What changed in this filing

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Item 1A. Risk Factors

2022-02-24 compared with 2021-02-24 · 106 added, 82 removed, 604 unchanged (24% of the section changed)

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These risks include:

● Our success depends on our ability to use and expand our XmAb technology platform to build a pipeline of product candidates and develop marketable products.

● Our success depends on our ability to use and expand our XmAb technology platform to build a pipeline of XmAb product candidates and develop marketable products.

We cannot be certain our candidates will receive regulatory approval or be successfully commercialized.

● The clinical development stage of our operations may make it difficult for you to evaluate the success of our business to date and to assess our future viability.

● Preliminary, interim, and topline data from our clinical trials that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.

● The COVID-19 pandemic and the future outbreak of other highly infectious or contagious diseases could materially and adversely impact or disrupt our business and our financial condition, results of operations, cash flows and performance.

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● We will require additional financing and may be unable to raise sufficient capital, which could lead us to delay, reduce or abandon research and development programs or commercialization.

● The market price of our common stock is likely to be highly volatile, and you could lose all or part of

your investment.

● The market price of our common stock is likely to be highly volatile, and you could lose all or part of your investment.

● Our principal stockholders, directors and management own a significant percentage of our stock and will be able to exert significant control over matters subject to stockholder approval.

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● Our patent protection and prosecution for some of our product candidates is dependent on third parties.

● We rely on third party manufacturers for the manufacture of our XmAb engineered antibodies.

● We rely on third-party manufacturers for the manufacture of our product candidates.

This entails a complex process and manufacturers often encounter difficulties in production.

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This could lead to delays, downsizing or termination of clinical development plans for any our product candidates.

● Adverse side effects or other safety risks associated with our product candidates could delay or preclude

approval, cause us to suspend or discontinue clinical trials, abandon product candidates, limit the commercial profile of an approved label, or result in significant negative consequences following marketing approval, if any.

● Adverse side effects or other safety risks associated with our product candidates could delay or preclude approval, cause us to suspend or discontinue clinical trials, abandon product candidates, limit the commercial profile of an approved label, or result in significant negative consequences following marketing approval, if any.

● If we experience delays or difficulties in the enrollment of patients in clinical trials, our receipt of necessary regulatory approvals could be delayed or prevented.

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Continued compliance with these laws may incur substantial costs and failure to maintain compliance could result in liability for damages that may exceed our resources.

Risks Related To Our Company

Risks Related to Our Unique and Specific Business Operations as a Small Biotechnology Company

Our success depends on our ability to use and expand our XmAb technology platform to build a pipeline of product candidates and develop marketable products.

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Our operations to date have been limited to raising capital, staffing our company, developing our proprietary XmAb technology platform, identifying potential product candidates, conducting preclinical studies and clinical trials, developing partnerships and business planning.

We have conducted, or are currently conducting, early phase clinical trials for several product candidates, but have not completed any late stage clinical trials for these or any other product candidate.

We have not yet demonstrated our ability to successfully complete any pivotal clinical trials, obtain regulatory

approvals, manufacture a commercial scale product, or arrange for a third party to do so on our behalf, or conduct sales and marketing activities necessary for successful product commercialization.

We have conducted, or are currently conducting, early phase clinical

trials for several product candidates, but have not completed any late stage clinical trials for these or any other product candidate.

We have not yet demonstrated our ability to successfully complete any pivotal clinical trials, obtain regulatory approvals, manufacture a commercial scale product, or arrange for a third party to do so on our behalf, or conduct sales and marketing activities necessary for successful product commercialization.

Consequently, any predictions you make about our future success or viability may not be as accurate as they could be if we were further advanced in development of our product candidates.

In addition, we may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown factors.

We believe to be successful will need to transition from a company with a research and development focus to a company capable of supporting commercial activities.

We believe we will need to transition from a company with a research and development focus to a company capable of supporting commercial activities.

We may not be successful in this transition.

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Accordingly, you should not rely upon the results of any quarterly or annual periods as indications of future operating performance.

Preliminary, interim, and topline data from our clinical trials that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.

From time to time, we may publicly disclose preliminary, interim or topline data from our clinical trials.

These updates are based on a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change following a more comprehensive review of the data related to the particular study or trial.

Additionally, interim data from clinical trials that we may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available.

Therefore, positive interim results in any ongoing clinical trial may not be predictive of such results in the completed study or trial.

We also make assumptions, estimations, calculations and conclusions as part of our analyses of data, and we may not have received or had the opportunity to fully and carefully evaluate all data.

As a result, the preliminary results that we report may differ from future results of the same studies, or different conclusions or considerations may qualify such results, once additional data have been received and fully evaluated.

Preliminary data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published.

As a result, preliminary, interim or topline data should be viewed with caution until the final data are available.

In addition, we may report interim analyses of only certain endpoints rather than all endpoints.

Adverse changes between preliminary or interim data and final data could significantly harm our business and prospects.

Further, additional disclosure of interim data by us or by our competitors in the future could result in volatility in the price of our common stock.

See the description of risks under the heading “Risks Specifically Related to Our Financial Position, Capital Requirements and Ownership of Our Common Stock” for more disclosure related to the risk of volatility in our stock price.

Further, others, including regulatory agencies, may not accept or agree with our assumptions, estimates, calculations, conclusions or analyses or may interpret or weigh the importance of data differently, which could impact the value of the particular program, the approvability or commercialization of the particular product candidate or product and our company in general.

In addition, the information we choose to publicly disclose regarding a particular study or clinical trial is typically selected from a more extensive amount of available information.

You or others may not agree with what we determine is the material or otherwise appropriate information to include in our disclosure, and any information we determine not to disclose may ultimately be deemed significant with respect to future decisions, conclusions, views, activities or otherwise regarding a particular product, product candidate or our business.

If the preliminary or topline data that we report differ from late, final or actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to obtain approval for, and commercialize our product candidates may be harmed, which could harm our business, financial condition, results of operations and prospects.

The COVID-19 pandemic and the future outbreak of other highly infectious or contagious diseases, could materially and adversely impact or disrupt our business and our financial condition, results of operations, cash flows and performance.

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While we have managed to maintain our operations during the COVID-19 pandemic, additional developments with this pandemic or another epidemic or pandemic, could cause significant disruptions to our business operations, business operations of our partners, on whom we rely for potential revenue, and product development collaborations;

operations of our third-party manufacturers and CROs, on which we rely to conduct our clinical trials;

operations of our third-party manufacturers and contract research organizations (CROs), on which we rely to conduct our clinical trials;

and to our clinical trials, including as a result of significant restrictions or bans on travel into and within the countries in which our manufacturers produce our product candidates or where we conduct our clinical trials.

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We rely on third party vendors for research supplies, development activities including manufacturing of drug product for our clinical studies and testing of drug material.

In the third quarter of 2020, several manufacturing vendors notified us of critical supply shortages which will delay the development timelines for our earlier stage development programs by three to six months.

In the third quarter of 2020, several manufacturing vendors notified us of critical supply shortages which delayed the development timelines for our earlier stage development programs by three to six months.

We currently do not expect these supply shortages to delay the timelines for our programs that are already in clinical studies.

However, if this supply disruption extends for more than the expected three to six months, it will extend the timelines for advancing our earlier stage programs further and could also delay the current timelines for advancing our existing clinical programs.

However, if this supply disruption continues or becomes more acute, it will extend the timelines for advancing our earlier stage programs further and could also delay the current timelines for advancing our existing clinical programs.

If any other vendors in our supply chain of products or services are also severely affected from the COVID-19 pandemic, it will adversely affect our ability to continue our research and development activities and also continue our clinical trial activities.

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To date, we have financed our operations primarily through equity financings and our research and development licensing agreements and have incurred significant operating losses since our inception in 1997.

For the year ended December 31, 2020, we incurred a net loss $69.3 million and as of December 31, 2020, we had an accumulated deficit of $365.7 million.

We expect to incur additional losses in future years as we execute our plan to continue our discovery, research and development activities, including the ongoing and planned clinical development of our antibody product candidates, and incur the additional costs of operating as a public company.

For the year ended December 31, 2021, we generated net income of $82.6 million and as of December 31, 2021, we had an accumulated deficit of $283.1 million.

We expect to incur losses in future years as we execute our plan to continue our discovery, research and development activities, including the ongoing and planned clinical development of our antibody product candidates, and incur the additional costs of operating as a public company.

We are unable to predict the extent of any future losses or when we will become profitable, if ever.

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We have devoted substantially all of our financial resources and efforts to developing our proprietary XmAb technology platform, identifying potential product candidates and conducting preclinical studies and clinical trials.

We and our partners are still in the early stages of developing our product candidates, and we have not completed development of any of our wholly-owned products.

We are still in the early stages of developing our product candidates, and we have not completed development of any of our wholly-owned products.

Our revenue to date has been primarily revenue from the license of our proprietary XmAb technology platform and drug candidates for the development of product candidates by others or revenue from our partners.

Our ability to generate revenue and achieve profitability depends in large part on our ability, alone or with partners, to achieve milestones and to successfully complete the development of, obtain the necessary regulatory approvals for, and commercialize and market, product candidates.

We do not anticipate generating revenues from sales of our own products in the foreseeable future that will provide sufficient proceeds to fund our operations on an ongoing basis.

Our ability to generate future revenues from licensing our proprietary XmAb technologies and drug candidates depends heavily on our and our partners’ success in advancing drug candidate that they have licensed from us or developed using one of our technologies.

We do not anticipate generating revenues from sales

of our own products in the foreseeable future that will provide sufficient proceeds to fund our operations on an ongoing basis.

Our ability to generate future revenues from licensing our proprietary XmAb technologies and drug candidates depends heavily on our and our partners’ success in advancing drug candidates that they have licensed from us or developed using one of our technologies.

Our partners face the same development, regulatory and market risk for advancing their drug candidates and their ability to successfully advance these partnered programs will affect potential milestones and royalties we could earn under our collaboration agreements.

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Because of the numerous risks and uncertainties associated with biologic product development, we are unable to predict the timing or amount of increased expenses and when we will be able to achieve or maintain profitability, if ever.

In addition, our expenses could increase beyond expectations if we are required by the FDA, or foreign regulatory agencies, to perform studies and trials in addition to those that we currently anticipate, or if there are any delays in our or our partners completing clinical trials or the development of any of our product candidates.

In addition, our expenses could increase beyond expectations if we are required by the FDA, or foreign regulatory agencies, to perform studies and trials in addition to those that we currently anticipate, or if there are any delays in our or our partners’ completion of clinical trials or delays in the development of any of our product candidates.

Even if we or our partners are able to generate revenues from the sale of any approved products, we may not become profitable and may need to obtain additional funding to continue operations, which may not be available to us on favorable terms, if at all.

We will require additional financing and may be unable to raise sufficient capital, which could lead us to delay, reduce or abandon research and development programs or commercialization.

As of December 31, 2020, we had $604.0 million in cash, cash equivalents and marketable securities.

We expect our expenses to increase in connection with our ongoing development activities, including the continued development of our pipeline of bispecific drug candidates and other research activities.

As of December 31, 2021, we had $664.1 million in cash, cash equivalents, marketable debt securities, and receivables.

We expect our expenses to increase in connection with our ongoing development activities, including the continued development of our pipeline of bispecific antibody and cytokine drug candidates and other research activities.

Identifying potential product candidates and conducting preclinical testing and clinical trials are time-consuming, expensive, and uncertain processes that take years to complete, and we or our partners may never generate the necessary data or results required to obtain regulatory approval and achieve product sales.

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If we are unable to raise capital when needed or on attractive terms, we could be forced to delay, reduce or eliminate our research and development programs or any future commercialization efforts.

We believe our existing cash, cash equivalents and marketable securities, together with interest thereon and expected milestones and royalty payments will be sufficient to fund our operations into 2024.

However, changing circumstances or inaccurate estimates by us may cause us to use capital significantly faster than we currently anticipate, and we may need to spend more money than currently expected because of circumstances beyond our control.

We do not have sufficient cash to complete the clinical development of any of our product candidates and will require additional funding to complete the development activities required for regulatory approval of our current product candidates or any other future product candidates that we develop independently.

Because successful development of our product candidates is uncertain, we are unable to estimate the actual funds we will require to complete research and development

and commercialize our product candidates.

Because successful development of our product candidates is uncertain, we are unable to estimate the actual funds we will require to complete research and development and commercialize our product candidates.

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

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The trading price of our common stock is likely to be volatile.

Since our IPO, the trading price of our common stock has ranged from a low of approximately $5.75 to a high of approximately $55.33.

Since our IPO, the trading price of our common stock has ranged from a low

of approximately $5.75 to a high of approximately $58.345.

Our stock price could be subject to wide fluctuations in response to a variety of factors, including the following:

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For example, these stockholders, acting together, may be able to control elections of directors, amendments of our organizational documents, or approval of any merger, sale of assets, or other major corporate transaction.

This may prevent or discourage unsolicited acquisition proposals, offers for our common stock or other transactions or arrangements that you may believe are in your best interest as one of our stockholders.

prevent or discourage unsolicited acquisition proposals, offers for our common stock or other transactions or arrangements that you may believe are in your best interest as one of our stockholders.

Raising additional funds through debt or equity financing may be dilutive or restrict our operations and raising funds through licensing may require us to relinquish rights to our technology or product candidates.

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As of December 31, 2021, we had options to purchase 8,676,329 shares outstanding under our equity compensation plans.

In addition, we are also authorized to

grant equity awards, including stock options, to our employees, directors and consultants, covering up to 11,479,096 shares of our common stock, pursuant to our equity compensation plans.

In addition, we are also authorized to grant equity awards, including stock options, to our employees, directors, and consultants, covering up to 13,122,238 shares of our common stock, pursuant to our equity compensation plans.

We plan to register the number of shares available for issuance or subject to outstanding awards under our equity compensation plans.

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Our net operating loss (NOL) carryforwards generated in tax years ending on or prior to December 31, 2017, are only permitted to be carried forward for 20 years under applicable U.S.

Under the TCJA, our federal NOLs generated in tax years ending after December 31, 2017, may be carried forward indefinitely, but the deductibility of such federal NOLs generated in tax years beginning after December 31, 2020, is limited.

Under the Tax Cuts and Jobs Act of 2017 (TCJA), our federal NOLs generated in tax years ending after December 31, 2017, may be carried forward indefinitely, but the deductibility of such federal NOLs generated in tax years beginning after December 31, 2021, is limited.

It is uncertain if and to what extent various states will conform to the TCJA.

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As a result, if we earn net taxable income, we may be unable to use all or a material portion of our NOLs and other tax attributes, which could potentially result in increased future tax liability to us and adversely affect our future cash flows.

New federal and state income tax legislation may affect our current and future income tax liabilities

The TCJA changed the income tax treatment of research and development expenses which may result in additional federal and state tax liabilities.

For tax years ended in December 31, 2022 and subsequent years, research and development costs must be capitalized and amortized over a period of years which could result in additional federal and state tax liabilities in 2022 and future years.

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

We have never declared or paid any cash dividend on our common 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.

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

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As part of our discovery and development activities, we routinely evaluate in-licenses from academic and research institutions.

We have licensed and sublicensed certain intellectual property relating to our Xtend technology from a third party.

We have also sublicensed certain intellectual property rights related to our CD3 bispecific technology from a third party, and we have licensed certain intellectual property rights from a third party related to our tidutamab and our IL-15 product candidates.

We have sublicensed certain intellectual property rights related to our CD3 bispecific technology from a third party, and we have licensed certain intellectual property rights from a third party related to our tidutamab product candidate.

We also license certain rights to the underlying cell lines for all our product candidates from third parties.

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The termination of these or other licenses could also prevent us from commercializing product candidates covered by the licensed intellectual property.

Furthermore, the research resulting in the in-licensed patents was developed in the course of research funded by the U.S.

As a result, the U.S.

government may have certain rights (“march-in rights”) to intellectual property embodied in our Xtend products.

Government rights in certain inventions developed under a government-funded program include a non-exclusive, non-transferable, irrevocable worldwide license to use inventions for any governmental purpose.

Circumstances that trigger march-in rights include, for example, failure to take, within a reasonable time, effective steps to achieve practical application of the invention in a field of use, failure to satisfy the health and safety needs of the public and failure to meet requirements of public use specified by federal regulations.

Federal law requires any licensor of an invention that was partially funded by the federal government to obtain a covenant from any exclusive licensee to manufacture products using the invention substantially in the United States.

government also has the right to use and disclose, without limitation, scientific data relating to licensed technology that was developed in whole or in part at government expense.

The government funding agency can elect to exercise these march-in rights on their own initiative or at the request of a third party.

It is also possible that we might knowingly or unknowingly in-license additional technology that is subject to U.S.

government march-in rights.

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 there is any conflict, dispute, disagreement or issue of non-performance between us and our licensing partners regarding our rights or obligations under the license agreements, including any such conflict, dispute or disagreement arising from our failure to satisfy payment obligations under any such agreement, we may owe damages, our licensor may have a right to terminate the affected license, and our and our partners' ability to utilize the affected intellectual property in our drug discovery and development efforts, and

our ability to enter into collaboration or marketing agreements for an affected product or therapeutic candidate, may be adversely affected.

We may be required to reduce the scope of our intellectual property due to third-party intellectual property claims.

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We may also become involved in similar proceedings in other jurisdictions.

Furthermore, recent changes in U.S.

Furthermore, changes in U.S.

patent law under the America Invents Act allows for post-issuance challenges to U.S.

patents, including ex parte reexaminations, inter parte reviews and post-grant oppositions.

patents, including ex parte reexaminations, inter parte reviews and post-grant review.

There is significant uncertainty as to how the new laws will be applied and if our U.S.

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For example, we are aware of issued patents owned by Merus B.V.

(Merus) that may relate to and claim components of our bispecific antibody product candidates and partnered bispecific product candidates, including vibecotamab, plamotamab, tidutamab, XmAb717, XmAb104, XmAb841, and XmAb819 will putatively expire in 2033.

(Merus) that may relate to

and claim components of our bispecific antibody product candidates and partnered bispecific product candidates, including plamotamab, tidutamab, vudalimab, XmAb104, XmAb841, and XmAb819 will putatively expire in 2033.

We are additionally aware of several patents and pending applications directed to the use of IL-15 fused with Fc domains, and in some cases in combination with targeting domains, that might be relevant to XmAb306, with putative expirations ranging from 2025 to later than 2032.

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While we believe that our current development of these candidates currently falls into the “safe harbor” of non-infringement under 35 U.S.C.

§271€(1), this protection terminates upon commercialization.

§271(e)(1), this protection terminates upon commercialization.

In addition, there can be no assurance that our interpretation of this statutory exemption would be upheld.

We believe there exists reasonable arguments of invalidity for the Genentech patent, the Merus patents and the IL-15 patents;

We believe there exists reasonable arguments of invalidity for the Merus patents and the IL-15 patents;

however, we cannot assure that if challenged in litigation for infringement of these patents that we would prevail.

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Our products may infringe or may be alleged to infringe these patents.

Because some patent applications in the United States may be maintained in secrecy until the patents are issued, because patent applications in the United States and many foreign jurisdictions are typically not published until eighteen months after filing and because publications in the scientific literature often lag behind actual discoveries, we cannot be certain that others have not filed patents that may cover our technologies, our product

candidates or their use.

Additionally, pending patent applications which have been published can, subject to certain limitations, be later amended in a manner that could cover our technologies, our products or the use of our products.

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We may not be able to protect our trade secrets adequately.

We have a policy of requiring our consultants, advisors, and collaborators to enter into confidentiality agreements and our employees to enter into invention, non-disclosure and non-compete agreements.

We have a policy of

requiring our consultants, advisors, and collaborators to enter into confidentiality agreements and our employees to enter into invention, non-disclosure and non-compete agreements.

However, no assurance can be given that we have entered into appropriate agreements with all parties that have had access to our trade secrets, know-how or other proprietary information.

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If we do not obtain patent term extension and data exclusivity for any therapeutic candidates we develop, our business may be materially harmed.

Depending upon the timing, duration, and specifics of any FDA marketing approval of any therapeutic candidates we

may develop, one or more of our owned or licensed U.S.

Depending upon the timing, duration, and specifics of any FDA marketing approval of any therapeutic candidates we may develop, one or more of our owned or licensed U.S.

patents may be eligible for limited patent term extension under the Hatch-Waxman Act.

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These problems include difficulties with production costs and yields, quality control, including stability of the product, quality assurance testing, operator error, shortages of qualified personnel, as well as compliance with strictly enforced federal, state and foreign regulations.

Furthermore, if microbial, viral or other contaminations are discovered in our products or in the manufacturing facilities in which our products are made, such manufacturing facilities may need to be closed for an extended period of time to investigate and remedy the contamination.

Furthermore, if microbial, viral or other contaminations are discovered in our products or

in the manufacturing facilities in which our products are made, such manufacturing facilities may need to be closed for an extended period of time to investigate and remedy the contamination.

All of our XmAb engineered antibodies are manufactured by starting with cells which are stored in a cell bank.

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We may also have to take inventory write-offs and incur other charges and expenses for product candidates or products that fail to meet specifications, undertake costly remediation efforts or seek more costly manufacturing alternatives.

Accordingly, failures or difficulties faced at any level of our supply chain could

materially adversely affect our business and delay or impede the development and commercialization of any of our product candidates or products and could have a material adverse effect on our business, prospects, financial condition and results of operations.

Accordingly, failures or difficulties faced at any level of our supply chain could materially adversely affect our business and delay or impede the development and commercialization of any of our product candidates or products and could have a material adverse effect on our business, prospects, financial condition and results of operations.

Our existing partnerships are important to our business, and future partnerships may also be important to us.

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Because developing biologics products, conducting clinical trials, obtaining regulatory approval, establishing manufacturing capabilities and marketing approved products are expensive, we have entered into partnerships, and may seek to enter into additional partnerships, with companies that have more resources and experience than us, and we may become dependent upon the establishment and successful implementation of partnership agreements.

Our partnership and license agreements include those we have announced with Janssen Genentech, Novartis, Amgen, MorphoSys, Alexion and others.

Our partnership and license agreements include those we have announced with Janssen, Genentech, Vir, Amgen, MorphoSys, Alexion and others.

These partnerships and license agreements also have provided us with important funding for our development programs, and we expect to receive additional funding under these partnerships in the future.

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collaborators have significant discretion in determining the efforts and resources that they will apply to these partnerships.

For example, in 2020, Amgen notified us of its decision to return the rights to AMG 424 to us under the terms of the Amgen Agreement, and in December 2018, Novartis notified us of its decision to return the rights to plamotamab to us under the terms of the Novartis Agreement;

our Novartis Agreement requires us to co-develop worldwide with Novartis our lead bispecific antibody candidate, vibecotamab, and share development costs.

For example, in 2021, Novartis notified us of its decision to return the rights to vibecotamab to us under the terms of the Novartis Agreement, and in 2020, Amgen notified us of its decision to return the rights to AMG 424 to us under the terms of the Amgen Agreement;

our Janssen Agreement provides for cost-sharing on development costs for the bispecific antibody candidate, plamotamab.

Such an arrangement may require us to incur substantial costs in excess of our available resources;

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If we fail to comply with or breach any provision of a partnership agreement, a collaborator may have the right to terminate, in whole or in part, such agreement or to seek damages.

Many of our collaborators also have the right to terminate the partnership agreement for convenience.

Many of our collaborators also have the right to terminate the partnership

agreement for convenience.

If a partnership agreement is terminated, in whole or in part, we may be unable to continue the development and commercialization of the applicable product candidates, and even if we are able to do so, such efforts may be delayed and result in additional costs.

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We face significant competition in seeking appropriate collaborators.

Our ability to reach a definitive agreement for a partnership will depend, among other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed partnership

and the proposed collaborator’s evaluation of a number of factors.

If we elect to fund and undertake development or commercialization activities on our own, we may need to obtain additional expertise and additional capital, which may not be available to us on acceptable terms or at all.

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Failure of these collaborators to provide services of a suitable quality and within acceptable timeframes may cause the delay or failure of our development programs.

We outsource manufacturing, certain functions, testing and services to contract research organizations (CROs), medical institutions and collaborators, and we rely on third parties for quality assurance, clinical monitoring, clinical data management and regulatory expertise.

We outsource manufacturing, certain functions, testing and services to CROs, medical institutions and collaborators, and we rely on third parties for quality assurance, clinical monitoring, clinical data management and regulatory expertise.

We also have engaged, and may in the future engage, a CRO to run all aspects of a clinical trial on our behalf.

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The development of such candidates could be stopped or delayed if any such third party fails to provide us with sufficient quantities of product or fails to do so at acceptable quality levels or prices or fails to maintain or achieve satisfactory regulatory compliance.

We do not currently have nor do we plan to acquire the infrastructure or capability internally to manufacture our clinical drug supplies for use in the conduct of our clinical trials, and we lack the resources and the capability to manufacture any clinical candidates on a clinical scale.

manufacture any clinical candidates on a clinical scale.

Instead, we rely on our third-party manufacturing partners to manufacture our clinical drug supply.

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In order to induce valuable employees to continue their employment with us, we have provided equity incentives that vest over time.

The value to employees of

this equity is significantly affected by movements in our stock price that are beyond our control and may at any time be insufficient to counteract more lucrative offers from other companies.

The value to employees of this equity is significantly affected by movements in our stock price that are beyond our control and may at any time be insufficient to counteract more lucrative offers from other companies.

Despite our efforts to retain valuable employees, members of our management team may terminate their employment with us at any time, with or without notice.

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The biotechnology and pharmaceutical industries are intensely competitive.

We have competitors both in the United States and internationally, including major multinational pharmaceutical companies, biotechnology companies, universities and other research institutions.

We have competitors both in the United States and internationally, including major multinational pharmaceutical companies, biotechnology companies,

universities and other research institutions.

Many of our competitors have substantially greater financial, technical and other resources, such as larger research and development staff and experienced marketing and manufacturing organizations and well-established sales forces.

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Healthcare providers, physicians and third-party payors in the United States and elsewhere will play a primary role in the recommendation and prescription of any product candidates for which we obtain marketing approval.

Our current and future arrangements with healthcare professionals, principal investigators, consultants, customers and third-party payors may require us to comply with to broadly applicable fraud and abuse and other healthcare laws, including, without limitation, the federal Anti-Kickback Statute and the federal civil False Claims Act, that may constrain the business or financial arrangements and relationships through which we sell, market and distribute any product candidates for which we obtain marketing approval.

Our current and future arrangements with healthcare professionals, principal investigators, consultants, customers and third-party payors may require us to comply with broadly applicable fraud and abuse and other healthcare laws, including, without limitation, the federal Anti-Kickback Statute and the federal civil False Claims Act, that may constrain the business or financial arrangements and relationships through which we sell, market and distribute any product candidates for which we obtain marketing approval.

In addition, we may be subject to physician payment transparency laws and patient privacy and security regulation by the federal government and by the states and foreign jurisdictions in which we conduct our business.

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

It is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws.

It is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law involving applicable fraud and

abuse or other healthcare laws.

If our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, including, without limitation, damages, fines, imprisonment, disgorgement, exclusion from participation in government healthcare programs, such as Medicare and Medicaid, additional reporting requirements and/or oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, and the curtailment or restructuring of our operations, as well as reputational harm, which could significantly harm our business.

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Among policy makers and payors in the United States and elsewhere, there is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality and/or expanding access.

In the United States, the pharmaceutical industry has been a particular focus of these efforts and has been

significantly affected by major legislative initiatives.

In the United States, the pharmaceutical industry has been a particular focus of these efforts and has been significantly affected by major legislative initiatives.

Healthcare reform measures, if approved, may result in more rigorous coverage criteria and lower reimbursement, and in additional downward pressure on the price that may be charged for any of our product candidates.

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Our operations also produce hazardous waste products.

The risk of accidental contamination or injury from these materials cannot be completely eliminated.

The risk of accidental contamination or injury from

these materials cannot be completely eliminated.

In the event of such an accident, we could be held liable for any damages that result, and any such liability could exceed our resources.

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For example, we may be sued if any product we develop allegedly causes injury or is found to be otherwise unsuitable during clinical testing, manufacturing, marketing, or sale.

Any such product liability

claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product, negligence, strict liability, and a breach of warranties.

Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product, negligence, strict liability, and a breach of warranties.

Claims could also be asserted under state consumer protection acts.

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We are required by contractual obligations to indemnify collaborators, partners, third-party contractors, clinical investigators, and institutions.

These indemnifications could result in a material impact due to product liability claims against us and/or these groups.

These indemnifications could result in a material

impact due to product liability claims against us and/or these groups.

We currently carry at least $10.0 million in product liability insurance, which we believe is appropriate for our current clinical trials.

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We may not be able to maintain or increase insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise.

We may be subject to damages resulting from claims that we or our employees have wrongfully used or disclosed alleged trade secrets of our employees’ former employers.

Many of our employees were previously employed at universities or other life sciences companies, including our competitors or potential competitors.

Although no claims against us are currently pending, we or our employees may be subject to claims that these employees or we have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers.

Litigation may be necessary to defend against these claims.

If we fail in defending such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights.

A loss of key research personnel work product could hamper or prevent our ability to commercialize certain potential products, which could severely harm our business.

Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management.

Our business could be negatively impacted by cyber security threats and other disruptions, including the theft of our intellectual property, and could compromise our information and expose us to liability, which would cause our business and reputation to suffer.

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In addition, these breaches and other inappropriate access can be difficult to detect, and any delay in identifying them may lead to increased harm of the type described above.

Moreover, the prevalent use of mobile devices that access confidential information increases the risk of data security breaches, which could lead to the loss of confidential information, trade secrets or other intellectual property.

Moreover, the prevalent use of mobile devices that access

confidential information increases the risk of data security breaches, which could lead to the loss of confidential information, trade secrets or other intellectual property.

As cyber threats continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any information security vulnerabilities.

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Any remedial costs or other liabilities related to cyber security incidents may not be fully insured or indemnified by other means.

The increasing use of social media platforms presents new risks and challenges.

Social media is increasingly being used to communicate about our products, technologies and programs, and the diseases our product or product candidates are designed to treat.

Social media practices in the biopharmaceutical industry continue to evolve and regulations relating to such use are not always clear.

This evolution creates uncertainty and risk of noncompliance with regulations applicable to our business.

For example, patients may use social media channels to comment on the effectiveness of a product or to report an alleged adverse event.

When such disclosures occur, there is a risk that we fail to monitor and comply with applicable adverse event reporting obligations or we may not be able to defend ourselves or the public's legitimate interests in the face of the political and market pressures generated by social media due to restrictions on what we may say about our product or product candidates.

There is also a risk of inappropriate disclosure of sensitive information or negative or inaccurate posts or comments about us on any social networking website.

If any of these events were to occur or we otherwise fail to comply with applicable regulations, we could incur liability, face overly restrictive regulatory actions or incur other harm to our business.

Compliance with global privacy and data security requirements could result in additional costs and liabilities to us or inhibit our ability to collect and process data globally, and the failure to comply with such requirements could have a material adverse effect on our business, financial condition or results of operations.

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Additionally, California recently enacted legislation that has been dubbed the first “GDPR-like” law in the U.S.

Known as the California Consumer Privacy Act (CCPA), it creates new individual privacy rights for consumers (as that word is broadly defined in the law) and places increased privacy and security obligations on entities handling personal data of consumers or households.

data of consumers or households.

The CCPA, which went into effect on January 1, 2020, requires covered companies to provide new disclosures to California consumers, and provides such consumers new ways to opt-out of certain sales of personal information.

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We have adopted a Code of Business Conduct and Ethics, but 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 be in compliance with such 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 civil, criminal, and administrative sanctions, and our reputation.

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 civil, criminal, and administrative sanctions, and our reputation.

In addition, during the course of our operations our directors, executives, and employees may have access to material, nonpublic information regarding our business, our results of operations, or potential transactions we are considering.

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

What changed 10-K

Item 1A. Risk Factors