or in collaboration with strategic partners, if our drug candidates are approved; 

 · 
 Gain acceptance for our drug candidates, if approved, by patients, the medical community and third-party payors; 

 · 
 Effectively compete with other therapies; 

 · 
 Obtain and maintain healthcare coverages and adequate reimbursement; 

 · 
 Maintain a continued acceptable safety profile for our drug candidates following approval; 

 · 
 Develop and maintain any strategic relationships we elect to enter into, if any; 

 · 
 Enforce and defend intellectual property rights and claims; and 

 · 
 Manage our spending as costs and expenses increase due to preclinical development, clinical trials, marketing approvals and commercialization. 

 22 

 We may find it difficult to enroll patients
in our clinical studies, which could delay or prevent clinical studies of our pharmaceutical products. 

 Identifying and qualifying patients to participate
in clinical studies of our pharmaceutical products is critical to our success. The timing of our clinical studies depends on the speed
at which we can recruit patients to participate in testing our pharmaceutical products. We may experience delays. If patients are unwilling
to participate in our clinical studies because of negative publicity from adverse events in the biopharmaceutical industries or for other
reasons, including competitive clinical studies for similar patient populations, the timeline for recruiting patients, conducting studies
and obtaining regulatory approval of potential products may be delayed. These delays could result in increased costs, delays in advancing
our product development, delays in testing the effectiveness of our technology or termination of the clinical studies altogether.

 We may not be able to identify, recruit and enroll
a sufficient number of patients, or those with required or desired characteristics to achieve diversity in a study, to complete our clinical
studies in a timely manner. Patient enrollment is affected by many factors, including:

 · 
 Severity of the disease under investigation; 

 · 
 Real or perceived availability of alternative treatments; 

 · 
 Size and nature of the patient population; 

 · 
 Eligibility criteria for and design of the trial in question; 

 · 
 Perceived risks and benefits of the drug candidate under study; 

 · 
 Proximity and availability of clinical sites for prospective patients; 

 · 
 Ongoing clinical trials of potentially competitive agents; 

 · 
 Physicians’ and patients’ perceptions as to the potential advantages of our drug candidates being studied in relation to available therapies or other products under development; 

 · 
 Our CRO’s and our trial sites’ efforts to facilitate timely enrollment in clinical trials; 

 · 
 Patient referral practices of physicians; and 

 · 
 The need to monitor patients and collect patient data adequately during and after treatment. 

 We may not be able to initiate or continue clinical
studies if we cannot enroll a sufficient number of eligible patients to participate in the clinical studies required by the FDA or other
regulatory agencies. Our ability to successfully initiate, enroll and complete a clinical study in any foreign country is subject to numerous
risks unique to conducting business in foreign countries, including:

 · 
 Difficulty in establishing or managing relationships with CROs and physicians; 

 · 
 Different standards for the conduct of clinical studies; 

 · 
 Our inability to locate qualified local consultants, physicians and partners; and 

 · 
 The potential burden of complying with a variety of foreign laws, medical standards and regulatory requirements, including the regulation of pharmaceutical and biotechnology products and treatment. 

 If we have difficulty enrolling a sufficient number
of patients to conduct our clinical studies as planned, we may need to delay, limit or terminate ongoing or planned clinical studies,
any of which would have an adverse effect on our business.

 We may encounter substantial delays in commencement,
enrollment or completion of our clinical trials, or we may fail to demonstrate safety and efficacy to the satisfaction of applicable regulatory
authorities, which could prevent us from commercializing our current and future drug candidates on a timely basis, if at all. 

 Before obtaining marketing approval from regulatory
authorities for the sale of our current and future drug candidates, we must conduct extensive clinical trials to demonstrate the safety
and efficacy of the drug candidates. We cannot guarantee that any clinical studies will be conducted as planned or completed on schedule,
if at all. A failure of one or more clinical studies can occur at any stage of testing. Events that may prevent successful or timely completion
of clinical development include:

 · 
 Delays in reaching a consensus with regulatory agencies on study design; 

 · 
 Delays in reaching agreement on acceptable terms with prospective CROs and clinical study sites; 

 · 
 Delays in obtaining required IRB, or Independent Ethics Committee approval at each clinical study site; 

 · 
 Delays in recruiting suitable patients to participate in our clinical studies; 

 23 

 · 
 Imposition of a clinical hold by regulatory agencies, including after an inspection of our clinical study operations or study sites; 

 · 
 Failure by our CROs, other third parties or us to adhere to clinical study requirements; 

 · 
 Failure to perform in accordance with the FDA’s GCP or applicable regulatory requirements in other countries; 

 · 
 Delays in the testing, validation, manufacturing and delivery of our drug candidates to the clinical sites; 

 · 
 Delays in having patients complete participation in a study or return for post-treatment follow-up; 

 · 
 Clinical study sites or patients dropping out of a study; 

 · 
 Clinical trial results may fail to demonstrate the safety and/or efficacy of the drug candidate; 

 · 
 Occurrence of serious adverse events associated with the drug candidate that are viewed to outweigh its potential benefits; or 

 · 
 Changes in regulatory requirements and guidance that require amending or submitting new clinical protocols. 

 Any inability to successfully complete preclinical
studies and clinical trials could result in additional costs to us or impair our ability to generate revenues from product sales, regulatory
and commercialization milestones and royalties. In addition, if we make manufacturing or formulation changes to our drug candidates, we
may need to conduct additional studies to bridge our modified drug candidates to earlier versions. Clinical trial delays also could shorten
any periods during which we may have the exclusive right to commercialize our drug candidates or allow our competitors to bring products
to market before we do, which could impair our ability to successfully commercialize our drug candidates and may harm our business, financial
condition, results of operations and prospects.

 If the results of our clinical studies are inconclusive
or if there are safety concerns or adverse events associated with our pharmaceutical products, we may:

 · 
 Be delayed in obtaining marketing approval or licenses for our drug candidates, if we receive them at all; 

 · 
 Obtain approval for indications or patient populations that are not as broad as intended or desired; 

 · 
 Obtain approval with labeling that includes significant use or distribution restrictions or safety warnings; 

 · 
 Be subject to changes with the way the product is administered; 

 · 
 Be required to perform additional clinical studies to support approval or be subject to additional post-marketing testing requirements; 

 · 
 Have regulatory authorities withdraw their approval of the product or impose restrictions on its distribution in the form of a modified risk evaluation and mitigation strategy; 

 · 
 Be subject to the addition of labeling statements, such as warnings or contraindications; 

 · 
 Be sued; or 

 · 
 Experience damage to our reputation. 

 As described above, any of these events could
prevent us from achieving or maintaining market acceptance and approval of our pharmaceutical products and impair our ability to generate
revenues.

 If we complete the necessary preclinical
and clinical studies, we cannot predict when or if we will obtain regulatory approval to commercialize a drug candidate, or the approval
may be for a more narrow indication than we expect. 

 A drug candidate cannot be commercialized until
the appropriate regulatory authorities have reviewed and approved the drug candidate. Even if our drug candidates demonstrate safety and
efficacy in clinical studies, the regulatory agencies may not complete their review processes in a timely manner, or we may not be able
to obtain regulatory approval. Additional delays may result if an FDA Advisory Committee or other regulatory advisory group or authority
recommends non-approval or restrictions on approval. In addition, we may experience delays or rejections based upon additional government
regulation from future legislation or administrative action or changes in regulatory agency policy during the period of product development,
clinical studies and the review process. Regulatory agencies also may approve a drug candidate for fewer or more limited indications than
requested or may grant approval subject to the performance of post-marketing studies. In addition, regulatory agencies may not approve
the labeling claims that are necessary or desirable for the successful commercialization of our drug candidates. Failure to obtain, or
a delay in obtaining, regulatory approval to commercialize a drug candidate will impair our ability to generate revenues and harm our
business prospects.

 24 

 If we obtain regulatory approval for a drug
candidate, our drug candidate will remain subject to regulatory scrutiny. 

 If our drug candidates are approved, they will
be subject to ongoing regulatory requirements for manufacturing, labeling, packaging, storage, advertising, promotion, sampling, record-keeping,
reporting, conduct of post-marketing studies and submission of safety, efficacy and other post-market information, including both federal
and state requirements in the United States and requirements of comparable foreign regulatory authorities.

 Manufacturers and manufacturing facilities are
required to comply with extensive FDA and comparable foreign regulatory authority requirements, including ensuring that quality control
and manufacturing procedures conform to cGMP regulations. As such, we will be subject to continual review and inspections to assess compliance
with cGMP and adherence to commitments made in any NDA, BLA or marketing authorization application (“MAA”). Accordingly, we
and our collaborators and suppliers must continue to expend time, money and effort in all areas of regulatory compliance, including manufacturing,
production and quality control.

 Any regulatory approvals that we or our collaboration
partners receive for our drug candidates may be subject to limitations on the approved indicated uses for which the product may be marketed
or to the conditions of approval or may contain requirements for potentially costly additional clinical trials and surveillance to monitor
the safety and efficacy of the drug candidate. We will be required to report certain adverse reactions, serious adverse events and production
problems, if any, to the FDA and comparable foreign regulatory authorities. Any new legislation addressing drug safety or other issues
related to regulatory review and approval could result in delays in product development or commercialization or increased costs to assure
compliance. We will have to comply with requirements concerning advertising and promotion for our products. Promotional communications
with respect to prescription drugs are subject to a variety of legal and regulatory restrictions and must be consistent with the information
in the product’s approved label. As such, we are not allowed to promote our products for indications or uses for which they do not
have approval. If our drug candidates are approved, we must submit new or supplemental applications and obtain approval for certain changes
to the approved products, product labeling or manufacturing process. We could also be asked to conduct post-marketing clinical trials
to verify the safety and efficacy of our products in general or in specific patient subsets. An unsuccessful post-marketing study or failure
to complete such a study could result in the withdrawal of marketing approval.

 If a regulatory agency discovers previously unknown
problems with an approved product, such as adverse events of unanticipated severity or frequency or problems with our manufacturing facilities,
or if a regulatory agency disagrees with the promotion, marketing or labeling of a product, such regulatory agency may impose restrictions
on that product or us, including requiring withdrawal of the product from the market. If we fail to comply with applicable regulatory
requirements, a regulatory agency or enforcement authority may, among other things:

 · 
 Issue inspectional findings; 

 · 
 Issue untitled and warning letters; 

 · 
 Impose civil or criminal penalties; 

 · 
 Suspend or withdraw regulatory approval or revoke a license; 

 · 
 Suspend or hold any of our ongoing clinical trials; 

 · 
 Require additional clinical trials; 

 · 
 Refuse to approve pending applications or supplements to approved applications submitted by us; 

 · 
 Impose restrictions on our operations, including closing our manufacturing facilities; or 

 · 
 Seize or detain products or require a product recall. 

 Any government investigation of alleged violations
of law could require us to expend significant time and resources in response and could generate negative publicity. Any failure to comply
with ongoing regulatory requirements may significantly and adversely affect our ability to commercialize and generate revenue from our
products. If regulatory sanctions are applied or if regulatory approval is withdrawn, the value of the Company and our operating results
will be negatively impacted.

 25 

 The commercial success of any current or
future pharmaceutical products will depend upon the degree of market acceptance by physicians, patients, third-party payors and others
in the medical community. 

 Even with the requisite approvals, the commercial
success of our pharmaceutical products will depend in part on the medical community, patients and third-party payors accepting our pharmaceutical
products as medically useful, cost-effective and safe. Any pharmaceutical product that we, or our partners, bring to the market may not
gain market acceptance by physicians, patients, third-party payors or others in the medical community. The degree of market acceptance
of these pharmaceutical products, if approved for commercial sale, will depend on a number of factors, including:

 · 
 The effectiveness of our approved drug candidates as compared to currently available products; 

 · 
 Patient willingness to adopt our approved drug candidates in place of current therapies; 

 · 
 Our ability to provide acceptable evidence of safety and efficacy; 

 · 
 Relative convenience and ease of administration; 

 · 
 The prevalence and severity of any adverse side effects; 

 · 
 Restrictions on use in combination with other products; 

 · 
 Availability of alternative treatments; 

 · 
 Pricing and cost-effectiveness assuming either competitive or potential premium pricing requirements, based on the profile of our drug candidates and target markets; 

 · 
 Effectiveness of our or our partners’ sales and marketing strategy; 

 · 
 Our ability to obtain sufficient third-party coverage or reimbursement; and 

 · 
 Potential product liability claims. 

 Even if a potential product displays a favorable
efficacy and safety profile in preclinical and clinical studies, market acceptance of the product will not be known until after it is
launched. Our efforts to educate the medical community and third-party payors on the benefits of the pharmaceutical products may require
a significant amount of resources and may never be successful. If these products do not achieve an adequate level of acceptance, we may
not generate significant product revenue and may not become profitable.

 The commercial potential of a pharmaceutical
candidate in development is difficult to predict. If the market size for a new drug candidate or technology is significantly smaller than
we anticipate, it could significantly and negatively impact our revenue, results of operations and financial condition. 

 It is very difficult to estimate the commercial
potential of pharmaceutical products due to important factors, such as safety and efficacy compared to other available technologies or
treatments, including changing standards of care, third-party payor reimbursement standards, patient and physician preferences, the availability
of competitive alternatives that may emerge either during the long drug development process or after commercial introduction and the availability
of generic versions of our successful drug candidates following approval by government health authorities, based on the expiration of
regulatory exclusivity or our inability to prevent generic versions from coming to market by asserting our patents. If due to these factors,
or others, the market potential for a pharmaceutical product is lower than we anticipated, it could significantly and negatively impact
the commercial terms of any collaboration partnership potential for such pharmaceutical product or, if we have already entered into a
collaboration for such pharmaceutical product, the revenue potential from royalty and milestone payments could be significantly diminished,
which would negatively impact our business, financial condition and results of operations.

 Failure to obtain or maintain adequate coverage
and reimbursement for our drug candidates, if approved, could limit our ability to market those products and decrease our ability to generate
revenue. 

 The success of our drug candidates, if approved,
depends on the availability of adequate coverage and reimbursement from third-party payors. In addition, because our drug candidates represent
new approaches to the treatment of certain diseases, we cannot be sure that coverage and reimbursement will be available for, or accurately
estimate the potential revenue from, our drug candidates or assure that coverage and reimbursement will be available for any product that
we may develop.

 26 

 Patients who are provided medical treatment for
their conditions generally rely on third-party payors to reimburse all or part of the costs associated with their treatment. Adequate
coverage and reimbursement from federal health care programs, such as Medicare and Medicaid, and commercial payors are critical to new
product acceptance.

 Government authorities and third-party payors,
such as private health insurers and health maintenance organizations, as well as their pharmacy benefit managers decide which drugs and
treatments they will cover and the amount of reimbursement. Coverage and reimbursement by a third-party payor may depend upon a number
of factors, including the third-party payor’s determination that use of a product is:

 · 
 A covered benefit under its health plan; 

 · 
 Safe, effective and medically necessary; 

 · 
 Appropriate for the specific patient; 

 · 
 Cost-effective; and 

 · 
 Neither experimental nor investigational. 

 In the United States, no uniform policy of coverage
and reimbursement for products exists among third-party payors and their contracted pharmacy benefit managers that manage prescription
benefits for such payors. As a result, obtaining coverage and reimbursement approval of a product from a government or other third-party
payor is a time-consuming and costly process that could require us to provide to each payor supporting scientific, clinical and cost-effectiveness
data for the use of our products on a payor-by-payor basis, with no assurance that coverage and adequate reimbursement will be obtained.
Even if we obtain coverage for a given product, the resulting reimbursement payment rates might not be adequate for us to achieve or sustain
profitability or may require co-payments that patients find unacceptably high. Additionally, third-party payors and their pharmacy benefit
managers may not cover, or provide adequate reimbursement for, long-term follow-up evaluations that may be required for our products.
Patients are unlikely to use our drug candidates unless coverage is provided and reimbursement is adequate to cover a significant portion
of the cost of our drug candidates and/or if patient out-of-pocket costs (such as co-pays or co-insurance) are prohibitively high. There
is significant uncertainty related to insurance coverage and reimbursement of newly-approved products. It is difficult to predict at this
time what third-party payors will decide with respect to the coverage and reimbursement for our drug candidates.

 Moreover, increasing efforts by governmental and
third-party payors in the United States and abroad to cap or reduce healthcare costs may cause such organizations to limit both coverage
and the level of reimbursement for newly-approved products and, as a result, they may not cover or provide adequate payment for our drug
candidates. We expect to experience pricing pressures in connection with the sale of any of our drug candidates due to the trend toward
managed healthcare, value-based pricing, the increasing influence of health maintenance organizations, cost containment initiatives and
additional legislative changes.

 We intend to seek approval to market our drug
candidates in both the United States and in select foreign jurisdictions. If we obtain approval in one or more foreign jurisdictions for
our drug candidates, we will be subject to rules and regulations in those jurisdictions. In some foreign countries, the pricing of pharmaceutical
products is subject to governmental control and other market regulations which could put pressure on the pricing and usage of our drug
candidates. In these countries, pricing negotiations with governmental authorities can take considerable time after obtaining marketing
approval of a drug candidate. In addition, market acceptance and sales of our drug candidates will depend significantly on the availability
of adequate coverage and reimbursement from third-party payors for our drug candidates and may be affected by existing and future health
care reform measures. Failure to obtain or maintain adequate coverage and reimbursement for our drug candidates, if approved, could limit
our ability to market those products and decrease our ability to generate revenue.

 27 

 We may use our financial and human resources
to pursue a particular research program or drug candidate and fail to capitalize on programs or drug candidates that may be more profitable
or for which there is a greater likelihood of success. 

 Because we have limited resources, we may forego
or delay pursuit of opportunities with certain programs, drug candidates or for indications that later prove to have greater commercial
potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities.
Our spending on current and future research and development programs for drug candidates may not yield any commercially viable products.
If we do not accurately evaluate the commercial potential or target market for a particular drug candidate, we may relinquish valuable
rights to that drug candidate through strategic collaboration, licensing or other royalty arrangements in cases in which it would have
been more advantageous for us to retain sole development and commercialization rights to such drug candidate, or we may allocate internal
resources to a drug candidate in a therapeutic area in which it would have been more advantageous to enter into a partnering arrangement.
Failure to pursue opportunities with greater commercial potential or relinquishing valuable rights to drug candidates may adversely impact
our business, results of operations and prospects.

 We may not be successful in our efforts
to identify or discover additional pharmaceutical products. 

 The success of our business depends primarily
upon our ability to identify and develop pharmaceutical products. Our research programs may fail to identify potential pharmaceutical
products for clinical development for a number of reasons. Our research methodology may be unsuccessful in identifying potential pharmaceutical
products, or our potential pharmaceutical products may be shown to have harmful side effects or may have other characteristics that may
make the products unmarketable or unlikely to receive marketing approval.

 If any of these events occur, we may be forced
to abandon our development efforts for a program or programs, which would have a material adverse effect on our business and could potentially
cause us to cease operations. Research programs to identify new pharmaceutical products require substantial technical, financial and human
resources. We may focus our efforts and resources on potential programs or pharmaceutical products that ultimately prove to be unsuccessful.
If we are not successful in our efforts to identify or discover additional pharmaceutical products, it could adversely affect our business,
results of operations and prospects.

 The market opportunities for our drug candidates
may be limited to those patients who are ineligible for or have failed prior treatments and may be small. 

 Cancer therapies are sometimes characterized as
first line, second line or third line, and the FDA often approves new therapies initially only for third line use. When cancer is detected
early enough, first line therapy is sometimes adequate to cure the cancer or prolong life without a cure. Whenever first line therapy,
which usually consists of chemotherapy, hormone therapy, surgery or a combination of these, proves unsuccessful, second line therapy may
be administered. Second line therapies often consist of more chemotherapy, radiation, antibody drugs, tumor targeted small molecules or
a combination of these. Third line therapies can include bone marrow transplantation, antibody and small molecule targeted therapies,
more invasive forms of surgery and new technologies. In markets with approved therapies, we expect to initially seek approval of our drug
candidates as a later stage therapy for patients who have failed other approved treatments. Subsequently, for those drugs that prove to
be sufficiently beneficial, if any, we would expect to seek approval as a second line therapy and potentially as a first line therapy,
but there is no guarantee that our drug candidates, even if approved, would be approved for second line or first line therapy. In addition,
we may have to conduct additional clinical trials prior to gaining approval for second line or first line therapy.

 Our projections of both the number of people who
have the cancers we are targeting, as well as the subset of people with these cancers in a position to receive later stage therapy and
who have the potential to benefit from treatment with our drug candidates, are based on our beliefs and estimates. These estimates have
been derived from a variety of sources, including scientific literature, surveys of clinics, patient foundations or market research and
may prove to be incorrect. Further, new studies may change the estimated incidence or prevalence of these cancers. The number of patients
may turn out to be lower than expected. In addition, the potentially addressable patient population for our drug candidates may be limited
or may not be amenable to treatment with our drug candidates. Even if we obtain significant market share for our drug candidates, we may
never achieve profitability without obtaining regulatory approval for additional indications, including use as a first or second line
therapy, which may adversely affect our business and results of operations.

 28 

 Clinical trials may fail to demonstrate
the safety and efficacy of our pharmaceutical drug candidates and could prevent or significantly delay regulatory approval. 

 Before receiving NDA or BLA approval to commercialize
a drug candidate, we must demonstrate to the FDA, with substantial evidence from well-controlled clinical trials, that the drug candidate
is both safe and effective or the biologic is safe, pure and potent. If these trials or future clinical trials are unsuccessful, our business
and reputation could be harmed and our stock price could be adversely affected.

 Clinical failure can occur at any stage of clinical
development. Clinical trials may produce negative or inconclusive results, and we or any of our current and future collaborators may decide,
or regulators may require us, to conduct additional clinical or preclinical testing. We will be required to demonstrate with substantial
evidence through well-controlled clinical trials that our drug candidates are as safe and effective for use in a specific patient population
as the respective reference products before we can seek regulatory approvals for their commercial sale. Success in early clinical trials
does not mean that future larger registration clinical trials will be successful because drug candidates in later-stage clinical trials
may fail to demonstrate equivalent safety and efficacy to the satisfaction of the FDA and foreign regulatory agencies despite having progressed
through initial clinical trials. Drug candidates that have shown promising results in early clinical trials may still fail in subsequent
confirmatory clinical trials. Similarly, the outcome of preclinical testing and early clinical trials may not be predictive of the success
of later clinical trials, and interim results of a clinical trial do not necessarily predict final results. A number of companies in the
pharmaceutical industry, including those with greater resources and experience than us, have suffered significant setbacks in advanced
clinical trials, even after obtaining promising results in earlier clinical trials.

 In addition, the design of a clinical trial can
determine whether its results will support approval of a product, and flaws in the design of a clinical trial may not become apparent
until the clinical trial is well advanced. We may be unable to design and execute a clinical trial to support regulatory approval. In
some instances, there can be significant variability in safety or efficacy results between different trials of the same drug candidate
due to numerous factors, including but not limited to, changes in trial protocols, differences in size and type of the patient populations,
adherence to the dosing regimen and the rate of dropout among clinical trial participants.

 Because of these risks, our research and development
efforts, and those of our collaborative partners, may not result in any commercially viable products. If a significant portion of these
development efforts is not successfully completed, or if required regulatory approvals are not obtained by us or our partners, or any
approved products are not commercially successful, we may not generate significant revenues or become profitable.

 We may fail to obtain orphan drug designations
from the FDA for our drug candidates, and even if we obtain such designations, we may be unable to maintain the benefits associated with
orphan drug designation, including the potential for market exclusivity. 

 Under the Orphan Drug Act, the FDA may grant orphan
drug designation to a drug or biologic intended to treat a rare disease or condition, which is defined as one occurring in a patient population
of fewer than 200,000 in the United States, or a patient population greater than 200,000 in the United States where there is no reasonable
expectation that the cost of developing the drug or biologic will be recovered from sales in the United States. In the United States,
orphan drug designation entitles a party to financial incentives such as opportunities for grant funding towards clinical trial costs,
tax advantages and user-fee waivers. In addition, if a product that has orphan drug designation subsequently receives the first FDA approval
for the disease for which it has such designation, the product is entitled to orphan drug exclusivity, which means that the FDA may not
approve any other applications, including a full NDA or BLA, to market the same drug or biologic for the same indication for seven years,
except in limited circumstances, such as a showing of clinical superiority to the product with orphan drug exclusivity or where the manufacturer
is unable to assure sufficient product quantity.

 We may seek to obtain orphan drug designation
for our active drug candidates for any qualifying indications they may be approved for in the future. Even if we obtain such designations,
we may not be the first to obtain marketing approval of our drug candidate for the orphan-designated indication due to the uncertainties
associated with developing pharmaceutical products. In addition, exclusive marketing rights in the United States may be limited if we
seek approval for an indication broader than the orphan-designated indication, or may be lost if the FDA later determines that the request
for designation was materially defective or if the manufacturer is unable to assure sufficient quantities of the product to meet the needs
of patients with the rare disease or condition. Further, even if we obtain orphan drug exclusivity for a product, that exclusivity may
not effectively protect the product from competition because different drugs with different active moieties can be approved for the same
condition. Even after an orphan product is approved, the FDA can subsequently approve the same drug with the same active moiety for the
same condition if the FDA concludes that the later drug is safer, more effective or makes a major contribution to patient care. Orphan
drug designation neither shortens the development time or regulatory review time of a drug, nor gives the drug any advantage in the regulatory
review or approval process. In addition, even if we seek orphan drug designation for our drug candidates, we may never receive such designations.

 29 

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

 In both the United States and certain foreign
jurisdictions, there have been a number of legislative and regulatory enactments in recent years that change the healthcare system in
ways that could impact our future ability to sell our drug candidates profitably.

 Furthermore, there have been and continue to be
a number of initiatives at the federal and state level that seek to reduce healthcare costs. Most significantly, in March 2010, the Patient
Protection and Affordable Health Care Act, as amended by the Health Care and Education Reconciliation Act (collectively, the “ACA”),
was signed into law, which includes measures that significantly change the way healthcare is financed by both governmental and private
insurers. In January 2017, Congress voted to adopt a budget resolution for fiscal year 2017, or the Budget Resolution, that authorizes
the implementation of legislation that would repeal portions of the ACA. In addition, on January 20, 2017, President Trump signed an executive
order directing federal agencies with authorities and responsibilities under the ACA to waive, defer, grant exemptions from, or delay
the implementation of any provision of the ACA that would impose a fiscal or regulatory burden on states, individuals, healthcare providers,
health insurers, or manufacturers of pharmaceuticals or medical devices. Further, on October 12, 2017, President Trump issued another
executive order requiring the Secretaries of HHA and the Departments of Labor and Treasury to consider proposing regulations or revising
existing guidance to allow more employers to form association health plans that would be allowed to provide coverage across state lines,
increase the availability of short-term, limited-duration health insurance plans, which are generally not subject to the requirements
of the ACA, and increase the availability and permitted use of health reimbursement arrangements. On October 13, 2017, the Department
of Justice announced that HHS was immediately stopping its cost sharing reduction payments to insurance companies based on the determination
that those payments had not been appropriated by Congress. Furthermore, on December 22, 2017, President Trump signed the Tax Cuts and
Jobs Act (the “TCJA”) into law that, in addition to overhauling the federal tax system, also, effective as of January 1, 2019,
repealed the penalties associated with the individual mandate. Congress or the President of the United States also could consider subsequent
legislation or executive action to replace, eliminate or reaffirm elements of the ACA. We will continue to evaluate the effect that the
ACA and any future measures to modify, repeal, replace or reaffirm the ACA have on our business.

 Additionally, the Inflation Reduction Act of 2022
may impact existing Medicare programs that cover prescription drugs. In addition to other relevant provisions, the Inflation Reduction
Act of 2022 allows the Medicare program to directly negotiate the price of certain high-expenditure prescription drugs covered under Medicare
Parts B and D, starting in the year 2028 and 2026, respectively, by setting certain "maximum fair prices." Moreover, the Inflation
Reduction Act of 2022 requires manufacturers to pay rebates to the federal government if prices of certain drugs covered under the Medicare
program rise faster than the rate of inflation. We will continue to evaluate the effects that the Inflation Reduction Act of 2022 will
have on our business.

 In a 2024 U.S. Supreme Court ruling ( Loper
Bright Enterprises v. Raimondo ) (the “ Loper decision”), the Supreme Court overturned the long-standing Chevron
doctrine, which had accorded deference to an agency’s interpretation of ambiguous laws since 1984. Following the Loper decision,
the healthcare space may face increased judicial scrutiny of agency regulations, as courts are no longer required to defer to federal
agencies’ interpretations of ambiguous statutes. This change could lead to significant alterations in how healthcare laws and regulations
are applied and enforced. While the full impact of this reversal has yet to be examined, the Loper decision could lead to material
changes to the healthcare system, particularly concerning the FDA, CMS, HHS, and other agencies. We will continue to evaluate the effects
that the Loper decision will have on our business.

 We are not able to provide any assurance that
the continued healthcare reform debate will not result in legislation, regulation, litigation or executive action by the President of
the United States that is adverse to our business. Moreover, we are not, at this time, able to evaluate any potential legislative, regulatory
or Executive Order actions that the new presidential administration may take which could have a material impact on our business.

 Laws and other reform and cost containment measures
that may be proposed and adopted in the future remain uncertain but may contain provisions that restrict our ability to price our products
and/or could result in additional reductions in Medicare and other healthcare funding, which could have a material adverse effect on our
future customers and, accordingly, our ability to generate revenue, attain profitability or commercialize our products.

 30 

 Risks Related to Our Reliance on Third-Parties 

 If conflicts arise between us and our collaborators
or strategic partners, these parties may act in their self-interest, which may limit our ability to implement our strategies. 

 If conflicts arise between our corporate or academic
collaborators or strategic partners and us, the other party may act in its self-interest, which may limit our ability to implement our
strategies. Some of our academic collaborators and strategic partners are conducting multiple product development efforts within each
area that is the subject of the collaboration with us. Our collaborators or strategic partners, however, may develop, either alone or
with others, products in related fields that are competitive with the products or potential products that are the subject of these collaborations.
Competing products, either developed by the collaborators or strategic partners or to which the collaborators or strategic partners have
rights, may result in the withdrawal of partner support for our drug candidates.

 Some of our collaborators or strategic partners
could also become our competitors in the future. Our collaborators or strategic partners could develop competing products, preclude us
from entering into collaborations with their competitors, fail to obtain timely regulatory approvals, terminate their agreements with
us prematurely, or fail to devote sufficient resources to the development and commercialization of products. Any of these developments
could harm our product development efforts, which may adversely affect our business, results of operations and prospects.

 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. 

 We rely on CROs, clinical investigators
and clinical study sites to ensure our clinical studies are conducted properly and on time. We will have limited influence over the performance
by CROs, clinical investigators and clinical study sites, and we will control only certain aspects of our CROs’ activities. Nevertheless,
we will be responsible for ensuring that each of our clinical studies is conducted in accordance with the applicable protocol, legal and
regulatory requirements and scientific standards, and our reliance on the CROs does not relieve us of our regulatory responsibilities.
Furthermore, facilities used by these third party CROs, clinical investigators and clinical study sites may be negatively affected by
catastrophic events, such as pandemics, terrorist attacks, wars or other armed conflicts, geopolitical tensions, such as the ongoing conflicts
in the Ukraine and Middle East, and related sanctions and other economic disruptions or concerns, natural disasters, such as floods or
fire, or such facilities could face manufacturing issues, such as contamination or regulatory concerns following a regulatory inspection
of such facility. In such instances, we may need to locate an appropriate replacement third-party facility and establish a contractual
relationship, which may not be readily available or on acceptable terms, which would cause additional delay and increased expense, including
as a result of additional required FDA approvals, and may have a material adverse effect on our business.

 We, our clinical investigators, and our CROs are
required to comply with the FDA’s GCPs for conducting, recording and reporting the results of clinical trials 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. The FDA enforces these GCPs through periodic inspections of study sponsors, principal investigators and clinical trial
sites. If we, our CROs or the clinical investigators fail to comply with applicable GCPs, the clinical data generated in our clinical
trials may be deemed unreliable, and the FDA may require us to perform additional clinical trials before approving any marketing applications.
Upon inspection, the FDA may determine that our clinical trials did not comply with GCPs. In addition, our future clinical trials will
require a sufficient number of test subjects to evaluate the safety and efficacy of our drug candidates. Accordingly, if our CROs or clinical
investigators fail to comply with these regulations or fail to recruit a sufficient number of patients, we may be required to repeat such
clinical trials, which would delay the regulatory approval process.

 Our CROs are not our employees, and we are therefore
unable to directly monitor whether or not they devote sufficient time and resources to our clinical and nonclinical programs, which must
be conducted in accordance with GCPs and GLPs, respectively. These CROs may also have relationships with other commercial entities, including
our competitors, for whom they may also be conducting clinical studies or other drug development activities that could harm our competitive
position. If our CROs do not successfully carry out their contractual duties or obligations, fail to meet expected deadlines or the quality
or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols or regulatory requirements
(or for any other reasons), our clinical studies may be extended, delayed or terminated, and we may not be able to obtain regulatory approval
for, or successfully commercialize, our pharmaceutical products. As a result, our financial results and the commercial prospects for our
pharmaceutical products would be harmed, our costs could increase and our ability to generate revenues could be delayed.

 31 

 We may also rely on other third parties to store
and distribute our products for any clinical studies that we may conduct. Any performance failure on the part of our distributors could
delay clinical development or marketing approval of our pharmaceutical products or commercialization of our products, if approved, producing
additional losses and depriving us of potential product revenue.

 Our collaborators or strategic partners
may decide to adopt alternative technologies or may be unable to develop commercially viable products with our technology, which would
negatively impact our revenues and our strategy to develop these products. 

 Our collaborators or strategic partners may adopt
alternative technologies, which could decrease the marketability of our products. Additionally, because our current or future collaborators
or strategic partners are likely to be working on more than one development project, they could choose to shift their resources to projects
other than those they are working on with us. If they do so, this would delay our ability to test our technology and would delay or terminate
the development of potential products based on our platforms. Further, our collaborators and strategic partners may elect not to develop
products arising out of our collaborative and strategic partnering arrangements or to devote sufficient resources to the development,
manufacturing, marketing or sale of these products. The failure to develop and commercialize a drug candidate pursuant to our agreements
with our current or future collaborator would prevent us from receiving future milestone and royalty payments, which would negatively
impact our revenues.

 We may seek to establish additional collaborations
and, if we are not able to establish them on commercially reasonable terms, we may have to alter our development and commercialization
plans. 

 Our drug candidate development programs and the
potential commercialization of our drug candidates will require substantial additional cash to fund expenses. For some of our drug candidates,
we may decide to collaborate with additional pharmaceutical and biotechnology companies for the development and potential commercialization
of those drug candidates.

 We face significant competition in seeking appropriate
collaborators. Whether we reach a definitive agreement for any additional collaborations will depend, among other things, upon our assessment
of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator’s
evaluation of a number of factors. Those factors may include the design or results of clinical trials, the likelihood of approval by FDA
or similar regulatory authorities outside the U.S., the potential market for the subject drug candidate, the costs and complexities of
manufacturing and delivering such drug candidate to patients, the potential of competing drugs, the existence of uncertainty with respect
to our ownership of technology (which can exist if there is a challenge to such ownership without regard to the merits of the challenge)
and industry and market conditions generally. The collaborator may also consider alternative drug candidates or technologies for similar
indications that may be available to collaborate on and whether such a collaboration could be more attractive than the one with us for
our drug candidate. The terms of any additional collaborations or other arrangements that we may establish may not be favorable to us.

 We may also be restricted under existing collaboration
agreements from entering into future agreements on certain terms with potential collaborators. Collaborations are complex and time-consuming
to negotiate and document. In addition, there have been a significant number of recent business combinations among large pharmaceutical
companies that have resulted in a reduced number of potential future collaborators.

 We may not be able to negotiate additional collaborations
on a timely basis on acceptable terms, or at all. If we are unable to do so, we may have to curtail the development of the drug candidate
for which we are seeking to collaborate, reduce or delay its development program or one or more of our other development programs, delay
its potential commercialization or reduce the scope of any sales or marketing activities or increase our expenditures and undertake development
or commercialization activities at our own expense. If we elect to increase our expenditures to fund development or commercialization
activities on our own, we may need to obtain additional capital, which may not be available to us on acceptable terms, or at all. If we
do not have sufficient funds, we may not be able to further develop our drug candidates or bring them to market and generate product revenue.

 32 

 We are a party to, and may enter into one
or more collaborations in the future, pursuant to which we may be required to relinquish important rights to and control over the development
of our drug candidates or otherwise be subject to unfavorable terms. 

 Any current and future collaborations we enter
into could subject us to a number of risks, including:

 · 
 We may not be able to control the amount and timing of resources that our collaborators devote to the development or commercialization of our drug candidates; 

 · 
 Collaborators may delay clinical trials, provide insufficient funding, terminate a clinical trial or abandon a drug candidate, repeat or conduct new clinical trials or require a new version of a drug candidate for clinical testing; 

 · 
 Collaborators may not pursue further development and commercialization of products resulting from the strategic partnering arrangement or may elect to discontinue research and development programs; 

 · 
 Collaborators may not commit adequate resources to the marketing and distribution of our drug candidates, limiting our potential revenues from these products; 

 · 
 Disputes may arise between us and our collaborators that result in the delay or termination of the research, development or commercialization of our drug candidates or that result in costly litigation or arbitration that diverts management’s attention and consumes resources; 

 · 
 Collaborators may experience financial difficulties; 

 · 
 Collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in a manner that could jeopardize or invalidate our proprietary information or expose us to potential litigation; 

 · 
 Business combinations or significant changes in a collaborator’s business strategy may also adversely affect a collaborator’s willingness or ability to complete its obligations under any arrangement; 

 · 
 Collaborators could decide to move forward with a competing drug candidate developed either independently or in collaboration with others, including our competitors; and 

 · 
 Collaborators could terminate the arrangement or allow it to expire, which would delay the development and may increase the cost of developing our drug candidates. 

 We have no manufacturing, sales, marketing
or distribution capabilities, and we may have to invest a significant amount of resources to develop these capabilities. 

 We have no internal manufacturing capabilities.
As a result, for manufacturing we depend on third-party manufacturers. Our strategy is based on leveraging the ability of collaboration
partners to develop and manufacture our products for commercialization in the pharmaceutical marketplace, and we will be dependent on
collaborations with drug development and manufacturing capabilities. If we are not able to maintain existing collaborative arrangements
or establish new arrangements on commercially acceptable terms, we would be required to undertake product manufacturing and development
activities at our own expense. This would increase our capital requirements or require us to limit the scope of our development activities.
Moreover, we have limited or no experience in conducting full-scale bioequivalence or other clinical studies, preparing and submitting
regulatory applications and distributing and marketing pharmaceutical products. As such, we are reliant on contract parties for such efforts.
We may not be able to enter into collaborations or hire consultants or external service providers to assist us in sales, marketing and
distribution functions on acceptable financial terms, or at all.

 If any of our developmental collaborators breach
or terminate their agreements with us or otherwise fail to conduct their collaborative activities in a timely manner, the preclinical
and/or clinical development and/or commercialization of our pharmaceutical products will be delayed and we would be required to devote
additional resources to product development and commercialization or terminate certain development programs. Also, a license relationship
may be terminated at the discretion of our collaborator, or at the end of contract terms, and in some cases with only limited notice to
us. The termination of the collaborative arrangement could have a material adverse effect on our business, financial condition and results
of operations. There also can be no assurance that disputes will not arise with respect to the ownership of rights to any technology developed
with third parties. These and other possible disagreements with collaborators could lead to delays in the development or commercialization
of our pharmaceutical products or could result in litigation or arbitration, which could be time-consuming and expensive and could have
a material adverse effect on our business, financial condition and results of operations. Even if we decide to perform clinical trials,
sales, marketing and distribution functions ourselves, we could face a number of additional related risks, including:

 · 
 We may not be able to attract clinical investigators and build effective clinical trials or a solid marketing department or sales force; 

 · 
 The cost of establishing an internal clinical trials program, marketing department or sales force may exceed our available financial resources and the revenue generated by any of our current product candidates, if approved, or any other pharmaceutical products that we may develop, in-license or acquire; and 

 · 
 Our direct sales and marketing efforts may not be successful. 

 Any failure to perform such activities could have
a material adverse effect on our business, financial condition and results of our operations.

 33 

 Our reliance on third parties requires us
to share our trade secrets, which increases the possibility that a competitor will discover them or that our trade secrets will be misappropriated
or disclosed. 

 Because we rely on third parties to manufacture
our pharmaceutical products, and because we collaborate with various organizations and academic institutions on the development of our
pharmaceutical products, we must, at times, share trade secrets with them. We seek to protect our proprietary technology in part by entering
into confidentiality agreements and, if applicable, material transfer agreements, collaborative research agreements, consulting agreements
or other similar agreements with our collaborators, advisors, employees and consultants prior to beginning research or disclosing proprietary
information. These agreements typically limit the rights of the third parties to use or disclose our confidential information, such as
trade secrets. The need to share trade secrets and other confidential information when working with third parties increases the risk that
such trade secrets become known by our competitors, are inadvertently incorporated into the technology of others or are disclosed or used
in violation of these agreements. Given that our proprietary position is based, in part, on our know-how and trade secrets, a competitor’s
discovery of our trade secrets or other unauthorized use or disclosure would impair our competitive position and may have a material adverse
effect on our business.

 In addition, these agreements typically restrict
the ability of our collaborators, advisors, employees and consultants to publish data potentially relating to our trade secrets. Our academic
collaborators typically have rights to publish data, provided that we are notified in advance and may delay publication for a specified
time in order to secure our intellectual property rights arising from the collaboration. In other cases, publication rights are controlled
exclusively by us, although in some cases we may share these rights with other parties. We may also conduct joint research and development
programs that may require us to share trade secrets under the terms of our research and development partnerships or similar agreements.
Our competitors may discover our trade secrets, either through breach of these agreements, independent development or publication of information
including our trade secrets in cases where we do not have proprietary or otherwise protected rights at the time of publication. A competitor’s
discovery of our trade secrets would impair our competitive position and have an adverse impact on our business.

 Our contract manufacturers are subject to
significant regulation with respect to manufacturing our products. The manufacturing facilities on which we rely may not continue to meet
regulatory requirements and have limited capacity. 

 We currently have relationships with a limited
number of suppliers for the manufacturing of our pharmaceutical products. Each supplier may require licenses to manufacture components
if such processes are not owned by the supplier or in the public domain, and we may be unable to transfer or sublicense the intellectual
property rights we may have with respect to such activities.

 All entities involved in the preparation of pharmaceutical
products for clinical studies or commercial sale, including our existing contract manufacturers for our drug candidates, are subject to
extensive regulation. Components of a finished pharmaceutical product approved for commercial sale or used in late-stage clinical studies
must be manufactured in accordance with cGMP. These regulations govern manufacturing processes and procedures (including record keeping)
and the implementation and operation of quality systems to control and assure the quality of investigational products and products approved
for sale. Poor control of production processes can lead to the introduction of adventitious agents or other contaminants or to inadvertent
changes in the properties or stability of our pharmaceutical products that may not be detectable in final product testing. Our contract
manufacturers must supply all necessary documentation in support of an NDA or BLA on a timely basis and must adhere to the FDA’s
GLP and cGMP regulations enforced by the FDA through its facilities inspection program. The facilities and quality systems of some or
all of our third-party contractors must pass a pre-approval inspection for compliance with the applicable regulations as a condition of
regulatory approval of our pharmaceutical products or any of our other potential products. In addition, the regulatory authorities may,
at any time, audit or inspect a manufacturing facility involved with the preparation of our pharmaceutical products or our other potential
products or the associated quality systems for compliance with the regulations applicable to the activities being conducted. If these
facilities do not pass a pre-approval plant inspection, FDA approval of the products will not be granted.

 The regulatory authorities also may, at any time
following approval of a product for sale, audit the manufacturing facilities of our third-party contractors. If any such inspection or
audit identifies a failure to comply with applicable regulations or if a violation of our product specifications or applicable regulations
occurs independent of such an inspection or audit, we, or the relevant regulatory authority, may require remedial measures that may be
costly and/or time-consuming for us or a third party to implement and that may include the temporary or permanent suspension of a clinical
study or commercial sales or the temporary or permanent closure of a facility. Any such remedial measures imposed upon third parties with
whom we contract could materially harm our business.

 34 

 If our third-party manufacturers fail to maintain
regulatory compliance, the FDA can impose regulatory sanctions including, among other things, refusal to approve a pending application
for a drug candidate or revocation of a pre-existing approval. As a result, our business, financial condition and results of operations
may be materially harmed.

 Additionally, if supply from one approved manufacturer
is interrupted, there could be a significant disruption in commercial supply. The number of manufacturers with the necessary manufacturing
capabilities is limited. In addition, an alternative manufacturer would need to be qualified through an NDA or BLA supplement which could
result in further delay. The regulatory agencies may also require additional studies if a new manufacturer is relied upon for commercial
production. Switching manufacturers may involve substantial costs and is likely to result in a delay in our desired clinical and commercial
timelines, which could materially harm our business and results of operations.

 These factors could cause the delay of clinical
studies, regulatory submissions, required approvals or commercialization of our pharmaceutical products and/or cause us to incur higher
costs and prevent us from commercializing our products successfully. Furthermore, if our suppliers fail to meet contractual requirements,
and we are unable to secure one or more replacement suppliers capable of production at a substantially equivalent cost, our clinical studies
may be delayed or we could lose potential revenue, which could materially harm our business and results of operations.

 Risks Related to Our Intellectual Property 

 If we fail to adequately protect or enforce
our intellectual property rights, we may be unable to operate effectively. 

 Our success and ability to compete are substantially
dependent on our patents, proprietary formulations and trademarks. There can be no assurance that our patents and associated trademarks
and licenses will not be challenged and subsequently invalidated and/or canceled. The invalidation or cancellation of any one or all of
the patents or trademarks would significantly damage our commercial prospects. Further, we may find it necessary to legally challenge
parties infringing our patents or trademarks or licensed trademarks to enforce our rights thereto. There can be no assurance that any
of the patents would ultimately be held valid or that efforts to defend any of the patents, trade secrets, know-how or other IP rights
would be successful.

 The patent positions of pharmaceutical and biotechnology
companies, such as ours, are uncertain and involve complex legal and factual issues. We own numerous U.S. and foreign patents and a number
of pending patent applications that cover various aspects of our drug candidates and technologies. There can be no assurance that patents
that have been issued will be held valid and enforceable in a court of law. Even for patents that are held valid and enforceable, the
legal process associated with obtaining such a judgment is time-consuming and costly. Additionally, issued patents can be subject to opposition
or other proceedings that can result in the revocation of the patent or maintenance of the patent in amended form (and potentially in
a form that renders the patent without commercially relevant and/or broad coverage). Further, our competitors may be able to circumvent
and otherwise design around our patents. Even if a patent is issued and enforceable because development and commercialization of pharmaceutical
products can be subject to substantial delays, patents may expire early and provide only a short period of protection, if any, following
the commercialization of a product encompassed by our patents. We may have to participate in interference proceedings declared by the
USPTO, which could result in a loss of the patent and/or substantial cost to us.

 We have filed patent applications and plan to
file additional patent applications covering various aspects of our drug candidates and technologies. There can be no assurance that the
patent applications for which we apply would actually be issued as patents, or do so with commercially relevant and/or broad coverage.
The coverage claimed in a patent application can be significantly reduced before the patent is issued. The scope of our claim coverage
can be critical to our ability to enter into licensing transactions with third parties and our right to receive royalties from our collaboration
partnerships. Since publication of discoveries in scientific or patent literature often lags behind the date of such discoveries, we cannot
be certain that we were the first inventor of inventions covered by our patents or patent applications. In addition, there is no guarantee
that we will be the first to file a patent application directed to an invention.

 35 

 An adverse outcome in any judicial proceeding
involving IP, including patents, could subject us to significant liabilities to third parties, require disputed rights to be licensed
from or to third parties or require us to cease using the technology in dispute. In those instances where we seek an IP license from another,
we may not be able to obtain the license on a commercially reasonable basis, if at all, thereby raising concerns on our ability to freely
commercialize our technologies and/or products. It is also possible that we or our licensors or licensees will fail to identify patentable
aspects of inventions made in the course of development and commercialization activities before it is too late to obtain patent protection
on them. Moreover, in some circumstances, we may not have the right to control the preparation, filing and prosecution of patent applications
(or to maintain the patents) covering technology that we license from or license to third parties. We are reliant on our licensors or
licensees. Therefore, these patents and applications may not be prosecuted and enforced in a manner consistent with the best interests
of our business. If our current or future licensors or licensees fail to establish, maintain or protect such patents and other intellectual
property rights, such rights may be reduced or eliminated. If our licensors or licensees are not fully cooperative or disagree with us
as to the prosecution, maintenance or enforcement of any patent rights, such patent rights could be compromised.

 Failure to adequately protect or enforce our intellectual
property rights could have a material adverse impact on our business, results of operations and prospects.

 Issued patents covering our drug candidates
could be found invalid or unenforceable if challenged in court. 

 If we or one of our licensing partners initiated
legal proceedings against a third-party to enforce a patent covering one of our drug candidates, the defendant could counterclaim that
the patent covering our drug candidate is invalid and/or unenforceable. In patent litigation in the United States, defendant counterclaims
alleging invalidity and/or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any
of several statutory requirements, including lack of novelty, obviousness or non-enablement. Grounds for an unenforceability assertion
could be an allegation that someone connected with prosecution of the patent withheld relevant information from the USPTO, or made a misleading
statement, during prosecution. Third parties may also raise similar claims before administrative bodies in the United States or abroad,
even outside the context of litigation. Such mechanisms include re-examination, post grant review and equivalent proceedings in foreign
jurisdictions (e.g., opposition proceedings). Such proceedings could result in revocation or amendment to our patents in such a way that
they no longer cover our drug candidates. The outcome following legal assertions of invalidity and unenforceability is unpredictable.
With respect to the validity question, for example, we cannot be certain that there is no invalidating prior art, of which we and the
patent examiner were unaware during prosecution. If a defendant were to prevail on a legal assertion of invalidity and/or unenforceability,
we would lose at least part, and perhaps all, of the patent protection on our drug candidates. Such a loss of patent protection would
have a material adverse impact on our business.

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

 Filing, prosecuting and defending patents on drug
candidates in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries
outside the United States can be less extensive than those in the United States. In addition, the laws of some foreign countries do not
protect intellectual property rights to the same extent as federal and state laws in the United States. Consequently, we may not be able
to prevent third parties from practicing our inventions in all countries outside the United States or from selling or importing products
made using our inventions in and into the United States or other jurisdictions. Competitors may use our inventions in jurisdictions where
we have not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories
where we have patent protection but enforcement is not as strong as that in the United States. These products may compete with our products,
and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

 Many companies have encountered significant problems
in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly
certain developing countries, do not favor the enforcement of patents, trade secrets and other intellectual property protection, particularly
those relating to biotechnology products, which could make it difficult for us to stop the infringement of our patents or marketing of
competing products in violation of our proprietary rights generally. Proceedings to enforce our patent rights in foreign jurisdictions
could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk
of being invalidated or interpreted narrowly, could put our patent applications at risk of not issuing and could provoke third parties
to assert claims against us. We may not prevail in any lawsuits that we initiate, and the damages or other remedies awarded, if any, may
not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate
to obtain a significant commercial advantage from the intellectual property that we develop or license.

 Failure to adequately protect our intellectual
property rights throughout the world could have a material adverse impact on our business, results of operations and prospects.

 36 

 If we infringe on the intellectual property
rights of others, our business and profitability may be adversely affected. 

 Our commercial success will also depend, in part,
on us and our collaborative partners not infringing on the patents or proprietary rights of others. There can be no assurance that the
technologies and products used or developed by our collaborative partners and marketed and sold by us will not infringe such rights. If
such infringement occurs and neither we nor our collaborative partner is able to obtain a license from the relevant third party, we will
not be able to continue the development, manufacture, use or sale of any such infringing technology or product. There can be no assurance
that necessary licenses to third-party technology will be available at all, or on commercially reasonable terms. In some cases, litigation
or other proceedings may be necessary to defend against or assert claims of infringement or to determine the scope and validity of the
proprietary rights of third parties. Any potential litigation could result in substantial costs to, and diversion of, our resources and
could have a material and adverse impact on us. An adverse outcome in any such litigation or proceeding could subject us to significant
liabilities, require us to cease using the subject technology or require us to license the subject technology from the third party, all
of which could have a material adverse effect on our business.

 If we fail to comply with our obligations
in the agreements under which we license intellectual property rights from third parties or otherwise experience disruptions to our business
relationships with our licensors, we could lose license rights that are important to our business. 

 We are a party to a number of intellectual property
license agreements that are important to our business, and we expect to enter into additional license agreements in the future. Our existing
license agreements impose, and we expect that future license agreements will impose, various diligence, milestone payment, royalty and
other obligations on us. If we fail to comply with our obligations under these agreements, or we are subject to a bankruptcy, the licensor
may have the right to terminate the license, in which event we would not be able to market products covered by the license.

 We may need to obtain licenses from third parties
to advance our research, and we have done so from time to time. We may fail to obtain any of these licenses at a reasonable cost or on
reasonable terms, if at all. In that event, we may be required to expend significant time and resources to develop or license replacement
technology. If we are unable to do so, we may be unable to develop the affected drug candidates, which could harm our business significantly.
We cannot provide any assurances that third-party patents do not exist which might be enforced against our current drug candidates or
future products, resulting in either an injunction prohibiting the sales, or, with respect to the sales, an obligation on our part to
pay royalties and/or other forms of compensation to third parties.

 In many cases, patent prosecution of our licensed
technology is controlled solely by the licensor. If our licensors fail to obtain and maintain patent or other protection for the proprietary
intellectual property we license from them, we could lose our rights to the intellectual property or our exclusivity with respect to those
rights, and our competitors could market competing products using the intellectual property. In certain cases, we control the prosecution
of patents resulting from licensed technology. In the event we breach any of our obligations related to such prosecution, we may incur
significant liability to our licensing partners. Licensing of intellectual property is of critical importance to our business and involves
complex legal, business and scientific issues and is complicated by the rapid pace of scientific discovery in our industry. Disputes may
arise regarding intellectual property subject to a licensing agreement, including:

 · 
 The scope of rights granted under the license agreement and other interpretation-related issues; 

 · 
 The extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement; 

 · 
 The sublicensing of patent and other rights under our collaborative development relationships; 

 · 
 Our diligence obligations under the license agreement and what activities satisfy those diligence obligations; 

 · 
 The ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our partners; and 

 · 
 The priority of invention of patented technology. 

 If disputes over intellectual property that we
have licensed prevent or impair our ability to maintain our current licensing arrangements on acceptable terms, we may be unable to successfully
develop and commercialize the affected drug candidates, which could have a material adverse effect on our business.

 37 

 We may be subject to claims that our employees,
consultants or independent contractors have wrongfully used or disclosed confidential information of third parties or that our employees
have wrongfully used or disclosed alleged trade secrets of their former employers. 

 We employ individuals who were previously employed
at universities or other biotechnology or pharmaceutical companies, including our competitors or potential competitors. We may be subject
to claims that we or our employees, consultants or independent contractors have inadvertently or otherwise used or disclosed intellectual
property, including trade secrets or other proprietary information, of any of our employee’s former employers or other third parties.
Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages,
we may lose valuable intellectual property rights or personnel, which could adversely impact our business. Even if we are successful in
defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.

 We may be subject to claims challenging
the inventorship or ownership of our patents and other intellectual property. 

 We may also be subject to claims that former employees,
collaborators or other third parties have an ownership interest in our patents or other intellectual property. We may have in the future
ownership disputes arising, for example, from conflicting obligations of consultants or others who are involved in developing our drug
candidates. Litigation may be necessary to defend against these and other claims challenging inventorship or ownership. If we fail in
defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive
ownership of, or right to use, valuable intellectual property. Such an outcome could have a material adverse effect on our business. Even
if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management
and other employees.

 Our inability to protect our confidential
information and trade secrets would harm our business and competitive position. 

 In addition to seeking patents for some of our
technology and products, we also rely on trade secrets, including unpatented know-how, technology and other proprietary information, to
maintain our competitive position. We seek to protect these trade secrets, in part, by entering into non-disclosure and confidentiality
agreements with parties who have access to them, such as our employees, corporate collaborators, outside scientific collaborators, contract
manufacturers, consultants, advisors and other third parties. We also enter into confidentiality and invention or patent assignment agreements
with our employees and consultants. Any of these parties may breach the agreements and disclose our proprietary information, including
our trade secrets, and we may not be able to obtain adequate remedies for such breaches. Enforcing a claim that a party illegally disclosed
or misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, some courts
both within and outside the United States may be less willing or unwilling to protect trade secrets. If a competitor lawfully obtained
or independently developed any of our trade secrets, we would have no right to prevent such competitor from using that technology or information
to compete with us, which could harm our competitive position and our business.

 We may be involved in lawsuits to protect
or enforce our patents or the patents of our licensors, which could be expensive, time-consuming and unsuccessful. 

 Competitors may infringe our patents or the patents
of our licensors. To counter infringement or unauthorized use, we may be required to file infringement claims, which can be expensive
and time-consuming. In addition, in an infringement proceeding, a court may decide that a patent of ours or our licensors is not valid,
is unenforceable and/or is not infringed, or may refuse to stop the other party from using the technology at issue on the grounds that
our patents do not cover the technology in question. An adverse result in any litigation or defense proceedings could put one or more
of our patents at risk of being invalidated or interpreted narrowly and could put our patent applications at risk of not issuing.

 Interference proceedings provoked by third parties
or brought by us may be necessary to determine the priority of inventions with respect to our patents or patent applications or those
of our licensors. An unfavorable outcome could require us to cease using the related technology or to attempt to license rights to it
from the prevailing party. Our business could be harmed if the prevailing party does not offer us a license on commercially reasonable
terms. Our defense of litigation or interference proceedings may fail and, even if successful, may result in substantial costs and distract
our management and other employees. We may not be able to prevent, alone or with our licensors, misappropriation of our intellectual property
rights, particularly in countries where the laws may not protect those rights as fully as in the United States.

 Furthermore, because of the substantial amount
of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could
be compromised by disclosure during this type of litigation. There could also be public announcements of the results of hearings, motions
or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have
a material adverse effect on the price of our common stock.

 38 

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

 As is the case with other biopharmaceutical companies,
our success is heavily dependent on intellectual property, particularly patents. Obtaining and enforcing patents in the biotechnology
industry involve both technological and legal complexity and is, therefore, costly, time-consuming and inherently uncertain. In addition,
the United States has enacted and is expected to continue to implement wide-ranging patent reform legislation. Further, certain U.S. Supreme
Court rulings have narrowed the scope of patent protection available in certain circumstances and/or weakened the rights of patent owners
in certain situations. In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination
of events has created uncertainty with respect to the value of patents, once obtained. Depending on decisions by the U.S. Congress, the
federal courts and the USPTO, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability
to obtain new patents or to enforce our existing patents and patents that we might obtain in the future.

 Patent reform legislation could increase the uncertainties
and costs surrounding the prosecution of our and our licensors’ patent applications and the enforcement or defense of our or our
licensors’ issued patents. Provisions of the Leahy-Smith America Invents Act (the “Leahy-Smith Act”), adopted in September
2011, made a number of significant changes to U.S. patent law, the effects of which are still unfolding. The Leahy-Smith Act and its implementation,
in addition to any new regulation, could increase the uncertainties and costs surrounding the prosecution of our patent applications and
the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business and financial condition.

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

 Periodic maintenance fees, renewal fees, annuity
fees and various other governmental fees on patents and/or applications will be due to be paid to the USPTO and various governmental patent
agencies outside of the U. S. in several stages over the lifetime of the patents and/or applications. The USPTO and various non-U.S. governmental
patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent
application process. Non-compliance may result in abandonment or lapse of the patent or patent application, resulting in partial or complete
loss of patent rights in the relevant jurisdiction. In such an event, our competitors might be able to enter the market, and this circumstance
would have a material adverse effect on our business.

 Risks Related to Our Business Operations 

 We operate in an extremely competitive
environment and there can be no assurances that competing technologies would not harm our business development. 

 We are engaged in a rapidly-evolving field. Competition
from numerous pharmaceutical companies is intense and expected to increase. The large and rapidly-growing market for oncology treatments
is likely to attract new entrants. Numerous biotechnology and pharmaceutical companies are focused on developing cancer treatments and
immuno-oncology technologies. Many, if not all, of these companies have greater financial and other resources and development capabilities
than we do. Many of our competitors also have greater collective experience in undertaking preclinical and clinical testing of products,
obtaining regulatory approvals and manufacturing and marketing prescription pharmaceutical products. There can be no assurance that our
under-development drug candidates will be more effective or achieve greater market acceptance than competitive products or that our competitors
will not succeed in developing products and technologies that are more effective than those being developed by us or that would render
our products and technologies less competitive or obsolete. Additionally, there can be no assurance that the development by others of
new or improved drugs will not make our pharmaceutical products superfluous or obsolete.

 39 

 Our future success depends on our ability
to retain principal members of our executive team, consultants and advisors and to attract, retain and motivate qualified personnel. 

 We are highly dependent on principal members of
our executive team, the loss of whose services may adversely impact the achievement of our objectives. Recruiting and retaining other
qualified employees, consultants and advisors for our business, including scientific and technical personnel, will also be critical to
our success. Competition for skilled personnel is intense and the turnover rate can be high. We may not be able to attract and retain
personnel on acceptable terms given the competition among numerous pharmaceutical and biotechnology companies for individuals with similar
skill sets. In addition, failure to succeed in preclinical or clinical studies may make it more challenging to recruit and retain qualified
personnel. The inability to recruit or loss of the services of any executive, consultant or advisor may impede the progress of our research
and development objectives.

 We will need to expand our organization
and we may experience difficulties in managing this growth, which could disrupt our operations. 

 As of December 31, 2024, we had two full-time
employees. As we mature, we may need to expand our full-time employee base and to hire more consultants and contractors. Our management
may need to divert a disproportionate amount of its attention away from our day-to-day activities and devote a substantial amount of time
to managing these growth activities. We may not be able to effectively manage the expansion of our operations, which may result in weaknesses
in our infrastructure, operational mistakes, loss of business opportunities, loss of employees and reduced productivity among remaining
employees, all of which may have a material adverse effect on our business, results of operations and prospects. Any future growth could
require significant capital expenditures and may divert financial resources from other projects, such as the development of additional
drug candidates. If our management is unable to effectively manage our growth, our expenses may increase more than expected, our ability
to generate and/or grow revenues could be reduced and we may not be able to implement our business strategy. Our future financial performance
and our ability to commercialize drug candidates and compete effectively will depend, in part, on our ability to effectively manage any
future growth.

 We are a party to collaboration agreements
and other significant agreements which contain complex commercial terms that could result in disputes, litigation or indemnification liability
that could adversely affect our business, results of operations and financial condition. 

 We currently derive, and expect to derive in the
foreseeable future, all or much of our revenue from collaboration agreements with biotechnology and pharmaceutical companies. These collaboration
agreements contain complex commercial terms, including:

 · 
 Clinical development and commercialization obligations that are based on certain commercial reasonableness performance standards that can often be difficult to enforce if disputes arise as to adequacy of our partner’s performance; 

 · 
 Research and development performance and reimbursement obligations for our personnel and other resources allocated to partnered drug candidate development programs; 

 · 
 Clinical and commercial manufacturing agreements, some of which are priced on an actual cost basis for products supplied by us to our partners with complicated cost allocation formulas and methodologies; 

 · 
 Intellectual property ownership allocation between us and our partners for improvements and new inventions developed during the course of the collaboration; 

 · 
 Royalties on drug sales based on a number of complex variables, including net sales calculations, geography, scope of patent claim coverage, patent life, generic competitors, bundled pricing and other factors; and 

 · 
 Indemnity obligations for intellectual property infringement, product liability and certain other claims. 

 From time to time, we may have informal dispute
resolution discussions with third parties regarding the appropriate interpretation of the complex commercial terms contained in our agreements.
One or more disputes may arise or escalate in the future regarding our collaboration agreements, transaction documents or third-party
license agreements that may ultimately result in costly litigation and unfavorable interpretation of contract terms, which would have
a material adverse effect on our business, financial condition and results of operations.

 40 

 Market conditions and changing circumstances,
some of which may be beyond our control, could impair our ability to access our existing cash, cash equivalents and investments and to
timely pay collaborators and others. 

 Market conditions and changing circumstances,
some of which may be beyond our control, could impair our ability to access our existing cash, cash equivalents and investments and to
timely pay key vendors and others. If banks and financial institutions with whom we have banking relationships enter receivership or become
insolvent in the future, we may be unable to access, and we may lose, some or all of our existing cash, cash equivalents and investments
to the extent those funds are not insured or otherwise protected by the FDIC. In addition, in such circumstances we might not be able
to make timely payments to our collaborators or others. The Company maintains its primary banking relationship with one large financial
institution and all cash on deposit is federally insured. The Company has not experienced any losses on its accounts, and does not believe
it is exposed to any unusual credit risk beyond the normal credit risk currently associated with commercial banking relationships. However,
any delay in our ability to access our cash, cash equivalents and investments or to timely pay our collaborators and others could have
a material adverse effect on our operations and cause us to need to seek additional capital sooner than planned.

 Potential new accounting standards or legislative
actions may adversely impact our future financial position or results of operations. 

 Future changes in financial accounting standards
may cause adverse, unexpected fluctuations in the timing of the recognition of revenues or expenses, and may affect our financial position
or results of operations. New standards may occur in the future and may cause us to be required to make changes in our accounting policies.
Compliance with changing regulation of corporate governance and public disclosure may result in additional expenses. Changing laws, regulations
and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002 (or the Sarbanes-Oxley
Act), new SEC regulations, Public Company Accounting Oversight Board (or PCAOB) standards and Nasdaq rules, are creating uncertainty for
companies such as ours. Insurance, accounting and auditing costs are high as a result of this uncertainty and other factors.

 We have limited capital resources and currently
have only one full-time employee in our finance department. We rely on outside consultants to supplement our internal expertise and are
committed to maintaining high standards of corporate governance and public disclosure. As a result, we intend to invest all reasonably
necessary resources to comply with evolving standards, and this investment may result in increased general and administrative expenses
and a diversion of management time and attention from revenue-generating activities to compliance activities.

 Risks Related to Our Common Stock 

 We may not continue to meet the continued
listing requirements of Nasdaq, which could result in a delisting of our common shares. 

 Our common shares are listed on the Nasdaq. While
we are currently in compliance, we have in the past been, and may in the future be, unable to comply with certain listing standards that
we are required to meet to maintain the listing of our common shares on the Nasdaq. For instance, on June 3, 2022, we received written
notification from the Listing Qualifications Department of Nasdaq notifying us that the closing bid price for our common stock had been
below $1.00 for 30 consecutive business days and that we, therefore, were not in compliance with the Nasdaq minimum bid price requirement.
After approval from the Company’s Board of Directors, on May 15, 2023, we effected a reduction, on a 1-for-10 basis, in our authorized
common stock, par value $0.001, along with a corresponding and proportional decrease in the number of shares issued and outstanding(the
“Reverse Stock Split”). On May 30, 2023, we received a letter from Nasdaq notifying us that we had regained compliance with
the minimum bid price requirement as a result of the closing bid price of our common stock being at $1.00 per share or greater for the
10 consecutive business days from May 15, 2023 through May 26, 2023 and that this matter was closed.

 The market price of our securities may be
highly volatile, and you may not be able to sell our securities. 

 Companies trading in the stock market in general
have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance
of these companies. Broad market and industry factors may negatively affect the market price of our securities, regardless of our actual
operating performance.

 41 

 The market price of our securities may be volatile.
Our securities could be subject to wide fluctuations in price in response to a variety of factors, including the following:

 · 
 Failure to realize the anticipated potential of the DNase technologies; 

 · 
 Adverse results, delays, or holds in pre-clinical or clinical studies; 

 · 
 Inability to obtain additional funding; 

 · 
 Any delay in filing an IND or BLA for any of our drug candidates and any adverse development or perceived adverse development with respect to the FDA’s review of that IND or BLA; 

 · 
 Failure to develop successfully our drug candidates; 

 · 
 Failure to maintain our existing strategic collaborations or enter into new collaborations; 

 · 
 Failure by us or our licensors and strategic collaboration partners to prosecute, maintain or enforce our intellectual property rights; 

 · 
 Changes in laws or regulations applicable to future products; 

 · 
 Inability to obtain adequate product supply for our drug candidates or the inability to do so at acceptable prices; 

 · 
 Adverse regulatory decisions; 

 · 
 Introduction of new products, services or technologies by our competitors; 

 · 
 Failure to meet or exceed financial projections we may provide to the public; 

 · 
 Failure to meet or exceed the financial projections of the investment community; 

 · 
 The perception of the pharmaceutical industry by the public, legislatures, regulators and the investment community; 

 · 
 Announcements of significant acquisitions, strategic partnerships, joint ventures or capital commitments by us, our strategic collaboration partner or our competitors; 

 · 
 Disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technologies; 

 · 
 Additions or departures of key scientific or management personnel; 

 · 
 Significant lawsuits, including patent or stockholder litigation; 

 · 
 Changes in the market valuations of similar companies; 

 · 
 Sales of our securities by us or our stockholders in the future; 

 · 
 Adverse economic conditions, including potential adverse effects of public health issues, such as the coronavirus outbreak, and geopolitical events, such as the Russian invasion of Ukraine, and related sanctions and other economic disruptions or concerns, on economic activity generally; and 

 · 
 Trading volume of our securities. 

 Actions of activist shareholders could
cause us to incur substantial costs, divert management's attention and resources, and have an adverse effect on our business. 

 We actively engage in discussions with our shareholders
regarding further strengthening our Company and creating long-term shareholder value. Some shareholder activism, including potential proxy
contests, could result in substantial costs, such as legal fees and expenses, disrupt our operations, and divert management’s and
our Board of Directors’ attention and resources from our business and strategic plans. Public shareholder activism can create perceived
uncertainties as to our future direction, strategy, or leadership and may result in the loss of potential business opportunities, harm
our ability to attract new employees, investors, collaborators and other partners, and cause our stock price to experience volatility.
These risks could adversely affect our financial performance.

 Our preferred stockholders have rights,
preferences and privileges that are not held by, and are preferential to, the rights of our common stockholders, which could result in
the interests of our preferred stockholders differing from those of our common stockholders. 

 The holders of our preferred stock have the right
to receive a liquidation preference entitling them to be paid out of our assets available for distribution to stockholders before any
payment may be made to holders of any common stock or any series of preferred stock ranked junior to such class of preferred stock. The
existence of a liquidation preference may reduce the value of our common stock, make it harder for us to sell shares of common stock in
offerings in the future or prevent or delay a change of control. Additionally, each share of Series B Preferred Stock are convertible
into shares of our common stock, subject to an issuable maximum and subject to certain adjustments, which may cause significant dilution
to our common stockholders. The preferential rights could result in divergent interests between the holders of shares of preferred stock
and holders of our common stock.

 42 

 The issuance of future shares of common
stock may result in dilution to our stockholders. 

 As of March 7, 2025, we had approximately 1.5
million shares of common stock outstanding, excluding approximately 0.3 million of potentially dilutive common stock related to outstanding
preferred stock, warrants and options.

 The issuance of these shares of common stock and
the sale of these shares of common stock, or even the potential of such issuance and sale, may have a depressive effect on the market
price of our common stock, and the issuance of such common stock will cause dilution to our stockholders.

 We could be subject to securities class
action litigation. 

 In the past, securities class action litigation
has often been brought against a company following a decline in the market price of its securities. This risk is especially relevant for
us because we have experienced significant stock price volatility in recent years. If we face such litigation, it could result in substantial
costs and a diversion of management’s attention and resources, which could harm our business.

 An active, liquid and orderly market for
our common stock may not develop. 

 Our common stock trades on the Nasdaq Capital
Market. An active, liquid trading market for our common stock may never develop or be sustained. If an active, liquid market for our common
stock does not continue to develop or is not sustained, it may be difficult for investors to sell shares or purchase warrants without
depressing the market price, and investors may not be able to sell the shares at all. An inactive or illiquid market may also impair our
ability to raise capital by selling common stock and may impair our ability to acquire other businesses, applications or technologies
using our common stock or purchase warrants as consideration, which, in turn, could materially adversely affect our business.

 We have entered into agreements with our
stockholders. 

 We have in the past, and may continue to enter
into from time to time, agreements with our stockholders, which may result in conflicts of interest. In addition, these arrangements may
not have been negotiated at arm’s length and may contain terms and conditions that are not in our best interest.

 We do not intend to pay dividends on our
common stock or preferred stock so any returns will be limited to the value of our stock. 

 We have never declared or paid any cash dividends
on our common stock or preferred stock. We currently anticipate that we will retain future earnings for the development, operation and
expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future. Any return to common
or preferred stockholders will therefore be limited to the appreciation of their stock.

 Certain provisions of our Articles of Incorporation,
Bylaws, and the Nevada Revised States may be deemed to have an anti-takeover effect, which could cause the market price of our common
stock to decline. 

 Certain provisions of our Articles of Incorporation,
Bylaws, and the Nevada Revised States may be deemed to have an anti-takeover effect. Such provisions may delay, deter or prevent a tender
offer or takeover attempt that a stockholder might consider to be in that stockholder’s best interests, including attempts that
might result in a premium over the market price for the shares held by stockholders, which could cause the market price of our common
stock to decline.

 43 

 General Risk Factors 

 We face potential product liability claims,
and, if successful claims are brought against us, we may incur substantial liability and costs. If the use of our drug candidates harms
patients, or is perceived to harm patients even when such harm is unrelated to our drug candidates, our regulatory approvals could be
revoked or otherwise negatively impacted, and we could be subject to costly and damaging product liability claims. 

 The use of our drug candidates in clinical studies
and the sale of any products for which we obtain marketing approval exposes us to the risk of product liability claims. Product liability
claims might be brought against us by consumers, healthcare providers, pharmaceutical companies or others selling or otherwise coming
into contact with our products. There is a risk that our drug candidates may induce adverse events. If we cannot successfully defend against
product liability claims, we could incur substantial liability and costs. In addition, regardless of merit or eventual outcome, product
liability claims may result in, among other negative effects:

 · 
 Impairment of our business reputation; 

 · 
 Withdrawal of clinical study participants; 

 · 
 Costs due to related litigation; 

 · 
 Distraction of management’s attention from our primary business; 

 · 
 Substantial monetary awards to patients or other claimants; 

 · 
 The inability to commercialize our drug candidates; and 

 · 
 Decreased demand for our drug candidates, if approved for commercial sale, 

 all of which may have a material adverse effect
on our business, results of operations and prospects.

 Our financial condition, results of operations,
business and cash flow may be negatively affected by unfavorable U.S. or global economic conditions. 

 Our financial condition, results of operations,
business and cash flow may be negatively affected by general conditions in the global economy and in the global financial markets and
uncertainty about economic stability. The global economy has experienced extreme volatility and disruptions, including as a result of
public health epidemics and pandemics, or other outbreaks of communicable diseases, such as the COVID-19 pandemic, as well as from international
conflicts, terrorism or other geopolitical events, such as the conflicts in the Ukraine and the Middle East, and related sanctions and
other economic disruptions or concerns.

 Additionally, the global economy and financial
markets may also be adversely affected by the current or anticipated impact of military conflict, terrorism or other geopolitical events,
such as the conflicts in Ukraine and the Middle East. Sanctions imposed by the United States and other countries in response to such conflicts,
may also adversely impact the financial markets and the global economy, and the economic countermeasures by the affected countries or
others could exacerbate market and economic instability. For example, in response to the Russian invasion of Ukraine, the United States
and certain other countries imposed significant sanctions and trade actions against Russia and could impose further sanctions, trade restrictions,
and other retaliatory actions as the conflict continues or if it worsens. It is not possible to predict the broader consequences of such
conflict or any others, such as the war in the Middle East, including related geo-political tensions, and the measures and retaliatory
actions that will be taken by the United States and other countries in respect thereof, as well as any countermeasures or retaliatory
actions Russia or any other country may take in response, are likely to cause regional instability and geo-political shifts and could
materially adversely affect global trade, currency exchange rates, regional economies, and the global economy. While it is difficult to
anticipate the impact of any of the foregoing on our Company in particular, the conflict and actions taken in response to the conflict
could increase our costs, disrupt our supply chain, impair our ability to raise or access additional capital when needed on acceptable
terms, if at all, or otherwise adversely affect our business, financial condition, and results of operations.

 44 

 There can be no assurance that further deterioration
in credit and financial markets and confidence in economic conditions will not occur. A severe or prolonged economic downturn could result
in a variety of risks to our business, including weakened demand for any product candidates we may develop and our ability to raise additional
capital when needed on acceptable terms, if at all. A weak or declining economy could also strain our suppliers, possibly resulting in
supply disruption. If the equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult, more
costly, and more dilutive. Failure to secure any necessary financing in a timely manner and on favorable terms could impair our ability
to achieve our growth strategy, could harm our financial performance and stock price and could require us to delay or abandon clinical
development plans. In addition, there is a risk that our current or future service providers, manufacturers or other collaborators may
not survive such difficult economic times, which could directly affect our ability to attain our operating goals on schedule and on budget.
We cannot anticipate all of the ways in which the current economic climate and financial market conditions could adversely impact our
business.

 Our ability to use potential future operating
losses and our federal and state NOL carryforwards to offset taxable income from revenue generated from operations or corporate collaborations
could be limited. 

 The use of our NOL carryforwards may have limitations
resulting from certain future ownership changes or other factors under the Code and other taxing authorities, including foreign tax regimes.
The TCJA changed both the federal deferred tax value of the NOL carryforwards and the rules of utilization of federal NOL carryforwards.

 If our NOL carryforwards are limited, and we have
taxable income which exceeds the available NOL carryforwards for that period, we would incur an income tax liability even though NOL carryforwards
may be available in future years prior to their expiration. Any such income tax liability may adversely affect our future cash flow, financial
position and financial results.

 Tax reform may significantly affect the
Company and our stockholders. 

 Due to the potential for changes to tax laws and
regulations or changes to the interpretation thereof, the ambiguity of tax laws and regulations, the subjectivity of factual interpretations
and other factors, our estimates of effective tax rate and income tax assets and liabilities may be incorrect and our financial statements
could be adversely affected. The impact of these factors referenced in the first sentence of this paragraph may be substantially different
from period-to-period.

 In addition, the amount of income taxes we pay
is subject to ongoing audits by U.S. federal, state and local tax authorities and by non-U.S. tax authorities. If audits result in payments
or assessments different from our reserves, our future results may include unfavorable adjustments to our tax liabilities and our financial
statements could be adversely affected. Any further significant changes to the tax system in the United States or in other jurisdictions
(including changes in the taxation of international income as further described below) could adversely affect our financial statements.

 Governments may impose price controls, which
may adversely affect our future profitability. 

 We intend to seek approval to market our drug
candidates in both the United States and in foreign jurisdictions. In some foreign countries and jurisdictions, particularly in the European
Union, the pricing of prescription pharmaceuticals is subject to governmental control. In these countries, pricing negotiations with governmental
authorities can take considerable time after the receipt of marketing approval for a drug candidate. To obtain reimbursement or pricing
approval in some countries, we may be required to conduct clinical trials to compare the cost effectiveness of our drug candidates to
other available therapies, which is time-consuming and costly. If reimbursement of our future products is unavailable or limited in scope
or amount, or if pricing is set at unsatisfactory levels, we may be unable to achieve or sustain profitability.

 45 

 Our employees, principal investigators,
consultants and commercial partners may engage in misconduct or other improper activities, including non-compliance with regulatory standards
and requirements and insider trading. 

 We are exposed to the risk of fraud or other misconduct
by our employees, principal investigators, consultants and commercial partners. Misconduct by these parties could include intentional
failures to comply with the regulations of the FDA and non-U.S. regulators, provide accurate information to the FDA and non-U.S. regulators,
comply with healthcare fraud and abuse laws and regulations in the United States and abroad, report financial information or data accurately
or disclose unauthorized activities to us. In particular, sales, marketing and business arrangements in the healthcare industry are subject
to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices. These laws
and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive
programs and other business arrangements. Such misconduct could also involve the improper use of information obtained in the course of
clinical studies, which could result in regulatory sanctions and cause serious harm to our reputation or could cause regulatory agencies
not to approve our drug candidates. It is not always possible to identify and deter employee misconduct, and the precautions we take to
detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental
investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations. If any such actions are
instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant
impact on our business, including the imposition of significant fines or other sanctions.

 Use of our drug candidates could be associated
with adverse side effects. 

 As with most biopharmaceutical products, use of
our drug candidates could be associated with side effects or adverse events which can vary in severity and frequency. Side effects or
adverse events associated with the use of our drug candidates may be observed at any time, including in clinical trials or once a product
is commercialized, and any such side effects or adverse events may negatively affect our ability to obtain regulatory approval or market
our drug candidates. Side effects such as toxicity or other safety issues associated with the use of our drug candidates could require
us to perform additional studies or halt development or sale of these drug candidates or expose us to product liability lawsuits which
will harm our business.

 The emergence of unforeseen safety issues or adverse
events may lead to regulatory agencies requiring us to conduct additional preclinical or clinical trials regarding the safety and efficacy
of our drug candidates, which we have not planned or anticipated. We cannot assure you that we will resolve any issues related to any
product-related adverse events to the satisfaction of the FDA or any regulatory agency in a timely manner or ever, which could harm our
business, prospects and financial condition. We may also inadvertently fail to report adverse events we become aware of within the prescribed
timeframe. We may also fail to appreciate that we have become aware of a reportable adverse event, especially if it is not reported to
us as an adverse event or if it is an adverse event that is unexpected or removed in time from the use of our products. If we fail to
comply with our reporting obligations, the FDA or other foreign regulatory agencies could take action including criminal prosecution,
the imposition of civil monetary penalties, seizure of our products, or delay in approval or clearance of future products.

 If we fail to comply with environmental,
health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse
effect on the success of our business. 

 We are subject to numerous environmental, health
and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment and disposal
of hazardous materials and wastes. Our operations involve the use of hazardous and flammable materials, including chemicals and biological
materials. Our operations also produce hazardous waste products. We generally contract with third parties for the disposal of these materials
and wastes. We cannot eliminate the risk of contamination or injury from these materials. In the event of contamination or injury resulting
from our use of hazardous materials, we could be held liable for any resulting damages, and any liability could exceed our resources.
We also could incur significant costs associated with civil or criminal fines and penalties.

 The workers’ compensation insurance we maintain
to cover us for costs and expenses we may incur due to injuries to our employees resulting from the use of hazardous materials or other
work-related injuries may not provide adequate coverage against potential liabilities. In addition, we may incur substantial costs in
order to comply with current or future environmental, health and safety laws and regulations. These current or future laws and regulations
may impair our research, development or production efforts. Failure to comply with these laws and regulations also may result in substantial
fines, penalties or other sanctions, which may have a material adverse effect on our business and results of operations.

 46 

 Non-cash charges such as share-based payments
may adversely impact our results of operations. 

 We record non-cash charges related to share-based
expense, which could fluctuate materially as the Company expects to continue to issue share-based payments awards and may adversely impact
our results of operations.

 Varying interpretations of existing accounting
standards and rules have occurred with frequency and may cause us to have to restate previously reported result of operations. 

 Varying interpretations of existing standards
of accounting policies or accounting treatments of existing transactions may cause us to have to restate previously reported result of
operations.

 Our disclosure controls and procedures may
not prevent or detect all errors or acts of fraud. 

 We are subject to the periodic reporting requirements
of the Exchange Act. Any disclosure controls and procedures or internal controls and procedures, no matter how well-conceived and operated,
can provide only reasonable, not absolute, assurance that the objectives of the control system are met. These inherent limitations include
the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally,
controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by an unauthorized override
of the controls. Accordingly, because of the inherent limitations in our control system, misstatements due to error or fraud may occur
and not be detected, which may have a material adverse effect on our business and results of operations.

 Failure in our information technology systems
or those of our third-party service providers, including by cybersecurity attacks or other data security incidents, could significantly
disrupt our operations. 

 Our operations depend, in part, on the continued
performance of our information technology systems, which are cloud-based and maintained by third-party service providers. Our information
technology systems are potentially vulnerable to physical or electronic break-ins, computer viruses and similar disruptions. Failure of
our information technology systems could adversely affect our business, profitability and financial condition.

 A successful cybersecurity attack or other data
security incident could result in the misappropriation and/or loss of confidential or personal information, create system interruptions
or deploy malicious software that attacks our systems. It is possible that a cybersecurity attack might not be noticed for some period
of time. The occurrence of a cybersecurity attack or incident could result in business interruptions from the disruption of our information
technology systems, or negative publicity resulting in reputational damage with our clinical trial participants, customers, stockholders
and other stakeholders and/or increased costs to prevent, respond to or mitigate cybersecurity events. In addition, the unauthorized dissemination
of sensitive personal information or proprietary or confidential information could expose us or other third parties to regulatory fines
or penalties, litigation and potential liability, or otherwise harm our business.

 We are a smaller reporting company, and
the reduced reporting requirements applicable to smaller reporting companies may make our common stock less attractive to investors. 

 We are a smaller reporting company (“SRC”),
which allows us to take advantage of exemptions from various reporting requirements that are applicable to other public companies that
are not SRCs, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act
of 2002, as amended, reduced disclosure obligations regarding executive compensation in our Annual Report and our periodic reports and
proxy statements and providing only two years of audited financial statements in our Annual Report and our periodic reports. We will remain
an SRC until (a) the aggregate market value of our outstanding common stock held by non-affiliates as of the last business day our most
recently completed second fiscal quarter exceeds $250 million or (b) (1) we have over $100 million in annual revenues and (2) the aggregate
market value of our outstanding common stock held by non-affiliates as of the last business day our most recently completed second fiscal
quarter exceeds $700 million. We cannot predict whether investors will find our common stock less attractive if we rely on certain or
all of these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market
for our common stock and our stock price may be more volatile and may decline.

 47
Xenetic Biosciences, Inc. 10-K

Item 1A. Risk Factors
