☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Registrant’s telephone number, including area code: (~~206~~858) ~~456-2900~~771-9307

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May ~~9, 2022~~10, 2023 there were ~~35,145,281~~94,774,232 shares of registrant’s common stock, $0.0001 par value per share, outstanding.

This Quarterly Report on Form 10-Q (this “Quarterly Report”) contains forward-looking statements that involve risks and uncertainties. We make such forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. All statements other than statements of historical facts contained in this Quarterly Report are forward-looking statements. In some cases, you can identify forward-looking statements by words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would,” or the negative of these words or other comparable terminology. These forward-looking statements include, but are not limited to, statements about:

Any forward-looking statements in this Quarterly Report reflect our current views with respect to future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under Part II, Item 1A, “Risk Factors” of this Quarterly Report. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

Unless the context otherwise indicates, references in this Quarterly Report to the terms ~~“Silverback”~~“ARS”, “the Company”, “we”, “our” and “us” refer to ~~Silverback Therapeutics,~~ARS Pharmaceuticals, Inc., and its consolidated subsidiaries, and references to our “common stock” refers to our voting common stock.

An investment in shares of our common stock involves a high degree of risk. Below is a list of the more significant risks associated with our business. This summary does not address all of the risks that we face. Additional discussion of the risks listed in this summary, as well as other risks that we face, are set forth under Part II, Item 1A, “Risk Factors” in this Quarterly Report. Some of the material risks associated with our business include the following:

The accompanying notes are an integral part of these ~~unaudited~~ condensed consolidated financial statements.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

~~The full~~ To the extent ~~to which~~there are material differences between the ~~coronavirus (“COVID-19”) pandemic will directly or indirectly impact~~estimates and actual results, the Company’s ~~business,~~future results of operations ~~and financial condition, including expenses, clinical trials and research and development costs,~~ will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning COVID-19 and the actions taken to contain or treat COVID-19, as well as the economic impact on local, regional, national and international markets. The Company has considered potential impacts arising from the COVID-19 pandemic and is not presently aware of any events or circumstances that would require the Company to update its estimates, judgments or revise the carrying value of its assets or liabilities.

Cash and cash equivalents, restricted cash, and investments are carried at fair value. Accounts payable and accrued expenses are carried at cost, which approximates fair value given their short-term nature. The term loan payable is carried at cost, which approximates fair value as its effective interest rate approximates current market rates.

Cash and cash equivalents ~~are comprised of short-term,~~include cash readily available in checking and money market mutual funds. The Company considers all highly liquid investments with remaining maturities when purchased of 90 days or less ~~at the date of purchase. At March 31, 2022 and December 31, 2021, the Company’s~~to be cash ~~equivalents consisted of money market funds.~~equivalents.

~~Restricted cash consists of a deposit securing a collateral letter of credit issued in connection with the Company’s facility operating lease.~~

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents, and short-term investments. The Company ~~is subject to credit risk from holding its cash~~maintains deposits in federally insured financial institutions in excess of federally insured limits and ~~cash equivalents at a limited number of commercial banks. The Company~~ limits its exposure to ~~credit losses~~cash risk by ~~investing in money market funds through a U.S. bank~~placing its cash with high credit ~~ratings~~quality financial institutions.

The Company reviews its financial instruments portfolio on a quarterly basis to determine if any unrealized losses have resulted from a credit loss or other factors. As part of the review, management considers factors such as historical experience, market data, issuer-specific factors, and ~~U.S. Treasury securities. Cash may consist of deposits held with banks~~current economic conditions. This review is subjective, as it requires management to evaluate whether an event or change in circumstances has occurred in that period that may ~~at times exceed federally insured limits, however, exposure~~be related to credit ~~risk~~issues.

~~The~~Stock-based compensation expense represents the cost of ~~employee services received in exchange for an award of an equity instrument is measured at~~ the grant date ~~based on the award’s estimated fair value using the Black-Scholes option pricing model. The estimated~~ fair value of ~~the awards is~~stock option grants recognized ~~into expense on a straight-line basis~~ over the requisite service ~~period. Stock-based compensation~~period of the awards (usually the vesting period) on a straight-line basis. The Company recognizes expense for ~~an award with a performance condition is recognized~~awards subject to performance-based milestones over the remaining service period when ~~the~~management determines that achievement of ~~such performance condition~~the milestone is ~~determined to be~~ probable. ~~If the outcome of such performance condition is not determined to be probable or is not met, no compensation expense is recognized, and any previously recognized compensation expense is reversed.~~ Management evaluates when the achievement of a ~~performance condition~~performance-based milestone is probable based on the expected satisfaction of the performance ~~condition~~conditions at each reporting date. ~~Forfeitures are recognized as a reduction~~The Company estimates the fair value of ~~stock-based compensation expense~~stock option grants using the Black-Scholes option pricing model and recognizes forfeitures as they occur. The option plan permits, but does not require, the inclusion of early exercise provisions in individual awards. Proceeds from early option exercises are recorded as a liability until the underlying restricted shares vest. While the restricted shares have voting rights, they are not considered outstanding for accounting purposes.

Basic net loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding for the period, without consideration of potentially dilutive securities. Diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders since the effect of potentially dilutive securities is anti-dilutive given the net loss of the Company. For purposes of this calculation, ~~redeemable~~ convertible preferred stock, stock options, ~~employee~~and preferred stock ~~purchase rights, and unvested common stock subject to repurchase~~warrants are considered to be common stock equivalents but are not included in the calculations of diluted net loss per share for the periods presented as their effect would be antidilutive.

The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with certain new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it is (1) no longer an emerging growth company or (2) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, these financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,~~. The objective~~ which changes the accounting for recognizing impairments of financial assets. Under the ~~standard is to provide information about expected~~new guidance, credit losses onfor certain types of financial instruments ~~at each reporting date~~will be estimated based on expected losses. The new guidance also modifies the impairment models for available-for-sale debt securities and ~~to change how other-than temporary impairments on investment securities are recorded. The guidance is~~for purchased financial assets with credit deterioration since their origination. This standard was effective for the Company beginning on January 1, ~~2023,~~2023. The adoption of this new standard did not have a material impact on the Company's condensed consolidated financial statements.

As of March 31, 2023 and December 31, 2022, the Company did not have any liabilities that were measured at fair value on a recurring basis.

Depreciation expense was immaterial for the three months ended March 31, 2023 and 2022.

7Milestone Payments. At the inception of each arrangement that includes clinical, regulatory or commercial milestone payments, the Company evaluates whether achieving the milestones is considered probable and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the value of the associated milestone is included in the transaction price. Milestone payments that are not within the Company’s control, such as approvals from regulators or where attainment of the specified event is dependent on the development activities of a third party, are not considered probable of being achieved until those approvals are received or the specified event occurs. Revenue is recognized when the underlying performance obligation has been transferred to the customer.

Research and Development Revenues. For arrangements that contain research and development commitments, any arrangement consideration allocated to the research and development work is recognized as the underlying services are performed over the research and development term.

Clinical and Commercial Supply. Arrangements that include a promise for the future supply of drug product for either clinical development or commercial supply at the licensee’s discretion are generally considered as options. We assess if these options provide a material right to the licensee and if so, they are accounted for as separate performance obligations. The Company has not earned revenues for clinical or commercial supply sales as of March 31, 2023.

Royalty/Transfer Price Revenues. For arrangements that include sales-based royalties or transfer price, including milestone payments based on the level of sales, and the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). The Company has not received any royalty or transfer price revenues as of March 31, 2023.

In March 2020, the Company signed a Letter of Intent (“LOI”) with Alfresa Pharma Corporation (“Alfresa”) for the right to negotiate a definitive agreement for the exclusive license and sublicensable right to develop, register, import, manufacture and commercialize neffy in Japan in exchange for an upfront payment of $2.0 million. In April 2020, the Company entered into a Collaboration and License Agreement for the rights pursuant to the LOI. Under the agreement, the Company delivered a license to the neffy technology and is responsible for completion of a certain clinical study and for the manufacturing of development and commercial drug supply. The parties agreed to share the cost of any additional clinical studies required for approval of neffy in Japan. Alfresa is solely responsible for regulatory and commercialization activities and may elect to assume responsibility for manufacturing and supplying drug product for commercial use in Japan. Either party may terminate the agreement for certain breaches of the agreement. Unless terminated earlier by either or both parties, the term of the agreement will continue until the later of (i) expiration of the last-to-expire patent in Japan; or (ii) 10 years after the commercial sale of neffy in Japan.

In addition to the $2.0 million received under the LOI, the Company is eligible to receive up to $13.0 million of milestone payments upon achievement of certain clinical and regulatory milestones. Further, the Company is eligible to receive a negotiable transfer price expected to be in the low double-digit percentage on net sales subject to the regulatory approval to commercialize neffy in Japan. In July 2020, the Company earned a $5.0 million milestone payment upon the completion of a clinical milestone in Japan.

At the commencement of this collaboration, the Company identified the following performance obligations: the license for neffy and research and development services. The Company determined the initial transaction price to be $7.0 million, which includes a clinical milestone as it was deemed not probable of significant reversal at the inception of the agreement. Due to the uncertainty in the achievement of the regulatory and commercial milestones, the variable consideration associated with these future milestone payments has been fully constrained and is excluded from the transaction price until such time that the Company concludes that it is probable that a significant reversal of previously recognized revenue will not occur. These estimates will be re-assessed at each reporting period. The transaction price was allocated to the performance obligations based on the estimated stand-alone selling price of each performance obligation. The Company recognized less than $0.1 million in revenue for each of the three months ended March 31, 2023 and 2022, and had a contract liability of less than $0.1 million as of March 31, 2023.

In September 2020, the Company entered into a License and Supply Agreement (the “Recordati Agreement”) with Recordati Ireland, Ltd. (“Recordati”) for the exclusive license and sublicensable right to develop, import, manufacture or have manufactured commercial product, file and hold regulatory approvals and commercialize neffy in Europe and certain European Free Trade Association, Russia/the Commonwealth of Independent States, Middle East and African countries (the “Recordati Territory”). ~~Stockholders’ Equity (Deficit)~~Under the Recordati Agreement, the Company is responsible for completion of any clinical studies for neffy required by the European Medicines Agency (“EMA”) before granting European Union Marketing Authorization, and by the Medicines and Healthcare products Regulatory Agency (“MHRA”) prior to granting United Kingdom Marketing Authorization. The Company filed the initial regulatory submissions with the EMA in the fourth quarter of 2022 and will file the initial regulatory submissions with the MHRA for neffy and is responsible for the manufacturing of commercial supply. Recordati is solely responsible for all regulatory activities in the region after the Company’s initial regulatory submissions to the EMA and MHRA, for any post-approval clinical studies and commercialization activities. Either party may terminate the Recordati Agreement for certain breaches. Unless terminated earlier by either or both parties, the term of the Recordati Agreement will continue as long as Recordati has commercial sales of neffy in the region.

Under the terms of the Recordati Agreement, the Company received an upfront payment of $11.8 million and a regulatory milestone payment of $6.0 million during 2020. In addition, the Company is eligible to receive up to 90.0 million euros of milestone payments upon achievement of certain regulatory and commercial sales milestones. Subject to regulatory approval, the Company will earn tiered royalties in the low double-digits on annual net sales in the region and will receive a per unit supply price for the sale of commercial supply to Recordati. The per unit commercial supply costs are subject to a cap. The combined tiered royalty and supply price have a low double-digit cap.

At the commencement of this collaboration, the Company identified the following performance obligations: the license for neffy in the defined territory and the research and development services. The Company determined the initial transaction price to be the $11.8 million. Due to the uncertainty in the achievement of all the developmental and commercial milestones, at inception of the contract, the variable consideration associated with future milestone payments was fully constrained and excluded from the transaction price until such time that the Company concludes that it is probable that a significant reversal of previously recognized revenue will not occur. These estimates will be re-assessed at each reporting period. The transaction price was allocated to the performance obligations based on the estimated stand-alone selling price of each performance obligation. In November 2020, the Company earned a regulatory milestone of $6.0 million.

On February 22, 2023, the Company and Recordati entered into a termination agreement (the “Termination Agreement”), pursuant to which, among other things, the Company and Recordati agreed to terminate the Recordati Agreement. Pursuant to the Termination Agreement, the Company reacquired all of the Recordati Rights, paid Recordati a one-time upfront payment of €3.0 million, and has agreed to pay additional payments upon achievement of certain milestones including: (i) an EMA regulatory milestone payment of €2.0 million, (ii) a milestone payment of €5.0 million upon first commercial sale of a Recordati Licensed Product in the Recordati Territory, and (iii) royalty payments of up to €5.0 million in the aggregate from sales of Recordati Licensed Product(s) in the Recordati Territory.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis together with our unaudited condensed consolidated financial statements and related notes thereto included in “Item 1. Financial Statements (Unaudited)” of this Quarterly Report on Form 10-Q and the audited financial statements and related notes thereto as of and for the year ended December 31, ~~2021~~2022 included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission (SEC), on March ~~31, 2022.~~23, 2023. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business, ~~and related financing,~~ includes forward-looking statements that involve risks and uncertainties. For a complete discussion of forward-looking statements, see the section above entitled “Forward Looking Statements.” As a result of many factors, including those factors set forth in the ~~“Risk~~under the caption “Item 1A. Risk Factors” ~~section~~ of this Quarterly Report, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. You should carefully read the “Risk Factors” section of this Quarterly Report to gain an understanding of the ~~important~~various factors that could cause actual results to differ materially from our forward-looking statements.

We are a biopharmaceutical company focused on ~~leveraging our~~the development of ARS-1 (brand name neffy®), a proprietary ~~ImmunoTAC technology platform to develop systemically delivered, tissue targeted therapeutics~~product candidate for the needle-free intranasal delivery of epinephrine for the emergency treatment of ~~chronic viral infections, cancer, and other serious diseases. Our ImmunoTAC platform~~ Type I allergic reactions, including anaphylaxis. neffy is ~~the result~~a proprietary composition of ~~a focused effort~~ epinephrine with an innovative absorption enhancer called Intravail®, which allows neffy to ~~discover ways to systemically deliver disease-modifying small molecules in a directed fashion to sites~~provide intranasal delivery of disease. Our platform enables us to strategically pair proprietary linker-payloads that modulate key disease-modifying pathways with monoclonal antibodies directed to specific disease sites. Many potentially promising systemic therapies fail to maximize their therapeutic potential due to toxicities in healthy tissues. Our approach is designed to expand the therapeutic window and avert unacceptable toxicities by directly targeting specific disease sites where our therapeutics are locally active.epinephrine.

We believe neffy’s “no needle, no injection” approach will address a significant unmet need in the use of epinephrine, which is currently approved only in injectable formulations for the emergency treatment of Type I allergic reactions. There are approximately 25 to 40 million people in the United States who experience Type I allergic reactions. Of this group, approximately 16 million people have been diagnosed and experienced severe Type I allergic reactions that may lead to anaphylaxis, but only 3.3 million currently have an active epinephrine autoinjector prescription, and of those, only half consistently carry their prescribed autoinjector with them due to the many drawbacks of these devices. In ~~July 2020,~~aggregate, we ~~initiated clinical development~~estimate that 90% of ~~our first ImmunoTAC product candidate,~~patients prescribed an epinephrine device are not achieving an optimal treatment outcome today. These drawbacks include the use of needles in the devices, which can result in patient and caregiver injury as well as hesitation and delays in administration due principally to apprehension and pain of needles, allowing the allergic reaction to progress in severity leading to symptoms that seriously impact patient quality of life, to potential need for emergency services and/or hospitalizations, and to life-threatening symptoms or events. Intra-muscular injections also are subject to dosing errors and risk of accidental blood vessel injections, which can cause a ~~TLR8 agonist conjugated~~significant spike in the intravascular delivery of epinephrine potentially leading to serious cardiovascular complications or events. We believe neffy’s “no needle, no injection” delivery that eliminates apprehension, pain and safety concerns, small size allowing for ease of portability, ease of use, and high reliability provide it with a user-friendly profile that will increase prescriptions for epinephrine and make it more likely for patients and caregivers to administer epinephrine sooner, achieve more rapid symptom relief and prevent the allergic reaction from progressing to a ~~HER2 antibody, SBT6050. Preclinical data suggested~~level of severity that ~~we would be able~~could lead to demonstrate a therapeutic window and advance SBT6050 through clinical development as a monotherapy and in combination with standard-of-care agents that had a complementary mechanism-of-action. Our Phase 1/1b program was designed to measure safety and tolerability, pharmacokinetic (PK), pharmacodynamic (PD) and anti-tumor activity as monotherapy and in combination with pembrolizumab. On March 28, 2022, we made the decision to discontinue our clinical development program for SBT6050 due to limited monotherapy activity and dose-limiting adverse events when used in combination with pembrolizumab. SBT6290, comprised of the same linker payload conjugated to a Nectin4 antibody was expected to show a similar clinical profile and, therefore, we also terminated this program prior to dosing patients. We have prioritized our resources to focus on the development of SBT8230 and early-stage discovery programs.hospitalization or even death.

~~Our understanding~~Data from our studies of TLR8 conjugates in preclinical species and in the clinic guides our interpretation of the preclinical characteristics of SBT8230, an ASGR1 antibody conjugated to a TLR8 agonist linker payload for the treatment of chronic hepatitis B virus (cHBV), which is currently in preclinical development. ASGR1 is highly expressed in liver and is restricted in its expression to this organ. Other ASGR1-directed agents, such as those used in RNAi therapies, have shown robust liver localization. SBT8230 shows biodistribution profiles in non-human primates (NHP) consistent with these agents, which is distinct from SBT6050 and SBT6290. We believe that efficient liver targeting of SBT8230 via ASGR1 binding has the potential to lead to markedly lower serum exposures of SBT8230 in patients comparedneffy demonstrated nasally delivered epinephrine reached blood levels comparable to those ~~observed with SBT6050 in the clinic at any dose evaluated. We believe the preclinical to clinical experience~~of already approved epinephrine injectable products. Our NDA was accepted for SBT6050, coupled with the NHP PK, PD, and tolerability data for SBT8230, suggest that the clinical safety, PK and PD profiles for SBT8230 has the potential to be notably different than those for SBT6050, given the large differences in serum exposures and overall conjugate disposition for SBT8230 that are expected in patients due to its efficient liver targeting. SBT8230 is designed to elicit an anti-viral immune responsereview by targeting TLR8 activation to the liver. The anti-viral immune response is achieved through activation of myeloid cells and subsequent activation of immune cells that drive an IFNγ signal, which has been observed in the clinic with SBT6050. This has been shown by others to drive seroconversion, an important determinant of a functional cure. We see a significant opportunity in liver-localized immunotherapies as a potential way of achieving durable responses in these patients. We are focused on advancing SBT8230, our liver-targeted conjugate designed to ~~potently activate human myeloid cells in the liver for the treatment of cHBV.~~

Further support for investigating TLR8 agonism for the treatment of cHBV comes from selgantolimod (GS-9688), an existing untargeted, orally administered TLR8 agonist being developed by Gilead Sciences. Selgantolimod has generated anti-viral immune responses in a cHBV animal model. The clinical development of this untargeted TLR8 agonist has shown promise, but we believe that toxicity prevented the use of a sufficient dose to elicit optimal clinical activity. We believe liver-localized TLR8 agonism could better realize the potential for effective therapy and potentially lead to functional cure, which is defined as sustained loss of HBsAg in the blood, in patients suffering from cHBV. We presented a preclinical update on SBT8230 in the fourth quarter of 2021. In the first quarter of 2022, we began a Phase 1-enabling toxicology study. We plan to complete a P~~hase 1 regulatory submission~~FDA in the fourth quarter of 2022 with an anticipated mid-2023 PDUFA target action date and ~~begin a Phase 1 single ascending dose (SAD) study in healthy volunteers in~~if our NDA is approved, we believe neffy will be the first ~~quarter~~“no needle, no injection” marketed epinephrine product for the emergency treatment of ~~2023.~~ ~~We expect to report~~Type I allergic reactions. On May 11, 2023, the FDA held a virtual meeting of its Pulmonary-Allergy Drugs Advisory Committee, or the Advisory Committee. At that meeting, on the question of whether the data from our neffy PK/PD results support a favorable benefit-risk assessment in adults for the ~~Phase 1 SAD study~~emergency treatment of Type I allergic reactions including anaphylaxis, the Advisory Committee voted 16 (yes) and 6 (no). On the question of whether the neffy PK/PD results support a favorable benefit-risk assessment in children (<18 years of age) ≥30 kg for the ~~second half~~emergency treatment of ~~2023. After completing~~Type I allergic reactions including anaphylaxis, the ~~SAD study,~~Advisory Committee voted 17 (yes) and 5 (no). Although the FDA considers the recommendations of its advisory committees, the recommendation by the Advisory Committee is non-binding. If approved, we ~~anticipate initiating a Phase 1 multiple ascending dose study in~~believe neffy has the potential to transform the treatment of Type I allergic reactions including anaphylaxis given the need for delivery options that make it easier for patients ~~with cHBV, who are virally suppressed on nucleoside analogue therapy.~~and caregivers to carry and administer epinephrine without anxiety and hesitation. Notwithstanding the Advisory Committee’s recommendation to approve our NDA submission, the timing for FDA regulatory approval of our NDA is outside our control, may be delayed and is uncertain.

~~In addition, our internal discovery programs are focused~~At this same Advisory Committee meeting on evaluating and developing new antigen binding domains specific for targets of interest (including antibodies), next-generation linker technologies, and both agonist and antagonist small molecule payloads, that may be combined to create novel tissue-targeted antibody conjugates. The integration of medicinal chemistry, bioconjugation, protein engineering, bioinformatics, pharmacology, and translational medicine expertise focused on developing tissue-targeted therapies allows us to leverage key learningsMay 11, 2023, we also provided preliminary, interim clinical efficacy data from 10 subjects with frequent urticaria flares. This data is from our ~~previous~~randomized, placebo-controlled proof of concept clinical ~~program~~study evaluating the safety and efficacy of neffy in subjects with frequent urticaria flares. Urticaria patients are randomized to ~~bring forward the next generation~~2 mg neffy, 1 mg neffy and placebo in a crossover trial design. The primary endpoints of ~~therapeutics.~~this clinical study were patient-reported outcomes including pruritus score, hives score, pain score (visual analogue scale), as well as investigator-reported extent of urticaria and erythema score. Both 1 mg and 2 mg doses of ~~We anticipate providing an update~~neffy demonstrated rapid treatment responses on ~~our discovery pipeline in the fourth quarter of 2022.~~all endpoints, as compared to placebo.

~~Our ImmunoTAC platform drives our development pipeline of tissue targeted therapeutic candidates as summarized in the chart below:~~25

WeSince our inception in 2015 as ARS Pharmaceuticals, Inc., we have ~~incurred significant operating losses since~~devoted substantially all of our ~~inception. As of March 31, 2022, we had an accumulated deficit of $210.8 million. Our net losses were $24.6 million~~efforts and ~~$18.9 million for the three months ended March 31, 2022~~financial resources to organizing and ~~2021, respectively. Our losses have resulted primarily from costs incurred in connection with~~staffing our company, business planning, raising capital, performing research and development activities, and providing general and administrative ~~expenses.~~support for these operations. We do not have any products approved for sale and have not generated any ~~revenue~~product sales. We have funded our operations primarily with proceeds from ~~product sales or otherwise.~~the Merger (as more fully described below), private placement of convertible preferred stock, licensing, supply and distribution arrangements with our commercialization partners, and bank debt. From inception to March 31, 2023, we have raised $262.3 million in cash, cash equivalents and short-term investments, net of transaction costs, from the Merger; net proceeds of $76.3 million from the issuance of convertible preferred and common stock; $27.8 million from our collaboration, licensing, supply and distribution arrangements; and $10.0 million from bank debt. As of March 31, 2023, we had cash, cash equivalents, and short-term investments of $264.5 million.

We ~~expect we will continue to incur significant~~have incurred net losses from operations since our inception. Our net loss was $34.7 million for the ~~foreseeable future as~~year ended December 31, 2022 and $15.0 million for the three months ended March 31, 2023. As of March 31, 2023 we ~~continue our development~~had an accumulated deficit of and seek regulatory approvals for, our product candidates and begin to commercialize any approved products, seek to expand our product pipeline, invest in our organization and technology platform, as well as incur expenses associated with operating as a public company.$91.9 million. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on ~~a variety of factors including~~ the timing ~~and scope~~ of our ~~preclinical studies~~clinical trials, our expenditures on other development activities, the cost for regulatory filings, expenses for pre-commercial activities to establish sales, marketing and distribution capabilities for our product candidates, and our ability to earn potential regulatory and commercial milestones under our collaboration arrangements. We expect our expenses and operating losses will increase substantially as our product candidate, neffy potentially is approved by the FDA and we commence commercialization efforts, any future product candidates advance through clinical ~~trials. Accordingly,~~trials, we expand our clinical, regulatory, quality, manufacturing and pre-commercial sales and marketing capabilities, and, as a result of the Merger, continue to incur costs associated with operating as a public company. If we obtain marketing approval for any of our product candidates, we will incur significant commercialization expenses for marketing, sales, manufacturing and distribution activities, and added expenditures to expand our operational, financial and management systems and increase personnel to support these operations.

We do not expect to generate any revenues from product sales unless and until we successfully obtain regulatory approval for one or more product candidates, if ever. Until such time, if ever, as we can generate ~~significant~~substantial product revenue, ~~from sales of our product candidates, if ever,~~ we ~~expect to~~may finance our operations through our existing cash, ~~needs through~~cash equivalents, short-term investments, equity offerings, debt financings orand other capital sources ~~including potential~~which may include collaborations, ~~licenses~~strategic alliances, marketing, distribution or licensing arrangements or other ~~similar arrangements.~~arrangements with third parties. However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. In addition, any future debt agreements may limit our ability to enter into certain debt financings without the consent of the lenders thereunder. Our failure to raise capital or enter into such other arrangements when needed would have a negative impact on our financial condition and may require us to delay, reduce or terminate our research and development programs or other operations, or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

We do not own or operate manufacturing facilities. We currently rely on third-party manufacturers and suppliers for neffy, and we expect to continue to do so to meet our nonclinical, clinical and any commercial activities. Our third-party manufacturers are required to manufacture our product candidates under cGMP requirements and other applicable laws and regulations.

On ~~March 28,~~November 8, 2022 ~~our board of directors approved~~(the “Closing Date”), privately-held ARS Pharmaceuticals, Inc. (“ARS Pharma”) merged with Silverback Therapeutics, Inc., a ~~corporate restructuring plan to discontinue our clinical development programs for SBT6050~~Delaware corporation (“Silverback” and ~~SBT6290 and to prioritize resources on~~ the ~~development of SBT8230 and early-stage discovery programs (the Restructuring Plan).~~transaction, the “Merger”), a publicly traded company. In ~~connection~~accordance with the ~~Restructuring Plan, our workforce will be reduced by 27%, with substantially all~~terms of the ~~reduction in personnel expected to be completed by~~agreement and plan of merger and reorganization, dated July ~~15, 2022. We initiated the reduction in force~~21, 2022, as amended on ~~March 31,~~August 11, 2022 and ~~expect~~October 25, 2022 (the “Merger Agreement”), Sabre Merger Sub, Inc. (“Merger Sub”), a wholly-owned subsidiary of Silverback, merged into ARS Pharma, with ARS Pharma surviving as Silverback’s wholly-owned subsidiary. At the completion of the Merger, the prior ARS Pharma equityholders owned 62% and the prior Silverback equityholders owned 38% of the combined company, in each case on a fully diluted basis using the treasury stock method and excluding out-of-money options of Silverback. Upon completion of the Merger, Silverback changed its name to ~~provide severance payments, continuation~~ARS Pharmaceuticals, Inc. As, among other facts, the stockholders of ~~group health insurance coverage, and other benefits~~ARS Pharma owned a majority of the combined company, the Merger was treated for accounting purposes as if ARS Pharma had acquired Silverback. As a ~~specified period~~result of the Merger being accounted for as if ARS Pharma had acquired Silverback, all financial statements prior to the ~~affected employees. We currently estimate that we will incur costs~~Merger are of ~~approximately $2.0 million for termination benefits related~~ARS Pharma.

At the effective time of the Merger (the “Effective Time”), each share of ARS Pharma common stock outstanding immediately prior to the ~~Restructuring Plan,~~Effective Time, after giving effect to the automatic conversion of all shares of ~~which will be cash expenditures paid in 2022.~~preferred stock of ARS Pharma into shares of ARS Pharma common stock immediately prior to the Effective Time, (excluding shares held as treasury stock by ARS Pharma or held or owned by Silverback, Merger Sub or any subsidiary of Silverback or ARS Pharma and dissenting shares) were automatically converted into the right to receive shares of Silverback common stock equal to the exchange ratio of 1.1819. Outstanding and unexercised options and warrants to purchase shares of ARS Pharma common stock were converted into options and warrants to purchase shares of Silverback common stock.

In September 2020, we entered into a license and supply agreement (the “Recordati License and Supply Agreement”) with Recordati Ireland, Ltd (“Recordati”). Pursuant to the Recordati License and Supply Agreement, we granted Recordati an exclusive, royalty-bearing, sublicensable license under our patents relating to neffy to (i) perform Recordati’s development activities on the epinephrine compositions (“Recordati Licensed Compositions”) and related products (“Recordati Licensed Products”) for commercialization in the EU, United Kingdom, and certain countries in the Middle East, Africa and Eurasia (the “Recordati Territory”), (ii) manufacture (or have manufactured) the Recordati Licensed Products for commercialization in the Recordati Territory, (iii) file and hold regulatory approvals for the Licensed Products in the Recordati Territory, and (iv) commercialize the Recordati Licensed Products in the Recordati Territory (collectively, the “Recordati Rights”).

~~Operating Expenses~~On February 22, 2023, we entered into the Termination Agreement with Recordati, pursuant to which, among other things, we and Recordati agreed to terminate the Recordati License and Supply Agreement. Pursuant to the Termination Agreement, we reacquired all of the Recordati Rights, paid Recordati a one-time upfront payment of €3.0 million, and have agreed to pay additional payments upon achievement of certain milestones including: (i) an EMA regulatory milestone payment of €2.0 million, (ii) a milestone payment of €5.0 million upon first commercial sale of a Recordati Licensed Product in the Recordati Territory, and (iii) royalty payments of up to €5.0 million in the aggregate from sales of Recordati Licensed Product(s) in the Recordati Territory.

To date, we have not generated any revenues from the commercial sale of ~~(i)~~any products, and we may not generate revenues from the commercial sale of any products. We have signed collaboration and license agreements including supply and distribution for neffy with Alfresa Pharma in Japan and Pediatrix in China. The terms of these agreements may include payment to us of one or more of the following: non-refundable, up-front license fees; clinical, regulatory, and/or commercial milestone payments; clinical development fees; and royalties or a transfer price on net sales of licensed products if neffy receives marketing approval in these regions. In addition, we previously entered into the Recordati License and Supply Agreement, which was terminated in February 2023. We expect revenues to fluctuate in future periods based on our ability to meet various regulatory milestones, and contingent on successfully obtaining regulatory approval for neffy in the US and the licensed regions, US product sales, commercial milestones, royalties or transfer price earned from our partner’s net sales and the supply of commercial product as set forth in the agreements described earlier.

To date, our research and development expenses have been related primarily to clinical development, process development and ~~(ii) general~~manufacturing costs of our product candidate. Research and ~~administrative expenses.~~development expenses are recognized as incurred and payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received.

Our external research and development expenses ~~consist~~for our clinical stage product candidate consists primarily of ~~direct~~fees, materials and other costs paid to CROs, CMOs, consultant and contractors. Our clinical trials and manufacturing costs for the periods presented below reflect an allocation of expenses associated with personnel costs, equity-based compensation expense, and indirect costs incurred in ~~connection with the development~~support of ~~our ImmunoTAC technology platform, product candidates, discovery efforts and preclinical studies and clinical trial activities related to our program pipeline, including our SBT8230 program.~~

We expense research and development costs as incurred. Advance payments for goods and services that will be used over time for research and development are capitalized and recognized as goods are delivered or as the related services are performed. In-licensing fees and other costs to acquire technologies used in research and development that have not yet received regulatory approval and that are not expected to have an alternative future use are expensed when incurred. We track direct costs by stage of program, clinical or preclinical. However, we do not track indirect costs on a program specific or stage of program basis because these costs are deployed across multiple programs and, as such, are not separately classified.27

We expect that our research and development expenses will likely decrease for the remainder of ~~2022 due to discontinuation of the~~2023 based on our planned clinical development ~~of SBT6050~~ and ~~SBT6290 and the Restructuring Plan. However, following 2022,~~manufacturing activities, as we ~~expect that our research and development expenses will begin~~plan to ~~increase again~~transition to commercialization efforts for the ~~foreseeable future as we continue the development~~potential launch of our ~~preclinical~~first product in the second half of 2023. However, the timing for regulatory approvals is outside our control, may be delayed and discovery programs, particularly as they move into later stages of development which increases costs considerably. We also expect to begin clinical trials of SBT8230 in 2023 which will increase research and development expenses.is uncertain. We cannot ~~reasonably~~ determine with certainty the timing of initiation, the duration or the completion costs of ~~these~~current or future ~~preclinical studies~~clinical trials and ~~clinical trials~~the manufacturing costs of our product candidates due to the inherently unpredictable nature of ~~preclinical~~clinical development and ~~clinical development.~~manufacturing activities. Clinical development and ~~preclinical development~~manufacturing timelines, the probability of success and development costs can differ materially from expectations. We anticipate that we will make determinations as to which ~~development~~product candidates ~~and discovery programs~~ to pursue and how much funding to direct to each product candidate ~~or program~~ on an ongoing basis in response to the results of ongoing and future ~~preclinical studies and~~ clinical trials, regulatory developments and our ongoing assessments as to each product candidate’s commercial potential. In addition, we cannot forecast to what degree our licensing, supply and distribution arrangements would affect our development plans and capital requirements.

The duration, costs and timing of clinical trials and development of our product candidates will depend on a variety of factors that include:

A change in the outcome of any of these variables with respect to the development of any of our product candidates could significantly change the costs and timing associated with the development of that product candidate. The process of conducting the necessary clinical research and manufacturing to obtain regulatory approval is costly and time-consuming. The actual probability of success for our product candidates or any future candidates may be affected by a variety of factors. We may never succeed in achieving regulatory approval for our product candidates or any future candidates. Further, a number of factors, including those outside of our control, could adversely impact the timing and duration of our product candidates’ or any future candidates’ development, which could increase our research and development expenses.

General and administrative expenses consist primarily of ~~personnel-related expenses, including employee~~ salaries, ~~bonuses,~~ benefits, ~~and stock-based~~equity-based compensation ~~and recruiting costs~~ for personnel in executive, finance, business development, sales and marketing and other corporate administrative functions. ~~Other significant general~~General and administrative expenses also include legal fees incurred relating to ~~intellectual property~~corporate and ~~corporate~~patent matters, professional fees incurred for accounting, auditing, tax and administrative consulting services, market research costs, and insurance ~~costs, travel expenses, and facility related expenses.~~costs.

We ~~expect that~~anticipate our general and administrative expenses will ~~decrease~~increase substantially for the remainder of ~~2022 due~~2023 as we add sales and marketing personnel, infrastructure and programs to ~~the Restructuring Plan. However, following 2022, we expect that~~support pre-commercial activities, and if our product candidates receive marketing approval, commercialization activities. We also anticipate increased general and administrative ~~expenses will begin to increase again to the extent needed~~personnel to support ~~growth in~~ our ~~research~~operations and ~~development activities.~~higher patent costs. We also expect to ~~continue to~~ incur ~~increased expenses associated with operating as a public company, including costs related to accounting,~~added audit, legal, regulatory and tax-related services associated with maintaining compliance with exchange listing and SEC requirements, director and officer insurance ~~costs,~~premiums, board of director fees, and investor ~~and~~relations costs associated with operating as a public ~~relations costs.~~company following the Merger.

~~Interest~~Other income, net ~~includes~~consists primarily of interest ~~earned on~~income from our cash, ~~and~~ cash equivalents, ~~carried at fair value,~~ and ~~interest expense on~~short-term investments, and net amortization and accretion associated with our ~~borrowings.~~short-term investments.

The following table summarizes our results of operations for the three months ended March 31, 2023 and 2022 ~~and 2021:~~(in thousands, except percentages):

Revenues. Revenues under collaboration agreements were less than $0.1 million and $0.7 million for the three months ended March 31, 2023 and 2022, respectively. The ~~following table summarizes~~revenues for the three months ended March 31, 2023 and 2022 include the recognition of revenue for the portion of upfront and clinical and regulatory milestone payments under our collaborations with Alfresa that have been allocated to research and development ~~expenses~~services provided for during these periods. The revenues for the three months ended March 31, 2022 also included similar revenues under our collaboration with Recordati. We expect revenues to fluctuate in future periods based on our ability to meet various regulatory milestones, and ~~2021:~~contingent on successfully obtaining regulatory approval for neffy in the licensed regions, commercial milestones, royalties or transfer price earned from our partner’s net sales and the supply of commercial product as set forth in these agreements.

Research and Development Expenses. Research and development expenses were ~~$16.9~~$6.6 million and ~~$12.2~~$5.4 million for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively. The increase of ~~$4.7~~$1.1 million was primarily due ~~primarily~~ to ana $2.3 million increase in ~~direct~~product materials associated with neffy, a $0.6 million increase in stock-based compensation, a $0.4 million increase in regulatory consulting costs, ~~related to our preclinical programs of $3.8~~and a $0.2 million ~~and increases~~increase in ~~personnel-related expenses of $2.4 million.~~payroll-related expenses. These aggregated increases were partially offset by ~~decreases~~a $1.0 million decrease in ~~our~~ clinical ~~programs of $1.3~~trial costs associated with neffy, a $0.8 million decrease in device manufacturing costs, and ~~facility and equipment related expenses of $0.2 million.~~a $0.6 million decrease in outside services associated with neffy.

General and administrative expenses were ~~$7.8~~$12.2 million and ~~$6.6~~$2.3 million for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively. The increase of ~~$1.2~~$9.8 million was ~~due~~ primarily ~~to an increase of $0.9 million in personnel-related expenses~~ due to ~~increases~~a $3.5 million increase in ~~salaries, bonuses, and~~pre-commercial launch activities related to neffy, a $2.4 million increase in payroll-related expenses, a $1.4 million increase in stock-based ~~compensation. To~~compensation, a ~~lesser extent, the~~$0.6 million increase in legal expense, a $0.4 million increase in insurance costs, a $0.3 million increase in contract labor costs, a $0.3 million increase in consulting costs, a $0.3 million increase in general overhead, a $0.2 million increase in recruiting fees, and ~~administrative expenses was due to an~~a $0.2 million increase ~~of $0.3 million~~ in ~~other various general~~professional fees for accounting, auditing and ~~administrative expenses.~~tax.

~~Interest~~Other income, net was ~~$67,000 and $18,000~~$3.8 million for the three months ended March 31, ~~2022~~2023 and ~~2021, respectively. The change of $49,000~~other expense, net was ~~primarily due to a decrease in principal on our notes payable and the investment in higher interest-bearing assets during the second half of 2021.~~

We have incurred net losses and negative cash flows from operations since our inception and anticipate we will continue to incur net losses for the foreseeable future. Since our inception, we have funded our operations almost exclusively with proceeds from the sale and issuance of shares of our redeemable convertible preferred stock and common stock, and debt financings. We will need to raise substantial additional capital in the future.

~~As of March 31, 2022, we had $298.1~~$0.2 million ~~in cash, cash equivalents, restricted cash, and investments. The following table sets forth a summary of the net cash flow activity~~ for the three months ended March 31, ~~2022~~2022. The difference of $3.9 million was primarily due to a $1.8 million increase in net amortization and ~~2021:~~accretion associated with our short-term investments, a $1.5 million increase in interest income from our cash, cash equivalents, and short-term investments, $0.3 million from the sale of in-process research and development obtained in the Merger, and a $0.2 million decrease in interest expense.

Since our inception, we have not generated any revenue from any product sale and have incurred significant operating losses and negative cash flows from our operations. We have not yet commercialized any of our product candidates and we do not expect to generate revenue from sales of any product candidates until the second half of 2023 or after, if at all. We have funded our operations to date primarily with proceeds from the Merger, the sale of preferred and common stock, revenue earned under collaboration, licensing, supply and distribution agreements and bank debt. From inception to March 31, 2023, we have raised $262.3 million in cash, cash equivalents and short-term investments, net of transaction costs, from the Merger, net proceeds of $76.3 million from the issuance of convertible preferred and common stock, $27.8 million from our collaboration, licensing, supply and distribution arrangements, and $10.0 million from bank debt. As of March 31, 2023, we had cash, cash equivalents, and short-term investments of $264.5 million.

The following table summarizes our cash flows for the three months ended March 31, 2023 and 2022 (in thousands):

During the three months ended March 31, ~~2022,~~2023, net cash used in operating activities was ~~$19.7~~$12.4 million. This consisted primarily of a net loss of ~~$24.6~~$15.0 million, and an increase in our operating assets and liabilities of $0.5 million, partially offset by non-cash charges of $5.4 million. The increase in our operating assets and liabilities was primarily due to a decrease in the lease liability of $0.3 million and accounts payable and accrued expenses of $0.2 million. The non-cash charges primarily consisted of stock-based compensation expense of $4.9 million, non-cash lease expense of $0.2 million, and depreciation expense of $0.2 million.

~~During the three months ended March 31, 2021, net cash used in operating activities was $12.2 million. This consisted primarily of a net loss of $18.9 million, partially offset by~~ ~~non-cash~~ ~~charges of $4.8 million and~~ a decrease in our operating assets and liabilities of ~~$1.9 million. The~~ ~~non-cash~~ ~~charges primarily consisted of stock-based compensation expense of $4.3 million,~~ ~~non-cash~~ ~~lease expense of $0.3~~$2.1 million, and ~~depreciation expense~~non-cash charges of ~~$0.2~~$0.5 million. The decrease in our operating assets and liabilities was primarily due to an increase in accounts payable and accrued ~~expenses~~liabilities of ~~$2.2 million. This~~$4.8 million, a decrease ~~was~~in prepaid and other assets of $0.4 million, partially offset by a decrease in ~~our lease~~contract liability of ~~$0.2~~$3.1 million. The non-cash charges consisted of non-cash stock-based compensation of $2.3 million, partially offset by $1.8 million in net amortization and ~~an increase in prepaid expenses and other assets~~accretion of ~~$0.1 million after adjusting for~~ ~~non-cash~~ ~~items.~~short-term investments.

During the three months ended March 31, 2022, net cash used in ~~investing~~operating activities was ~~$0.3~~$6.9 million. This consisted primarily of ~~purchases~~a net loss of ~~property~~$7.3 million and ~~equipment~~non-cash stock-based compensation charges of $0.3 million. There was no net change to our operating assets and liabilities, primarily due to a decrease in contract liability of $0.7 million, offset by an increase in accounts payable and accrued liabilities of $0.5 million and a decrease in prepaid and other assets of $0.1 million.

During the three months ended March 31, ~~2021,~~2023, the cash and cash equivalents used in investing activities was ~~less than $0.1~~primarily due to purchases of short-term investments of $131.4 million, ~~consisting~~maturities of short-term investments of $20.0 million, and purchases of property and equipment of $0.2 million. During the three months ended March 31, 2022, the cash and cash equivalents used in investing activities was primarily due to immaterial purchases of property and equipment.

During the three months ended March 31, ~~2022,~~2023, the cash and cash equivalents provided by financing activities was ~~less than $0.1 million. This was~~ primarily ~~driven by~~due to proceeds from ~~the exercise of~~ common stock ~~options.~~

option exercises of $1.3 million. During the three months ended March 31, ~~2021,~~2022, the cash and cash equivalents used in financing activities was ~~$0.1 million. This was~~ primarily ~~driven by $0.4 million of principal payments~~due to repayments on the ~~term loan payable, which was partially offset by $0.2 million in proceeds from exercises~~bank note of ~~common stock options.~~$0.9 million.

WeBased on our current operating plan, we believe that our existing cash and cash equivalents will be sufficient to meet our anticipated cash requirements through at least the next three years. In particular, we expect our cash, cash equivalents, ~~restricted cash,~~ and short-term investments ~~of $298.1 million at March 31, 2022~~ will ~~be sufficient~~allow us to fund our ~~operating~~ expenses related to the FDA’s review of our NDA for neffy, fund proof of concept clinical trials of neffy for additional indications, fund pre-commercial manufacturing and ~~capital expenditure requirements into~~sales and marketing activities, and if and when neffy is approved by the ~~second half of 2026.~~FDA, fund our commercial launch. However, our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially. We have based this estimate on assumptions that may prove to be wrong, and we could deplete our capital resources sooner than we expect. Additionally, the process of testing product candidates in clinical trials is costly, and the timing of progress and expenses in these trials is uncertain.

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

Until such time, if ever, as we can generate substantial product revenues to support our cost structure, we expect to finance our cash needs through a combination of our existing cash, cash equivalents, short-term investments, equity offerings, debt financings orand other capital sources ~~including potential~~which may include collaborations, ~~licenses~~strategic alliances, marketing, distribution or licensing arrangements or other ~~similar arrangements.~~arrangements with third parties. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be or could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing and equity 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. In addition, our current or future debt agreements may limit our ability to incur additional debt. If we raise funds through ~~strategic~~additional collaborations, or other similar arrangements with third parties, we may have to relinquish valuable rights to our ~~platform technology,~~technologies, future revenue streams, ~~research~~development programs or product candidates or ~~may have to~~ grant licenses on terms that may not be favorable to us and/or may reduce the value of our common stock. 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.

Our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and disruptions to and volatility in the credit and financial markets in the ~~United States~~US, including due to recent bank failures, and worldwide resulting from ~~the ongoing COVID-19 pandemic or otherwise.~~macroeconomic factors. Because of the numerous risks and uncertainties associated with product development, we cannot predict the timing or amount of increased expenses and cannot assure you that we will ever be profitable or generate positive cash flow from operating activities.

~~During the three months ended March 31, 2022, there~~There have been no material changes ~~outside the ordinary course of business to~~in our material cash requirements from those disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K filed with the SEC on March ~~31, 2022.~~

Critical Accounting Policies and Significant ~~Judgments~~Judgements and Estimates

Our management’s discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (GAAP). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our financial statements. On an ongoing basis, we evaluate our estimates and judgments, including those related to accrued expenses, stock-based compensation, and valuation allowances for deferred tax assets. We base our estimates on historical experience, known trends and events, and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

During the three months ended March 31, ~~2022,~~2023, there were no material changes to our critical accounting policies. Our critical accounting policies are described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Significant Judgments and Estimates” in our Annual Report on Form 10-K filed with the SEC on March ~~31, 2022~~23, 2023 and Note 22- Summary of Significant Accounting Policies to our unaudited condensed consolidated financial statements appearing in Part I, Item 1 of this Quarterly Report on Form 10-Q. ~~We believe that of our critical accounting policies, the following accounting policies involve the most judgment and complexity:~~

See Note 22- Summary of Significant Accounting Policies to our unaudited condensed consolidated financial statements appearing in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.

We are an emerging growth company, as defined in the JOBS Act. For so long as we remain an emerging growth company, we are permitted and intend to rely on certain exemptions from various public company reporting requirements, including not being required to have our internal control over financial reporting audited by our independent registered public accounting firm pursuant to

Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and any golden parachute payments not previously approved.

Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. We have elected to use this extended transition period for complying with certain new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

We will remain an emerging growth company until the earliest to occur of: (i) the last day of the fiscal year in which we have at least ~~$1.07~~$1.235 billion in annual revenue; (ii) the date upon which we are deemed to be a “large accelerated filer,” as defined in Rule 12b-2 under the ~~Securities~~ Exchange ~~Act of 1934, as amended (the Exchange Act);~~Act; (iii) the date on which we have issued more than $1.0 billion in nonconvertible debt securities during the prior three-year period; and (iv) December 31, 2025.

We are also a “smaller reporting company” as defined in the Exchange Act. We may continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250 million measured on the last business day of our second fiscal quarter or (ii) our annual revenue was less than $100 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700 million measured on the last business day of our second fiscal quarter. If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation and other matters.

~~Not applicable to~~As a “smaller reporting company” as defined under Item 10(f)(1) of Regulation S-K of the Securities Act, ~~of 1933, as amended (the Securities Act).~~we are not required to provide the information contemplated by this item.

As required by Rules 13a-15(b) and 15d-15(b) of the Exchange Act, our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, ~~2022.~~2023. The term “disclosure controls and procedures” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of March 31, ~~2022,~~2023, our Chief Executive Officer and our Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

There were no changes in our internal control over financial reporting that occurred during the quarter ended March 31, ~~2022~~2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

~~On November 5, 2021, a securities class action complaint was filed against us~~From time to time, we may be involved in various claims and ~~certain~~legal proceedings relating to claims arising out of our ~~officers~~operations. See Note 7- Commitments and ~~directors in~~Contingencies to the U.S. District for the Western District of Washington, captioned Dresner v. Silverback Therapeutics, Inc., et al., Case No. 2:21-cv-01499. The court appointed lead plaintiff and lead plaintiff's counsel, and plaintiff's counsel then filed the amended complaint on April 11, 2022. The amended complaint alleges that between December 3, 2020 and March 31, 2022, we and certain of our officers and directors violated (1) Sections 11 and 15 of the Securities Act; and (2) Sections 10(b) and 20(a) of the Exchange Act and SEC Rule 10b-5 promulgated thereunder, by making allegedly false and misleadingunaudited condensed consolidated financial statements in ~~various SEC filings and press releases regarding the clinical and commercial prospects of our product candidate, SBT6050,~~this Form 10-Q, which is now discontinued. The complaint seeks unspecified damages and interest, as well as attorneys’ fees and other costs. We and the other defendants have not yet filed a response to the amended complaint, but anticipate doing soincorporated by reference in ~~late May 2022.~~this Part II, Item 1, for any required disclosure.

We operate in a dynamic and rapidly changing environment that involves numerous risks and uncertainties. Certain factors may have a material adverse effect on our business, financial condition and results of operations, and you should carefully consider them. Accordingly, in evaluating our business, we encourage you to consider the following discussion of risk factors, in its entirety, in addition to other information contained in this Quarterly Report on Form 10-Q and our other public filings with the SEC. Other events that we do not currently anticipate or that we currently deem immaterial may also affect our results of operations and financial condition. The risk factors set forth below that are marked with an asterisk (*) did not appear as separate risk factors in, or contain changes to the similarly titled risk factor included in Item 1A. of our Annual Report on Form 10-K, filed with the SEC on March ~~31, 2022.~~23, 2023.

Risks Related to Our ~~Business~~Financial Position and ~~Industry~~Need for Capital

We ~~have~~are a ~~limited operating history,~~clinical-stage biopharmaceutical company and have incurred ~~net~~significant losses since our ~~inception, and~~inception. We anticipate that we will continue to incur significant losses for the foreseeable future.*

Investment in biopharmaceutical product development is highly speculative because it entails substantial upfront capital expenditures and significant risk that any potential product candidate will fail to demonstrate adequate effect or an acceptable safety profile, gain regulatory approval and become commercially viable. Our only product candidate, neffy, is in the clinical stage of development. We ~~may never generate~~have no products approved for commercial sale and have not generated any revenue or become profitable or, if we achieve profitability, may not be able to sustain it.*

~~We are an early-stage biopharmaceutical company with a limited operating history that may make it difficult to evaluate the success of our business~~from product sales to date, and we will continue to ~~assess~~incur significant research and development and other expenses related to our ~~future viability. Our operations to date~~clinical development and ongoing operations. As a result, we are not profitable and have ~~been limited~~incurred losses in each period since our inception. Since our inception, we have devoted substantially all of our efforts and financial resources to organizing and staffing our company, business planning, ~~business development,~~ raising capital, ~~developing and optimizing our technology platform, identifying potential product candidates, undertaking~~performing research and ~~preclinical studies for our lead program and other~~ development ~~programs, undertaking clinical trials for our now discontinued SBT6050 and SBT6290 programs, establishing and enhancing our intellectual property portfolio,~~activities, and providing general and administrative support for these operations. ~~All of our product candidates are in preclinical development,~~Our financial condition and ~~none have been approved for commercial sale. We have never generated any revenue from product sales and have incurred~~operating results, including net losses, ~~each~~may fluctuate significantly from quarter to quarter and year ~~since we commenced operations. For~~to year. Accordingly, you should not rely upon the ~~three months ended March 31, 2022 and 2021, our~~results of any quarterly or annual periods as indications of future operating performance. Additionally, net losses ~~were $24.6 million~~ and ~~$18.9 million, respectively. We expect that it will be several years, if ever, before we~~negative cash flows have a product candidate ready for regulatory approval and commercialization. We expect to incur increasing levels of operating losses over the next several years and for the foreseeable future as we advance our product candidates through clinical development. Our prior losses, combined with expected future losses, had, and will continue to have, an adverse effect on ~~our~~Our stockholders’ ~~deficit~~equity and working capital. Our net loss was $34.7 million for the year ended December 31, 2022 and $15.0 million for the three months ended March 31, 2023. As of March 31, 2023, we had an accumulated deficit of $91.9 million. We expect to continue to incur significant losses for the foreseeable future, and we expect these losses to increase as we continue our research and development of, and seek regulatory approvals and prepare for commercialization for our product candidate, neffy, an investigational, new formulation of epinephrine, for the emergency treatment of Type I allergic reactions and potential additional indications.

We anticipate that our expenses will increase substantially if and ~~remain profitable, we must~~as we:

Our expenses could increase beyond our expectations if we are required by the FDA, the EMA or other regulatory authorities to perform clinical trials or conduct nonclinical studies in addition to those that we currently expect, or if there are any delays in completing our clinical trials or the development of neffy, or if we choose to develop any future product candidates.

Our ability to become and remain profitable depends on our ability to generate significant revenue from product sales. We do not expect to generate significant revenue, if any, unless and until we, either alone or with a collaborator, are able to obtain regulatory approval for, and successfully commercialize, neffy for its initial indication and potential additional indications. Successful commercialization of neffy will require achievement of many key milestones, which vary by jurisdiction and may include demonstrating safety and efficacy in clinical trials, and obtaining regulatory approval for neffy. If neffy is approved, we, or any of our current or future licensing and collaboration partners must also comply with post-approval requirements, such as those relating to marketing ~~approval~~ and ~~satisfying~~manufacturing. Finally, obtaining adequate coverage and reimbursement for neffy from private or government payors will be crucial to neffy’s commercial success. Because of the uncertainties and risks associated with these activities, we are unable to accurately and precisely predict the timing and amount of revenues, the extent of any ~~post-marketing requirements.~~further losses or if or when we might achieve profitability. We and any current and future licensing and collaboration partners may never succeed in these activities and, even if we ~~succeed in commercializing one~~do, or ~~more of our product candidates,~~any current or future licensing and collaboration partners do, we may never generate ~~revenue~~revenues that ~~is significant or~~are large enough for us to achieve profitability. ~~In addition, as a young business, we may encounter unforeseen expenses, difficulties, complications, delays, and other known and unknown challenges. If~~Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual ~~basis and we will continue to incur substantial research and development and other expenditures to develop and market additional product candidates.~~ basis.

Our failure to become and remain profitable ~~would decrease~~may depress the ~~value~~market price of ~~the company~~our common stock and could impair our ability to raise capital, ~~maintain our research and development efforts,~~ expand our business or continue our operations. ~~A decline~~

We have a limited operating history and only one current product candidate, neffy, which is in the ~~value~~clinical stage of development and has no commercial sales, which may make it difficult to evaluate the prospects for our future viability.

We are a biopharmaceutical company founded in 2015 as ARS Pharmaceuticals, Inc., and our operations to date have been limited to organizing, staffing and financing our company, raising capital, and conducting research and development activities, including preclinical and nonclinical studies and clinical trials, for our only product candidate, neffy. We have not yet demonstrated an ability to generate product revenues, obtain regulatory approvals, manufacture a commercial product, or arrange for a third party to do so on our behalf, or conduct sales and marketing activities necessary for successful product commercialization. Accordingly, you should consider our prospects in light of the costs, uncertainties, delays and difficulties frequently encountered by companies in clinical development, especially clinical-stage biopharmaceutical companies such as us. Any predictions you make about our future success or viability may not be as accurate as they could ~~also cause you to lose all~~be if we had a longer operating history or ~~part~~a history of ~~your investment.~~successfully developing and commercializing pharmaceutical products.

We ~~incur significantly increased costs as~~may encounter unforeseen expenses, difficulties, complications, delays and other known or unknown factors in achieving our business objectives. We are preparing to transition from a ~~result~~company with a development focus to a company capable of ~~operating as~~supporting commercial activities. We may not be successful in such a ~~public company, and our management is required to devote substantial time to new compliance initiatives.~~transition.

As a public company listed on the Nasdaq Global Market, we incur significant legal, accounting and other expenses that we did not incur as a private company. In addition, the Sarbanes-Oxley Act, as well as rules subsequently implemented by the SEC, and the Nasdaq Global Market have imposed various requirements on public companies. In July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) was enacted. There are significant corporate governance and executive compensation related provisions in the Dodd-Frank Act that require the SEC to adopt additional rules and regulations in these areas such as “say on pay” and proxy access. Recent legislation permits smaller “emerging growth companies” to implement many of these requirements over a longer period and up to five years from the pricing of our initial public offering. We intend to continue to take advantage of this new legislation but cannot guarantee that we will not be required to implement these requirements sooner than budgeted or planned and thereby incur unexpected expenses. Stockholder activism, the current political environment and the current high level of government intervention and regulatory reform may lead to substantial new regulations and disclosure obligations, which may lead to additional compliance costs and impact the manner in which we operate our business in ways we cannot currently anticipate. Our management and other personnel need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations increase our legal and financial compliance costs and make some activities more time- consuming and costlier. For example, these rules and regulations make it more difficult and more expensive for us to obtain director and officer liability insurance and we are required to incur substantial costs to maintain our current levels of such coverage.

IfWe may need additional funding, and if we are unable to raise ~~additional~~ capital when needed, we ~~may~~could be forced to delay, reduce or eliminate our product development ~~programs~~activities or other operations.*commercialization efforts.

~~Since our inception, we~~Our operations have ~~used substantial~~consumed significant amounts of cash tosince inception. Based upon our current operating plan, we believe that our cash and cash equivalents will fund our ~~operations~~operating and capital expenses for at least three years. We expect ~~we will continue~~our spending levels to ~~incur significant losses~~ increase in connection with seeking regulatory approval and preparing for commercialization of neffy for the ~~foreseeable future. The development~~emergency treatment of biopharmaceutical product candidates is capital intensive. As our product candidates enter and advance through preclinical studies and potential clinical trials, we will need substantial additional funds to expand our clinical, regulatory, quality and manufacturing capabilities.Type I allergic reactions. In addition, if we obtain ~~marketing~~regulatory approval for ~~any~~the marketing of ~~our product candidates,~~neffy, we expect to incur significant ~~commercialization~~ expenses related to commercial launch, product sales, medical affairs, marketing, ~~sales,~~ manufacturing and distribution. ~~Furthermore,~~Further, we ~~have incurred and~~ expect ~~to continue~~ to incur additional costs associated with operating as a public company. Even if our nonclinical and clinical development of neffy is successful and we are able to gain marketing approval for neffy for the emergency treatment of Type I allergic reactions in the timeframe we anticipate, we may require significant additional amounts of cash in order to launch and commercialize neffy for this indication in the United States or for any additional indications for which neffy receives regulatory approval. In addition, other unanticipated costs may arise in the course of our development efforts. Because the outcome of our ongoing and anticipated clinical trials and timeframe for regulatory approvals for neffy is highly uncertain, we cannot reasonably estimate the actual amounts of cash necessary to successfully complete the development and commercialization of neffy for any indication we are pursuing.

We cannot be certain that additional funding will be available on acceptable terms, or at all. The global credit and financial markets have experienced extreme volatility and disruptions, including diminished liquidity and credit availability, declines in ~~March 2022,~~consumer confidence, declines in economic growth, increases in unemployment rates, inflation, bank failures and uncertainty about economic stability. If the equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult, more costly or more dilutive.

We believe that our existing cash and cash equivalents ~~restricted cash, and investments~~ will be sufficient to fund our operating expenses and capital expenditure requirements into the second half of 2026. However, we believe that our existing cash, cash equivalents, restricted cash, and investments will not be sufficient to fund any of our product candidates through regulatory approval, and we will need to raise substantial additional capital to complete the development and commercialization of our product candidates.

~~We have based these estimates on assumptions that~~planned operations for at least three years. This estimate may prove to be ~~incorrect or require adjustment as a result of business decisions,~~wrong, and we could ~~utilize~~use our available capital resources sooner than we currently expect. ~~Our future~~Further, changing circumstances, some of which may be beyond our control, could cause us to consume capital ~~requirements will depend on many factors, including:~~

Because we do not expect to generate revenue from product sales for many years, if at all, we will need to obtain substantial additional funding in connection with our continuing operations and expected increases in expenses. Until such time as we can generate significant revenue from sales of our product candidates, if ever, we expect to finance our cash needs through equity offerings, debt financings or other capital sources, including potential collaborations, licenses or other similar arrangements. In addition, we may seek additional capital due to favorable market conditions or strategic considerations, even if we believe we have sufficient funds for our current or future operating plans. The impact of the COVID-19 pandemic on capital markets may affect the availability, amount and type of financing available to us in the future.licensing agreements. If we are unable to raise additional capital ~~when needed~~in sufficient amounts or on ~~attractive~~ terms acceptable to us, we may have to significantly delay, scale back or discontinue the development or potential commercialization of neffy for additional indications. We may need to seek licensing and collaboration partners for neffy for commercialization in additional indications on terms that are less favorable than might otherwise be available or relinquish or license on unfavorable terms our rights to neffy in markets where we otherwise would ~~be forced~~seek to ~~delay, reduce,~~pursue development or ~~eliminate~~commercialization ourselves. Any of the above events could significantly harm our ~~research~~business, prospects, financial condition, and ~~development programs or future commercialization efforts.~~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 product ~~candidates.~~candidate.*

~~Until such time, if ever, as~~We expect our expenses to increase in connection with our planned operations. Based upon our current operating plan, we believe that our cash and cash equivalents will fund our operating and capital expenses for at least three years. However, unless and until we can generate a substantial ~~product~~amount of revenue from neffy, we ~~expect~~may seek to finance our ~~operations~~future cash needs through public or private equity offerings, royalty-based or debt financings, collaborations, licensing arrangements or other sources, or any combination of the foregoing. In addition, we may seek additional capital ~~sources, including potential collaborations, licenses,~~due to favorable market conditions or ~~other similar arrangements.~~ strategic considerations, even if we believe that we have sufficient funds for our current or future operating plans.

To the extent that we raise additional capital through the sale of common stock, convertible securities or other equity ~~or convertible debt~~ securities, ~~your ownership interest will~~stockholders’ interests may be diluted, and the terms of these securities ~~may~~could include liquidation or other preferences and anti-dilution protections that could adversely affect ~~your rights as a common stockholder. Debt~~our stockholders’ rights. In addition, new debt financing, if available, may result in fixed payment obligations and may involve agreements that include restrictive covenants that further ~~limiting or restricting~~limit our ability to take specific actions, such as ~~further limitations on~~incurring additional debt, making capital expenditures, creating liens, redeeming stock or declaring dividends, which could adversely impact our ability to ~~incur additional debt, make capital expenditures or declare dividends.~~conduct our business. In addition, securing financing could require a substantial amount of time and attention from our management and may divert a disproportionate amount of their attention away from day-to-day activities, which may adversely affect their ability to oversee the development and potential future commercialization of neffy.

If we raise additional funds through collaborations or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams ~~research programs~~ or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

~~The COVID-19 pandemic has had, and~~Changes in tax law could continue to have, an adverse impact on our business, including on our preclinical studies and planned clinical trials, supply chain, and business development activities.*

In December 2019, COVID-19, a novel strain of coronavirus, was first reported in Wuhan, China and has since become a global pandemic. The President of the United States declared the COVID-19 pandemic a national emergency and many states and municipalities in the Unites States have taken aggressive actions to reduce the spread of the disease, including limiting non-essential gatherings of people, ceasing all non-essential travel, ordering certain businesses and government agencies to cease non-essential operations at physical locations and issuing “shelter-in-place” orders which direct individuals to shelter at their places of residence (subject to limited exceptions). For example, on March 23, 2020, the Office of the Governor issued Proclamation 20-25, ordering all individuals in the State of Washington to stay at their place of residence except as needed to maintain continuity of operations of the federal critical infrastructure sectors. As a result of the Washington state order, almost all of our non-lab based employees were telecommuting, which impacted certain of our operations and may continue to do so over the long term. We may experience further limitations on employee resources in the future, including because of sickness of employees or their families. The effects of government actions and our own policies and those of third parties to reduce the spread of COVID-19 may negatively impact productivity and slow down or delay our preclinical studies, future clinical trials and research and development activities, and may cause disruptions to our supply chain and impair our ability to execute our business development strategy. In the event that government authorities were to enhance current restrictions, our employees who currently are not telecommuting may no longer be able to access our facilities, and our operations may be further limited or curtailed.

~~As COVID-19 continues to spread, we may experience ongoing disruptions that could severely impact our business, preclinical studies and planned clinical trials, including:~~

~~These and other disruptions in our operations and the global economy could negatively impact our business, operating results, and financial condition.~~

Our prior clinical trials for SBT6050 and SBT6290 were, and our future clinical trials may be, affected by the COVID-19 pandemic. For example, some of our prior clinical trial sites slowed down or stopped further enrollment of new patients in clinical trials, and otherwise curtailed certain operations. Similarly, our ability to recruit and retain principal investigators and site staff who, as healthcare providers, may have heightened exposure to COVID-19, may be adversely impacted. Our planned clinical trials may also be impacted by interruptions or delays in the operations of the FDA and comparable foreign regulatory agencies. We and our CROs may need to make certain adjustments to the operation of our planned trials in an effort to ensure the monitoring and safety of patients and minimize risks to trial integrity during the pandemic in accordance with the guidance issued by the FDA. Many of these adjustments may be new and untested, may not be effective, and may have unforeseen effects on the enrollment, progress and completion of these trials and the findings from these trials. These events could delay our planned clinical trials, increase the cost of completing our planned clinical trials and negatively impact the integrity, reliability or robustness of the data from our planned clinical trials.

In addition, quarantines, shelter-in-place and similar government orders, or the perception that such orders, shutdowns or other restrictions on the conduct of business operations could occur, related to COVID-19 or other infectious diseases could impact personnel at third-party manufacturing facilities or CROs upon which we rely, or the availability or cost of materials or supplies, which could disrupt the supply chain for our product candidates or for performing preclinical studies. For example, we depend on the availability of various animals, including rodents and non-human primates, to conduct certain preclinical studies that we are required to complete prior to submitting an IND and initiating clinical development or to continue clinical development, including pharmacological and toxicology evaluations. There is currently a global shortage of animals available for drug development, due in part to an increase in demand from companies and other institutions developing vaccines and treatments for COVID-19. This has caused the cost of obtaining animals for our preclinical studies to increase dramatically and, if the shortage continues, could also result in delays to our development timelines. To the extent our suppliers and service providers are unable to comply with their obligations under our agreements with them or they are otherwise unable to deliver or are delayed in delivering goods and services to us due to the COVID-19 pandemic, our ability to continue meeting clinical supply demand for our product candidates or otherwise advancing development of our product candidates may become impaired.

We face risks related to the health, safety, morale, and productivity of our employees, including the safe occupancy of our sites during the pandemic. In the third quarter of 2021, we transitioned to a return-to-site phase for our non-lab based employees. Our job site enhancements and risk protocols, which include health screenings and COVID-19 testing and vaccine requirements, do not guarantee that we can maintain the continued safe occupancy of our sites and may adversely impact employee recruitment and retention. On-site employees testing positive for COVID-19 could lead to mandatory quarantines and potential site shutdowns. In the first quarter of 2022 and continuing to the present, the Omicron variant affected our staff, our clinical sites, our CROs and our third-party manufacturers.

The spread of COVID-19 and actions taken to reduce its spread may also materially affect us economically. While the potential economic impact brought by, and the duration of, the COVID-19 pandemic may be difficult to assess or predict, there could be a significant disruption of global financial markets, reducing our ability to access capital, which could in the future negatively affect our liquidity and financial position. In addition, the trading prices for other biopharmaceutical companies have been highly volatile as a result of the COVID-19 pandemic. As a result, we may face difficulties raising capital through sales of our common stock or such sales may be on unfavorable terms.

COVID-19 and actions taken to reduce its spread continue to rapidly evolve. The extent to which COVID-19 has or may continue to impede the development of our product candidates, reduce the productivity of our employees, disrupt our supply chains, delay our preclinical studies and future clinical trials, reduce our access to capital or limit our business development activities, will depend on future developments, which are highly uncertain and cannot be predicted with confidence. To the extent the COVID-19 pandemic otherwise adversely affects our business and financial ~~results, it~~condition.

The rules dealing with U.S. federal, state and local income taxation are constantly under review by persons involved in the legislative process and by the Internal Revenue Service and the U.S. Treasury Department. Changes to tax laws (which changes may ~~also~~ have retroactive application) could adversely affect us or holders of our common stock. In recent years, many such changes have been made and changes are likely to continue to occur in the future. Future changes in tax laws could have a material adverse effect on our business, cash flow, financial condition, realization of ~~heightening many of the other risks described in this “Risk Factors” section, such as those relating to the timing and~~tax assets or results of ~~our planned clinical trials and our financing needs.~~operations.

Risks Related to the ~~Discovery,~~ Development ~~and Regulatory Approval~~ of ~~Our~~neffy or Any Future Product Candidates

We currently depend on the success of neffy, which is our only current product candidate. If we are ~~early~~unable to obtain regulatory approval for, and successfully commercialize, neffy, or experiences significant delays in doing so, our ~~development efforts and all of our product candidates and research programs are in preclinical development or discovery stage.~~business will be materially harmed.

We ~~are early~~currently only have one product candidate, neffy, and our business and future success depends entirely on our ability to develop, obtain regulatory approval for, and then successfully commercialize, neffy, which is currently in clinical development for the emergency treatment of Type I allergic reactions in adults and children age 4 to 18 years. This may make an investment in our company riskier than similar companies that have multiple product candidates in active development that may be able to better sustain failure of a lead product candidate.

We currently have no products approved for marketing and are investing the majority of our efforts and most of our operations to date have been limited to developing our platform technologies and conducting drug discovery and preclinical studies. While we performed limited clinical trials for our now discontinued SBT6050 and SBT6290 programs, we have not begun clinical trials for any of our current product candidates or development programs. Our current product candidates remainfinancial resources in the preclinical and discovery stage. As a result, we have limited infrastructure, experience conducting clinical trials as a company and regulatory interactions, and cannot be certain that our planned clinical trials will be completed on time, if at all, that our planned development programs would be acceptable to the FDA or other comparable foreign regulatory authorities, or that, if approval is obtained, such product candidates can be successfully commercialized.

~~Because of the early stage of~~ development of our ~~products~~sole product candidate, neffy, for the emergency treatment of Type I allergic reactions and potential other indications. Successful continued development and ultimate regulatory approval of neffy for our initial indication and potential additional indications is critical to the future success of our business. We will need to successfully complete our clinical development of neffy for the emergency treatment of Type I allergic reactions and other indications. The future regulatory and commercial success of neffy and any future product candidates ~~our ability~~is subject to ~~eventually generate significant revenues from product sales will depend on~~ a number of ~~factors, including:~~risks, including the following:

Many of these risks are beyond our control, including the risks related to clinical development, the regulatory submission and review process, potential threats to our intellectual property rights and the manufacturing, marketing and sales efforts of any ~~product following approval, if any.~~

current or future collaboration partner. If we ~~do not achieve one~~are unable to develop, receive regulatory approval for, or ~~more~~successfully commercialize neffy for the indications we are developing it for, or if we experience delays as a result of any of these ~~requirements~~risks or otherwise, our business will be materially harmed.

In addition, of the large number of products in development in the pharmaceutical industry, only a ~~timely manner,~~small percentage result in the submission of an NDA to the FDA or a MAA to the EMA, and even fewer are approved for marketing and commercialization. Furthermore, even if we ~~could experience significant delays~~receive regulatory approval to market neffy for any indication, any such approval may be subject to limitations on the indications or ~~an inability~~uses or the patient populations for which we may market the product. Accordingly, even if we are able to obtain the requisite financing to continue to fund our development activities, we cannot assure you that we will successfully develop or commercialize neffy for any indication. If we or any of our current or future licensing and collaboration partners are unable to develop, or obtain regulatory approval for, or, if approved, successfully commercialize ~~our product candidates, which would materially harm~~neffy for its initial indication or potential additional indications, we may not be able to generate sufficient revenue to continue our business. In addition, our failure to satisfy other regulatory requirements could adversely affect our development efforts for neffy in other indications.

~~Preclinical~~The denial of regulatory approval for neffy could mean that we need to delay or even cease operations, and ~~clinical development is~~ a ~~lengthy, expensive,~~delay in obtaining such approval would delay commercialization of neffy and ~~uncertain process. The~~adversely impact our ability to generate revenue, business and results of ~~preclinical studies and early clinical trials~~operations.

If we are not ~~always predictive of future results. Any product candidate that~~successful in commercializing neffy, or are significantly delayed in doing so, our business will be materially harmed, and we ~~advance into clinical trials, including from our SBT8230 program,~~ may ~~not achieve favorable results in later clinical trials, if~~need to curtail or cease operations. We currently have no pharmaceutical products approved for marketing, and we may never obtain regulatory approval to market and commercialize neffy for any ~~or receive marketing approval.~~

indication. The research, testing, manufacturing, labeling, approval, sale, marketing and ~~development~~distribution of ~~drugs and biological~~pharmaceutical products ~~is extremely risky. Only a small percentage of product candidates that enter~~are subject to extensive regulation by the ~~development process ever receive marketing approval. Before obtaining marketing approval from regulatory authorities for~~FDA, the sale of our product candidates, we must conduct extensive clinical trials to demonstrate the safety and efficacy of the product candidates in humans. Preclinical and clinical development is expensive and can take many years to complete, and their outcome is inherently uncertain. We may face unforeseen challenges in our product candidate development strategy, and we can provide no assurances that we will ultimately be successful in our future clinical trials or that our product candidates will be able to receive regulatory approval. The results of preclinical studies and early clinical trials of our product candidatesEMA, and other products, even those with the same or similar mechanisms of action, may not be predictive of the results of later-stage clinical trials. For example, it is not uncommon for product candidates to exhibit unforeseen safety or efficacy issues when tested in humans despite promising results in preclinical animal models. Future results of preclinical and clinical testing of our product candidates are also less certain due to the novel and relatively untested nature of our approach to TLR8 and related platform technologies. In general, clinical trial failure may result from a multitude of factors including flaws in study design, dose selection, patient enrollment criteria and failure to demonstrate favorable safety or efficacy traits. As such, failure in clinical trials can occur at any stage of testing. For example, on March 28, 2022, we made the decision to discontinue our clinical development programs for SBT6050 and SBT6290 due to SBT6050 exhibiting limited monotherapy activity and dose-limiting adverse events when used in combination with pembrolizumab. A number of companies in the biopharmaceutical industry have suffered setbacks in the advancement of clinical trials due to lack of efficacy or adverse safety profiles, notwithstanding promising results in earlier trials.

~~Prior to obtaining approval to commercialize any product candidate~~regulatory agencies in the United States, EU and other countries, and such regulations differ from country to country. We are not permitted to market neffy until we receive approval or ~~abroad, we must~~marketing authorization from the relevant regulatory authority. The FDA, the EMA or any other foreign regulatory agency can delay, limit or deny approval to market neffy for many reasons, including:

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our inability to ~~conduct additional preclinical studies or clinical trials for~~enroll an adequate number of patients in and successfully complete our ~~product candidates either prior to or post-approval, or it may object to elements of our clinical development program, requiring their alteration.~~

~~If the results of our~~ongoing and any future clinical trials, ~~are inconclusive or if there are safety concerns or other adverse events associated with~~including our ~~product candidates, we may:~~

•

~~incur unplanned costs;~~pediatric clinical study EPI-10;

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~~be delayed in~~the FDA’s, the EMA’s or ~~prevented from continuing~~any other applicable foreign regulatory agency’s requirement for additional nonclinical or clinical ~~development and obtaining marketing approval for our product candidates;~~studies or trials, including studies to satisfy applicable rules governing combination products;

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~~obtain approval~~the FDA’s, the EMA’s or any other applicable foreign regulatory agency’s having differing requirements for ~~indications or patient populations that are not as broad as intended or desired;~~the trial protocols used in our clinical trials;

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~~obtain approval with~~the FDA’s, the EMA’s or any other applicable foreign regulatory agency’s non-approval of the formulation, labeling ~~that includes significant use~~ and/or ~~distribution restrictions or safety warnings including boxed warnings;~~the specifications of neffy;

•

~~be subject~~the FDA’s, the EMA’s or any other applicable foreign regulatory agency’s failure to ~~changes~~accept the manufacturing processes or ~~limitations in the way the product is administered;~~

•

~~be required to perform additional clinical trials 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 (REMS);~~

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~~be subject to the addition of labeling statements, such as warnings or contraindications;~~

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~~be sued;~~third-party manufacturers with which we contract; or

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~~experience damage~~the potential for approval policies or regulations of the FDA, the EMA or any other applicable foreign regulatory agencies to significantly change in a manner rendering our ~~reputation.~~clinical data insufficient for approval.

Treatment of patients with chronic disease, such as hepatitis B virus infection, with our product candidates may be used in combination with other drugs, such as monoclonal antibodies or other protein-based drugs, small molecule agents, and RNAi therapeutics which can cause side effects or adverse events that are unrelated to our product candidate but may still impact the success of our future clinical trials. Additionally, our product candidates could potentially cause adverse events. As described above, any of these events could prevent us from obtaining regulatory approval or achieving or maintaining market acceptance of our product candidates and impair our ability to commercialize our products. Because all of our product candidates are derived from our platform technologies, a clinical failure of one of our product candidates may also increase the actual or perceived likelihood that our other product candidates will experience similar failures.

Of the large number of pharmaceutical products in development, only a small percentage successfully complete the FDA, the EMA or ~~comparable foreign~~other regulatory ~~authorities’~~ approval processes and are commercialized. The lengthy approval process as well as the unpredictability of future clinical trial results may result in our failing to obtain regulatory approval to market our product candidates, which would significantly harm our business, financial condition, results of operations and prospects.

Even if we eventually complete clinical testing and ~~receive~~receives approval of ~~a biologics license application (BLA)~~an NDA, MAA or other foreign marketing ~~application~~authorization for ~~our product candidates,~~neffy, the FDA, the EMA or ~~the comparable~~other applicable foreign regulatory ~~authorities~~agency may grant approval contingent on the performance of costly additional clinical trials, ~~including post-market clinical trials.~~which may be required after approval. The FDA, the EMA or ~~the comparable~~other applicable foreign regulatory ~~authorities~~agency may also ~~may~~ approve ~~a product candidate~~ neffy for a more limited indication and/or a narrower patient population than we originally request, and the FDA, the EMA or ~~comparable~~any other applicable foreign regulatory ~~authorities~~agency may not approve the labeling that we believe is necessary or desirable for the successful commercialization of ~~a product candidate.~~neffy. Any delay in obtaining, or inability to obtain, applicable regulatory ~~approval~~approvals would delay or prevent commercialization of ~~that product candidate~~ neffy and would materially adversely impact our business and prospects.

~~In addition,~~39

We have never commercialized a product and may experience delays or unexpected costs or difficulties in obtaining regulatory approval for neffy for its initial indication or potential additional indications.

We have never obtained regulatory approval for, or commercialized, a pharmaceutical product. It is possible that the FDA and the EMA may refuse to accept any or all of our submitted or planned NDAs and MAAs for substantive review or may conclude after review of our data that an application is insufficient to obtain regulatory approval for neffy or any future product candidates. For example, the EMA required us to submit our preclinical dog anaphylaxis study results during the review process of our prior 1.0 mg dose of neffy MAA submission. If the FDA and the EMA do not initially approve any of our submitted or planned NDAs or MAAs, such regulatory authorities may require that we conduct additional costly clinical, nonclinical or manufacturing validation studies before they will reconsider future applications. Depending on the extent of these or any other required studies, approval of any NDA, MAA or other application that we submit may be significantly delayed, possibly for several years, or may require us to expend more resources than we have available. Any failure or delay in obtaining regulatory approvals would prevent us from commercializing neffy for any indication or any other product candidate, generating revenues and achieving and sustaining profitability. It is also possible that additional studies, if performed and completed, may not be considered sufficient by the FDA or EMA to approve any NDA, MAA or other application that we submit. For example, the FDA has indicated that the ongoing pediatric clinical trial, EPI-10, would be sufficient to support a submission of our NDA for pediatric approval of a 2.0 mg dose of neffy for children weighing more than 30 kg, and to support a separate submission for pediatric approval of a 1mg dose of neffy for children weighing between 15 and 30 kg; however, the FDA has not reviewed our complete clinical data, to date, and therefore there is no guarantee that the FDA will determine that the NDA currently under review by the FDA for approval of a 2.0 mg dose of neffy for children weighing more than 30 kg or any future NDA is sufficient for issuing a marketing approval of neffy for the emergency treatment of Type I allergic reactions in children. If any of these outcomes occur, we may be forced to abandon the development of neffy or any future product candidates, which would materially adversely affect our business and could potentially cause us to cease operations. We face similar risks for applications in other foreign jurisdictions. In addition, difficulties in obtaining approval of neffy for the emergency treatment of Type I allergic reactions, could adversely affect our efforts to seek approval from regulatory authorities for neffy for use in other potential indications.

The regulatory approval processes of the FDA, the EMA and other comparable foreign authorities are lengthy, time-consuming and inherently unpredictable, and if we are ultimately unable to obtain regulatory approval for neffy or any future product candidates, our business will be substantially harmed.*

We, and any current and future licensing and collaboration partners, are not permitted to commercialize, market, promote or sell any product candidate in the United States or the EU without obtaining regulatory approval from the FDA or the EMA, respectively. Regulatory authorities in other jurisdictions may have similar requirements. The time required to obtain approval by the FDA, the EMA and other comparable foreign regulatory authorities is unpredictable, but typically takes many years following the commencement of clinical trials and depends upon numerous factors, including substantial discretion of such regulatory authorities. In addition, approval policies, regulations, or the type and amount of preclinical and clinical data necessary to gain approval may change during the course of a product candidate’s clinical development and may vary among jurisdictions. To date, other than the NDA for neffy that we submitted to the FDA in the third quarter of 2022 and our MAA for neffy that was filed and validated for review by the EMA in the fourth quarter of 2022, we have not submitted any product approval submissions for neffy or any other product candidate to the FDA, EMA or other comparable foreign regulatory authorities for neffy and there can be no assurance that we will receive such approval from such regulatory authorities after submitting any product approval application. Even though a majority of the FDA’s Advisory Committee on May 11, 2023 voted in favor of the data from our neffy PK/PD results supporting a favorable benefit-risk assessment in adults and children >30 kg for the emergency treatment of Type I allergic reactions including anaphylaxis, the recommendation by the Advisory Committee is non-binding and the FDA may issue a Complete Response Letter on our NDA rather than approval.

Clinical testing is expensive, difficult to design and implement, can take many years to complete and is inherently uncertain as to outcome. We cannot guarantee that any clinical trials will be conducted as planned or completed on schedule, if at all. The clinical development of neffy or any future product candidates is susceptible to the risk of failure inherent at any stage of development, including failure to demonstrate safety or efficacy in a clinical trial or across a broad population of patients, the occurrence of adverse events that are severe or medically or commercially unacceptable, failure to comply with protocols or applicable regulatory requirements, and determination by the FDA, the EMA or any other comparable foreign regulatory authority that a product candidate may not continue development or is not approvable. Additionally, our expenses could increase if it is required by the FDA, the EMA or any other comparable foreign regulatory authority to perform clinical trials or studies in addition to those currently expected, or if there are any delays in completing our clinical trials or the development of neffy for additional indications. It is possible that even if neffy or any future product candidate has a beneficial effect, that effect will not be detected during clinical evaluation as a result of one or more of a variety of factors, including the size, duration, design, measurements, conduct or analysis of our clinical trials. Conversely, as a result of the same factors, our clinical trials may indicate an apparent positive effect of neffy or any future product candidate that is greater than the actual positive effect, if any. Similarly, in our clinical trials we may fail to detect toxicity of or intolerability caused by neffy or any future product candidate, or mistakenly believe that neffy or any future product candidates are toxic or not well-tolerated when that is not in fact the case. neffy and any future product candidates could fail to receive regulatory approval for many reasons, including the following:

•

the FDA, the EMA or other comparable foreign regulatory authorities may ~~change their policies, adopt~~disagree as to the design or implementation of our clinical trials;

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we may be unable to demonstrate to the satisfaction of the FDA, the EMA or other comparable foreign regulatory authorities that a product candidate is safe and effective for its proposed indication and, if necessary, that a product candidate and any active components thereof are safe and effective for the proposed indication;

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the FDA, the EMA or other comparable foreign regulatory authorities may find deficiencies with regards to the formulation components or specifications of neffy, including, without limitation, with respect to appearance, identity, impurities, or particle size;

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the results of clinical trials may not meet the level of evidence or criteria required by the FDA, the EMA or other comparable foreign regulatory authorities for approval;

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we may be unable to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks;

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the FDA, the EMA and comparable authorities in other countries may disagree with our interpretation of data from clinical trials or nonclinical studies and may require additional ~~regulations~~trials or ~~revise existing regulations~~ studies to support marketing approval;

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the data collected from clinical trials of neffy or ~~take other actions, which may prevent or delay approval of our~~any future product candidates ~~under development on a timely basis. Such policy~~may not be sufficient to support the submission of an NDA or ~~regulatory changes could impose additional requirements upon us that could delay our ability~~other submission to the FDA or to obtain ~~approvals, increase~~regulatory approval in the ~~costs~~United States, the EU or elsewhere;

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the FDA, the EMA or other comparable foreign regulatory authorities may find deficiencies with clinical trial sites or fail to approve the manufacturing processes or facilities of ~~compliance~~third-party manufacturers with which we contract for clinical and commercial supplies; and

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the approval policies or ~~restrict~~regulations of the FDA, the EMA or other comparable foreign regulatory authorities may significantly change in a manner rendering our ~~ability~~clinical data insufficient for approval.

This lengthy approval process as well as the unpredictability of clinical trial results may result in us failing to ~~maintain~~obtain regulatory approval to market neffy or any ~~marketing authorizations~~future product candidate we ~~may~~develop, which would significantly harm our business, results of operations and prospects. Although we have ~~obtained.~~successfully completed a pre-NDA meeting with the FDA, there is no assurance that the endpoints and trial designs used for the approval of a new formulation of epinephrine for the emergency treatment of Type I allergic reactions will be acceptable for neffy

. The FDA, the EMA and other comparable foreign authorities have substantial discretion in the approval process and determining when or whether regulatory approval will be obtained for any product candidate that we develop. Even if we believe the data collected from current or future clinical trials of

~~Our~~neffy or any future product candidates are ~~based on novel technologies, which make it difficult~~promising, such data may not be sufficient to ~~predict~~support approval by the ~~timing, results and cost of product candidate development and likelihood of obtaining~~FDA, the EMA or any other regulatory ~~approval.~~authority.

~~We have concentrated our research and development efforts on product candidates using our platform technologies, and our future success depends on~~There can be no assurance that the successful development of this approach. We have not yet succeeded and may not succeed in demonstrating efficacy and safety for any product candidates based on our platform technologies in clinical trials or in obtaining marketing approval thereafter, and use of our platform technologies may not ever result in marketable products. We may also experience delays in developing a sustainable, reproducible and scalable manufacturing process or transferring that process to commercial partners or establishing our own commercial manufacturing capabilities, which may prevent us from completing our planned clinical trials or commercializing any products on a timely or profitable basis, if at all.

~~In addition, the clinical trial requirements of the~~ FDA ~~EMA~~ and other regulatory agencies, including the EMA, will not require additional clinical trials or studies to support an application for the marketing of neffy in the emergency treatment of Type I allergic reactions or any other indication. This may be the case particularly as these regulatory authorities may consult with one another or as we may be required to apprise the respective agencies of studies we are conducting of neffy in conjunction with our requests for marketing approval or in response to requests and updates from the criteria these regulators use to determine the safety and efficacy of a product candidate vary substantially according to the type, complexity, novelty and intended use and market of the potential products. The regulatory approval process for novel product candidates such as ours can be more expensive and take longer than for other, better known or extensively studied pharmaceutical or other product candidates.respective agency.

The cHBV market is also rapidly developing and our competitors may introduce new technologies that effectively target the virus lifecycle or modulate the immune response to the virus that render our technologies obsolete or less attractive. New technology could emerge at any point in the development cycle of our product candidates.

The TLR field is also rapidly evolving and as competitors use or develop alternative TLR technologies, any failures of such technologies could adversely impact our programs. For example, companies are developing other TLR8, TLR7, TLR7/8 and TLR9 agonists, some of which are conjugated to monoclonal antibodies. Regardless of our belief that our approach to activating the innate immune system has advantages, issues encountered with other TLR programs will create a negative perception of or increase scrutiny for our technologies and product candidates.

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If we experience delays or difficulties enrolling in our planned clinical trials, our research and development efforts and business, financial condition and results of operations could be materially adversely affected.

WeHowever, the FDA may not be able to ~~initiate~~continue its current pace and approval timelines could be extended, including where a pre-approval inspection or ~~continue~~an inspection of clinical sites is required and due to the COVID-19 pandemic and travel restrictions the FDA is unable to complete such required inspections during the review period.

With respect to new sites or facilities in the European Economic Area (“EEA”), which have never had a current Good Manufacturing Practices (“cGMP”) inspection or authorization, the EMA has stated that a distant assessment may be conducted in order to evaluate if the site could be authorized without an on-site pre-approval inspection. If an approval is granted, it should be indicated that the certificate has been granted on the basis of a distant assessment and an on-site inspection should be conducted when circumstances permit. If a cGMP certificate cannot be granted as a result of the distant assessment, a clock-stop in the regulatory approval process will be imposed until an on-site inspection is possible. In addition, even if we were to obtain approval, regulatory authorities may approve neffy or any future product candidates for fewer or more limited indications, may not approve the price we intend to charge for our ~~planned~~products, may grant approval contingent on the performance of costly post-marketing clinical trials, or may approve a product candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that product candidate. Any of the foregoing scenarios could materially harm the commercial prospects for neffy or any future product candidates.

If the FDA does not conclude that neffy or any future product candidates satisfy the requirements for the Section 505(b)(2) regulatory approval pathway, or if the requirements for such product candidates under Section 505(b)(2) are not as we expect, the approval pathway for those product candidates will likely take significantly longer, cost significantly more and entail significantly greater complications and risks than anticipated, and in either case may not be successful.

While we believe that we will have the necessary supporting data to submit a marketing application under Section 505(b)(2) of the Federal Food, Drug and Cosmetic Act (“Section 505(b)(2)”) regulatory pathway to the FDA for neffy for the emergency treatment of Type I allergic reactions for adults and children greater than 30 kg in weight, and upon completion of our ongoing pediatric study, EPI-10, for children between 15 and 30 kg in weight, there can be no assurance that the FDA will agree that the Section 505(b)(2) pathway is appropriate or will approve any such application or any future application for additional indication or future product candidates.

The Hatch Waxman Act added Section 505(b)(2) to the FDCA. Section 505(b)(2) permits the filing of an NDA where at least some of the information required for approval comes from studies that were not conducted by or for the applicant and for which the applicant has not obtained a right of reference. Section 505(b)(2), if available to us, would allow an NDA we submit to the FDA to rely in part on data in the public domain or the FDA’s prior conclusions regarding the safety and effectiveness of approved compounds, which could expedite the development program for our future product candidates by potentially decreasing the amount of nonclinical and/or clinical data that we would need to generate in order to obtain FDA approval. This pathway does not, however, expedite the FDA review process timelines.

If the FDA does not allow us to pursue the Section 505(b)(2) regulatory pathway as anticipated, we may need to conduct additional nonclinical studies and/or clinical trials, provide additional data and information, and meet additional standards for regulatory approval. If this were to occur, the time and financial resources required to obtain FDA approval for neffy or any future product candidate, and complications and risks associated with such product candidates, would likely substantially increase. Moreover, inability to pursue the Section 505(b)(2) regulatory pathway could result in new competitive products reaching the market more quickly than any product candidates we develop, which could adversely impact our competitive position and prospects. Even if we are allowed to pursue the Section 505(b)(2) regulatory pathway, we cannot assure you that neffy or any future product candidates we develop will receive the requisite approval for commercialization.

In addition, notwithstanding the approval of a number of products by the FDA under Section 505(b)(2), certain pharmaceutical companies and others have objected to the FDA’s interpretation of Section 505(b)(2). If the FDA’s interpretation of Section 505(b)(2) is successfully challenged, the FDA may change its Section 505(b)(2) policies and practices, which could delay or even prevent the FDA from approving any NDA that we submit under Section 505(b)(2). In addition, the pharmaceutical industry is highly competitive, and Section 505(b)(2) NDAs are subject to certain requirements designed to protect the patent rights of sponsors of previously approved drugs that are referenced in a Section 505(b)(2) NDA. These requirements may give rise to patent litigation and mandatory delays in approval of our NDAs for up to 30 months or longer depending on the outcome of any litigation. It is not uncommon for a manufacturer of an approved product to file a citizen petition with the FDA seeking to delay approval of, or impose additional approval requirements for, pending competing products. If successful, such petitions can significantly delay, or even prevent, the approval of a new product. Even if the FDA ultimately denies such a petition, the FDA may substantially delay approval while it considers and responds to the petition. In addition, even if we are able to utilize the Section 505(b)(2) regulatory pathway, there is no guarantee this would ultimately lead to streamlined product development or earlier approval. Finally, a competitor might receive FDA approval before neffy and obtain non-patent market exclusivity, which could delay approval of neffy.

We may incur unexpected costs or experience delays in completing, or ultimately be unable to ~~identify~~complete, the development and ~~enroll~~commercialization of neffy or any future product candidates.

To obtain the requisite regulatory approvals to market and commercialize neffy and any future product candidates, we must demonstrate through extensive nonclinical studies and clinical trials that such product candidates are safe and effective for their intended use in humans. Nonclinical and clinical testing are expensive and can take many years to complete, and their outcome is inherently uncertain. Failure can occur at any time during the clinical trial process and our future clinical trial results may not be successful.

We may experience delays in completing our clinical trials or nonclinical studies and initiating or completing additional studies or clinical trials. We may also experience numerous unforeseen events during our clinical trials that could delay or prevent our ability to receive marketing approval or commercialize neffy or any future product candidates we develop, including:

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regulators, or IRBs or other reviewing bodies may not authorize us or our investigators to commence a ~~sufficient~~clinical trial, or to conduct or continue a clinical trial at a prospective or specific trial site;

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we may not reach an agreement on acceptable terms with prospective CROs and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;

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a delay in receiving study or clinical trial material from outside the United States;

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the number of ~~healthy volunteers~~subjects or ~~eligible~~ patients ~~to participate~~required for clinical trials of neffy in an indication or any future product candidate may be larger than we anticipate, enrollment in these clinical trials asmay be insufficient or slower than we anticipate, and the number of clinical trials being conducted at any given time may be high and result in fewer available patients for any given clinical trial, or patients may drop out of these clinical trials at a higher rate than we anticipate;

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our third-party contractors, including those manufacturing neffy or any future product candidates or conducting clinical trials on our behalf, may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all;

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we may have to amend clinical trial protocol(s) submitted to regulatory authorities or conduct additional studies to reflect changes in regulatory requirements or guidance, which we may be required to resubmit to an IRB and regulatory authorities for re-examination;

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unforeseen safety events may occur during the course of a clinical trial and these events may result in the temporary suspension or termination of a clinical trial, or require urgent safety measures or restrictions to protect human subjects during the conduct of a clinical trial;

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regulators, IRBs or other reviewing bodies may fail to approve or subsequently find fault with the manufacturing processes or facilities of third-party manufacturers with which we have entered and may enter into agreement for clinical and commercial supplies, or the supply or quality of neffy or any future product candidate or other materials necessary to conduct clinical trials of neffy or any future product candidates may be insufficient, inadequate or not available at an acceptable cost, or we may experience interruptions in supply; and

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the potential for approval policies or regulations of the FDA, the EMA or any other applicable foreign regulatory agencies to significantly change in a manner rendering our clinical data insufficient for approval.

Regulators, IRBs of the institutions in which clinical trials are being conducted, or data monitoring committees may suspend or terminate a clinical trial due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA or other regulatory ~~agencies. Subject enrollment, a significant factor~~authorities resulting in the ~~timing~~imposition of a clinical ~~trials, is affected by many factors including the size and nature~~hold, unforeseen safety issues or adverse side effects, failure to appear to demonstrate a benefit from using a drug, changes in governmental regulations or administrative actions or lack of ~~the patient population, the proximity of patients~~adequate funding to ~~clinical sites, the eligibility criteria for~~continue the clinical trial, the design of the clinical trial, competing clinical trials and clinicians’ and patients’ perceptions as to the potential advantages of the product candidate being studied in relation to other available therapies, including any new drugs that may be approved for the indications we are investigating.trial.

The timely completion of clinical trials in accordance with their protocols depends, among other things, on our ability to enroll a sufficient number of patients who remain in the study until its conclusion. We may experience difficulties in patient enrollment or retention in our planned clinical trials for a variety of reasons. The enrollment of patients depends on many factors, including:

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~~the eligibility criteria defined in the protocol;~~

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~~the size of the patient population required for analysis of the trial’s primary endpoints;~~

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~~the proximity of patients to study sites;~~

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~~the design of the trial;~~

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~~our ability to recruit clinical trial investigators with the appropriate competencies and experience;~~

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clinicians’ and patients’ perceptions as to the potential advantages of the product candidate being studied in relation to other available therapies, including any new drugs that may be approved for the indications we are investigating;

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~~our ability to obtain and maintain patient consents; and~~

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~~the risk that patients enrolled in clinical trials will drop out of the trials before completion.~~

In addition, our planned clinical trials may compete with other clinical trials for product candidates that are in the same therapeutic areas as our product candidates, and this competition will reduce the number and types of patients available to us, because some patients who might have opted to enroll in our trials may instead opt to enroll in a trial being conducted by one of our competitors. Delays in patient enrollment may result in increased costs or may affect the timing or outcome of the planned clinical trials, which could prevent completion of these trials and adversely affect our ability to advance the development of our product candidates.

Serious adverse events, undesirable side effects or other unexpected properties of our product candidates may be identified during development or after approval, which could lead to the discontinuation of our clinical development programs, refusal by regulatory authorities to approve our product candidates or, if discovered following marketing approval, revocation of marketing authorizations or limitations on the use of our product candidates thereby limiting the commercial potential of such product candidate.

As we continue developing our product candidates and initiate any future clinical trials of our product candidates, serious adverse events (SAEs), undesirable side effects, relapse of disease, or unexpected characteristics may emerge causing us to abandon these product candidates or limit their development to more narrow uses or subpopulations in which the SAEs or undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective or in which efficacy is more pronounced or durable. Should we observe any SAEs in our planned clinical trials or identify other undesirable side effects or other unexpected findings, depending on their severity, our trials could be delayed or even stopped and our development programs may be halted entirely.

Our TLR8 agonist containing product candidates, including from our SBT8230 program, activate dendritic cells among other innate immune cells, which can amplify anti-drug antibodies. As a result, significant anti-drug antibodies (ADA) generation could neutralize the effects of SBT8230 by reducing exposure. The development of ADAs could also trigger hypersensitivity reactions that manifest as SAEs. If patients experience adverse events due to ADAs, our preclinical studies and future trials could be delayed or stopped and our development programs may be halted entirely if this is observed during clinical development. Even if ADAs are not detected in the early clinical trials, they may be detected after product launch and may significantly reduce the commercial potential or even result in the product being pulled from the market.

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~~Even if~~Negative or inconclusive impressions of the results from our ~~product candidates initially show promise in early~~earlier clinical trials of neffy for the ~~side effects~~emergency treatment of ~~biological~~Type I allergic reactions or any other clinical trial or nonclinical studies in animals that we have conducted, could mandate repeated or additional nonclinical studies or clinical trials and could delay marketing approvals or result in changes to or delays in nonclinical studies or clinical trials of neffy for other indications. While data from our studies of neffy demonstrated nasally delivered epinephrine reached blood levels comparable to those of already approved epinephrine injectable products, ~~are frequently only detectable after they are tested in larger, longer, and more extensive~~we do not know whether any future clinical trials or studies that we may conduct will demonstrate adequate efficacy and safety necessary to result in ~~some cases, after they are made available~~obtaining regulatory approval to ~~patients on a commercial scale after approval. Sometimes, it can be difficult~~market neffy for its initial indication or potential additional indications, or any future product candidate. If later stage clinical trials, including our ongoing pediatric clinical study, EPI-10, do not produce favorable results that meet regulatory authority criteria, our ability to ~~determine if~~obtain regulatory approval for neffy for the ~~serious adverse~~emergency treatment of Type I allergic reactions or ~~unexpected side effects were caused by the~~potential additional indications, or any future product candidate, may be adversely impacted.

Our failure to successfully initiate and complete clinical trials of neffy for the emergency treatment of Type I allergic reactions or ~~another factor, especially in oncology subjects who may suffer from other medical conditions~~potential additional indications and ~~be taking other medications. If serious adverse or unexpected side effects are identified during development or after~~to demonstrate the efficacy and safety of neffy, necessary to obtain regulatory approval ~~and are determined~~ to ~~be attributed to~~market neffy would significantly harm our business. Our product candidate development costs will also increase if we experience delays in testing or regulatory approvals and we may be required to ~~develop a REMS~~obtain additional funds to ~~ensure~~complete clinical trials. We cannot assure you that our clinical trials will begin as planned or be completed on schedule, if at all, or that we will not need to restructure our trials after they have begun. Significant clinical trial delays also could shorten any periods during which we may have the ~~benefits of treatment with~~exclusive right to commercialize neffy or any future product candidates or allow our competitors to bring products to market before we do and impair our ability to successfully commercialize such product ~~candidate outweigh the risks for each potential patient,~~candidates, which may include, among other things, a communication plan to health care practitioners, patient education, extensive patient monitoring or distribution systems and processes that are highly controlled, restrictive and more costly than what is typical for the industry. Product-related side effects could also result in potential product liability claims. Any of these occurrences may harm our business ~~financial condition~~ and ~~prospects significantly.~~results of operations. In addition, many of the factors that cause, or lead to, delays of clinical trials may ultimately lead to the denial of regulatory approval of neffy or any future product candidate.

The results of early-stage clinical trials and preclinical studies may not be predictive of future results. Initial data in our clinical trials may not be indicative of results obtained when these trials are completed or in later stage trials.

The results of preclinical studies may not be predictive of the results of clinical trials, and the results of any early-stage clinical trials we commence may not be predictive of the results of the later-stage clinical trials. In addition, ~~if one or more~~initial data in clinical trials may not be indicative of results obtained when such trials are completed. There can be no assurance that any of our ongoing, planned or future clinical trials will ultimately be successful or support further clinical development or regulatory approval of neffy or any future product candidates. There is a high failure rate for drugs and biologics candidates ~~receives marketing approval, and we or others later identify undesirable side effects or ADAs caused by such products, a~~proceeding through clinical trials. A number of ~~potentially~~companies in the pharmaceutical and biotechnology industries have suffered significant ~~negative consequences~~setbacks in clinical development even after achieving promising results in earlier studies, and any such setbacks in our clinical development could ~~result, including:~~have a material adverse effect on our business and operating results.

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~~regulatory authorities may suspend, withdraw or limit approvals of such product, or seek an injunction against its manufacture or distribution;~~

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regulatory authorities may require additional warnings on the label, including “boxed” warnings, or issue safety alerts, Dear Healthcare Provider letters, press releases or other communications containing warnings or other safety information about the product;

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~~we may be required to create a medication guide outlining the risks of such side effects for distribution to patients;~~

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~~we may be required to change the way a product is administered or conduct additional clinical trials;~~

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~~the product may become less competitive, and our reputation may suffer;~~

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~~we may decide to remove the product from the marketplace; and~~

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~~we may be subject to fines, injunctions or the imposition of civil or criminal penalties.~~

Interim topline and preliminary data from our ~~preclinical studies~~clinical trials that we announce or ~~planned clinical trials~~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~~publish interim topline or preliminary ~~interim, or topline~~ data from our ~~preclinical studies or planned~~clinical trials. Interim data from clinical trials ~~which is based on a preliminary analysis of then-available data, and the results and related findings and conclusions~~that we may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment ~~and treatment~~ continues and more patient data become available. ~~Adverse differences between previous preliminary~~Preliminary or ~~interim data and future interim or final data could significantly harm our business prospects. We may also announce~~ topline data following the completion of a preclinical study or planned clinical trial, which may be subject to change following a more comprehensive review of the data related to the particular 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 interim, topline or 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. Topline data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published. As a result, interim ~~topline~~ and preliminary data should be viewed with caution until the final data are available. Adverse differences between preliminary or interim data and final data could significantly harm our reputation and business prospects.

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 based on what is typically extensive information, and you or others may not agree with what we determine to be 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 candidate or our business. If the interim, topline, or preliminary data that we report differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to obtain approval for and commercialize our product candidates, our business, operating results, prospects or financial condition may be harmed.

~~The regulatory approval process is lengthy, expensive and uncertain, and we may be unable to obtain regulatory approval for our product candidates under applicable regulatory requirements. The denial~~neffy or ~~delay of~~ any ~~such approval would delay commercialization of our product candidates and adversely impact our ability to generate revenue, our business and our results of operations.~~

The development, research, testing, manufacturing, labeling, approval, selling, import, export, marketing, promotion and distribution of drug products are subject to extensive and evolving regulation by federal, state and local governmental authorities in the United States, principally the FDA, and by foreign regulatory authorities, which regulations differ from country to country. Neither we nor any current or future ~~collaborator is permitted to market any of our product candidates in the United States until we receive regulatory approval of a BLA from the FDA.~~

~~Obtaining regulatory approval of a BLA can be a lengthy, expensive and uncertain process. Prior to obtaining approval to commercialize a~~ product candidate in the United States or abroad, we or our collaborators must demonstrate with substantial evidence from well-controlled clinical trials, and to the satisfaction of the FDA or other foreign regulatory agencies, that such product candidates are safe and effective for their intended uses. The number of preclinical studies and clinical trials that will be required for FDA approval varies depending on the product candidate, the disease or condition that the product candidate is designed to address, and the regulations applicable to any particular product candidate.

Results from preclinical studies and planned clinical trials can be interpreted in different ways. Even if we believe the preclinical or clinical data for our product candidates are promising, such data may ~~not be sufficient to support approval by the FDA and other regulatory authorities. Administering product candidates to humans may produce~~cause undesirable side effects, ~~which~~adverse events, or have other properties that could delay or prevent its regulatory approval, limit the commercial profile of an approved label, or result in significant negative consequences following regulatory approval, if obtained.

Undesirable side effects or adverse events caused by neffy, or any future product candidate, could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA, the EMA or ~~other~~comparable foreign regulatory authorities. Although our clinical studies to date have demonstrated that neffy is well-tolerated by patients with no serious treatment-related adverse events, and reported adverse events generally no more severe than grade 1 and comparable with injection products, and with no meaningful pain or irritation based on formal scoring, results of our ongoing or future clinical trials for neffy or any future product candidate could reveal a high and unacceptable severity and prevalence of side effects, adverse events, or unexpected characteristics. Many compounds that initially showed promise in clinical or earlier stage testing are later found to cause undesirable or unexpected side effects or adverse events that prevented further development of the compound.

If unacceptable side effects or adverse events arise in the development of neffy or any future product candidates, we, the FDA, the EMA or comparable foreign regulatory authorities, ~~denying~~the IRBs, or independent ethics committees at the institutions in which our trials are conducted, or the independent safety monitoring committee could suspend or terminate our clinical trials or regulatory authorities could order us to cease clinical trials or deny approval of aneffy or any future product ~~candidate~~candidates for any or all targeted indications. ~~The FDA may~~Treatment-emergent side effects and adverse events that are deemed to be drug-related could also ~~require us~~affect subject recruitment or the ability of enrolled subjects to ~~conduct additional studies~~complete the trial or ~~trials for our~~result in potential product ~~candidates either prior to~~liability claims. Undesirable side effects or ~~post-approval, or it may object to elements~~adverse events in one of our clinical ~~development program such as the number of subjects~~ trials for neffy in ~~our future~~one indication could adversely affect enrollment in clinical trials, ~~from~~regulatory approval and commercialization of neffy in other indications. Additionally, there may be negative findings regarding components of neffy or future product candidates by other parties. Any negative findings by third parties may impact the ~~United States.~~future approvability or labeling of

neffy

~~The FDA~~ or other product candidates we may develop. In addition, all side effects and adverse events may not be appropriately recognized or managed by the treating medical staff. Inadequate training in recognizing or managing the potential side effects and adverse events of neffy or any ~~foreign regulatory bodies can delay, limit or deny approval of our~~future product candidates ~~or require us to conduct additional preclinical or clinical testing or abandon a program for many reasons, including:~~

•

~~the FDA or the applicable foreign regulatory agency’s disagreement with the design or implementation of our planned clinical trials;~~

•

~~negative or ambiguous results from our clinical trials or results that may not meet the level of statistical significance required by the FDA or comparable foreign regulatory agencies for approval;~~

•

~~serious and unexpected drug-related side effects experienced by participants in our clinical trials or by individuals using drugs similar to our product candidates;~~

•

~~our inability to demonstrate to the satisfaction of the FDA or the applicable foreign regulatory body that our product candidates are safe and effective for the proposed indication;~~

•

~~the FDA’s or the applicable foreign regulatory agency’s disagreement with the interpretation of data from preclinical studies or clinical trials;~~

•

~~our inability to demonstrate the clinical and other benefits of our product candidates outweigh any safety or other perceived risks;~~

•

~~the FDA’s or the applicable foreign regulatory agency’s requirement for additional preclinical studies or clinical trials;~~

•

~~the FDA’s or the applicable foreign regulatory agency’s disagreement regarding the formulation, labeling and/or the specifications of our product candidates;~~

•

~~the FDA’s or the applicable foreign regulatory agency’s failure to approve the manufacturing processes or facilities of third-party manufacturers with which we contract; or~~

•

~~the potential for approval policies or regulations of the FDA or the applicable foreign regulatory agencies to significantly change in a manner rendering our clinical data insufficient for approval.~~

Of the large number of drugs in development, only a small percentage successfully complete the FDA or other regulatory approval processes and are commercialized. The lengthy approval process as well as the unpredictability of future clinical trial results maycould result in ~~our failing to obtain regulatory approval to market our product candidates, which would significantly~~patient injury or death. Any of these occurrences may harm our business, financial condition ~~results of operations~~ and ~~prospects.~~prospects significantly.

39In addition, clinical trials of

neffy are conducted in carefully defined sets of patients who have agreed to enter into clinical trials. Consequently, it is possible that our clinical trials, or those of any future collaborator, may indicate an apparent positive effect of neffy or a future product candidate that is greater than the actual positive effect, if any, or alternatively fail to identify undesirable side effects.

~~Even if we eventually complete our planned clinical testing~~Finally, neffy is comprised of epinephrine and ~~receive approval~~Intravail® that is delivered via an intranasal device. Intra-muscular injection of a BLA or foreign marketing application for our product candidates, the FDA or the applicable foreign regulatory agency may grant approval contingent on the performance of costly additional clinical trials, including Phase 4 clinical trials, and/or in the case of the FDA, the implementation of a REMS, which may be required to ensure safe use of the drug after approval. The FDA or the applicable foreign regulatory agency also may approve a product candidate for a more limited indication or a narrower patient population than we originally requested, and the FDA or applicable foreign regulatory agency may not approve the labeling that we believe is necessary or desirable for the successful commercialization of a product candidate. Any delay in obtaining, or inability to obtain, applicable regulatory approval would delay or prevent commercialization of that product candidate and would materially adversely impact our business and prospects.

We may seek Breakthrough Therapy designation or Fast Track designation by the FDA for one or more of our product candidates, but we may not receive such designation, and even if we do, such designation may not lead to a faster development or regulatory review or approval process and it does not increase the likelihood that our product candidates will receive marketing approval.

We may seek Breakthrough Therapy or Fast Track designation for some of our product candidates. If a product candidate is intended for the treatment of a serious or life-threatening condition and clinical or preclinical data demonstrate the potential to address unmet medical needs for this condition, the product candidate may be eligible for Fast Track Designation. The benefits of fast track designation include more frequent meetings with FDA to discuss the drug’s development plan and ensure collection of appropriate data needed to support drug approval, more frequent written communication from FDA about such things as the design of the proposed clinical trials and use of biomarkers, eligibility for Accelerated Approval and Priority Review, if relevant criteria are met, and rolling review, which means that a drug company can submit completed sections of its BLA for review by FDA, rather than waiting until every section of the BLA is completed before the entire application can be reviewed. BLA review usually does not begin until the entire applicationepinephrine has been ~~submitted to the FDA.~~

A breakthrough therapy is defined as a drug or biologic that is intended, alone or in combination with one or more other drugs or biologics, to treat a serious or life-threatening disease or condition and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. Drugs or biologics designated as breakthrough therapiesapproved by the FDA may be eligible for all features of Fast Track designation, intensive guidance on an efficient drug development program, beginning as early as Phase 1, and organizational commitment involving senior managers at FDA.

The FDA has broad discretion whether or not to grant these designations, so even if we believe a particular product candidate is eligible, we cannot assure you that the FDA would decide to grant it. Even if we have obtained Fast Track Designation and/or Breakthrough Therapy Designation for one or more of our product candidates, we may not experience a faster development process, review or approval compared to non-expedited FDA review procedures. In addition, the FDA may withdraw Fast Track Designation or Breakthrough Therapy Designation if it believes that the designation is no longer supported. These designations do not guarantee qualification for the FDA’s priority review procedures or a faster review or approval process.

Even if we obtain regulatory approval for our product candidates, they will remain subject to ongoing regulatory oversight. Additionally, our product candidates, if approved, could be subject to labeling and other restrictions on marketing or withdrawal from the market, and we may be subject to penalties if we fail to comply with regulatory requirements or if we experience unanticipated problems with our product candidates, when and if any of them are approved.

Even if we obtain regulatory approval for any of our product candidates, they will be subject to extensive and ongoing regulatory requirements for manufacturing, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion, sampling and record-keeping. These requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with current good manufacturing practices (cGMP) regulations, as well as GCPs for any clinical trials that we conduct post-approval, all of which may result in significant expense and limit our ability to commercialize such products. In addition, any regulatory approvals that we receive for our product candidates may also be subject to limitations on the approved indicated uses for which the product may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing testing, including Phase 4 clinical trials, and surveillance to monitor the safety and efficacy of the product candidate. The FDA may also require a REMS as a condition of approval of our product candidates, which could include requirements for a medication guide, physician communication plans or additional elements to ensure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. Such regulatory requirements may differ from country to country depending on where we have received regulatory approval.

The FDA’s and other regulatory authorities’ policies may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our product candidates. We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States or abroad. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained and we may not achieve or sustain profitability. Moreover, if there are changes in the application of legislation or regulatory policies, or if problems are discovered with a product or our manufacture of a product, or if we or one of our distributors, licensees or co-marketers fails to comply with regulatory requirements, the regulators could take various actions. These include:

•

~~issuing warning or untitled letters;~~

•

mandating modifications to promotional materials or require us to provide corrective information to healthcare practitioners, or require other restrictions on the labeling or marketing of such products;

•

~~seeking an injunction or imposing civil or criminal penalties or monetary fines;~~

•

~~suspension or imposition of restrictions on operations, including product manufacturing;~~

•

~~seizure or detention of products, refusal to permit the import or export of products or request that we initiate a product recall;~~

•

~~suspension, modification or withdrawal of our marketing authorizations;~~

•

~~suspension of any ongoing clinical trials;~~

•

~~refusal to approve pending applications or supplements to applications submitted by us;~~

•

~~refusal to permit the import or export of products; or~~

•

~~requiring us to conduct additional clinical trials, change our product labeling or submit additional applications for marketing authorization.~~

~~Moreover,~~ the FDA and other regulatory authorities ~~strictly regulate~~for the ~~promotional claims that may be made about biologic products.~~emergency treatment of Type I allergic reactions. In ~~particular, a product may not be promoted for uses that are not approved by the FDA as reflected~~addition, Intravail® has previously been included in the ~~product’s~~formulations of FDA approved ~~labeling. Physicians, on the other hand, may prescribe~~ products ~~for off-label uses. Although~~such as VALTOCO® and TOSYMRA® nasal sprays. The intranasal apparatus we use to deliver neffy has been used to deliver several drugs approved by the FDA and other regulatory ~~agencies do not regulate a physician’s choice of drug treatment made in the physician’s independent medical judgment, they do restrict promotional communications from companies~~authorities, including VALTOCO®, TOSYMRA® and NARCAN®. Even if neffy were to receive marketing approval or ~~their sales force with respect~~be commercialized, we would continue to off-label uses of products for which marketing clearance has not been issued. Companies may only share truthful and not misleading information that is otherwise consistent with a product’s FDA approved labeling. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to ~~significant civil, criminal and administrative penalties.~~the risks that the FDA, EMA or similar regulatory authorities could revoke approval of intra-muscular epinephrine injection products, other drug formulations containing Intravail® or utilizing the same intranasal apparatus, or that efficacy, manufacturing or supply issues could arise with epinephrine API, Intravail® or our intranasal apparatus. This could result in our own products being removed from the market or being less commercially successful.

~~Any government investigation~~

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

Social media is increasingly being used to communicate about our clinical development activities and the indications neffy is being developed to treat, and we intend to utilize appropriate social media in connection with our commercialization efforts following regulatory approval of neffy, if any. Social media practices in the biotechnology and biopharmaceutical industries continue to evolve and regulations and regulatory guidance relating to such use are evolving and not always clear. This evolution creates uncertainty and risk of noncompliance with regulations applicable to our business, resulting in potential regulatory actions against us, along with the potential for litigation related to off-label marketing or other prohibited activities and heightened scrutiny by the FDA, the Federal Trade Commission (“FTC”), the SEC and other regulators. For example, patients may use social media channels to comment on their experience in an ongoing clinical trial or to report an alleged ~~violations~~side effect or adverse event. If such disclosures occur, there is a risk that trial enrollment may be adversely impacted, that we may fail to monitor and comply with applicable adverse event reporting obligations or that we may not be able to defend our business or the public’s legitimate interests in the face of ~~law could require us~~the political and market pressures generated by social media due to ~~expend significant time and resources in response and could generate negative publicity. The occurrence of any event or penalty described above~~restrictions on what we may ~~inhibit our ability to commercialize~~say about our product ~~candidates and harm~~candidates. There is also a risk of inappropriate disclosure of sensitive or confidential information or negative or inaccurate posts or comments about us on any social networking website. In addition, we may encounter attacks on social media regarding us, our ~~business, financial condition, results of operations and prospects.~~management, neffy

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

If we fail to develop and commercialize neffy for additional indications or fail to discover, develop and commercialize other product candidates, we may be unable to grow our business and our ability to ~~sell such~~achieve our strategic objectives would be impaired.

Although the development and commercialization of neffy for the emergency treatment of Type I allergic reactions is our current primary focus, as part of our longer-term growth strategy, we plan to evaluate neffy for use in other indications and may develop other product candidates. We intend to evaluate internal opportunities from neffy and may do so for other potential product candidates or choose to in-license or acquire other product candidates as well as commercial products to treat other indications like Type I allergic reactions. These other potential product candidates will require additional, time-consuming development efforts prior to commercial sale, including preclinical studies, clinical trials and approval by the FDA, the EMA and/or other applicable foreign regulatory authorities. All product candidates are prone to the risks of failure that are inherent in pharmaceutical product development, including the possibility that the product candidate will not be ~~impaired,~~shown to be sufficiently safe and ~~we may incur substantial additional expense to comply with~~effective for approval by regulatory ~~requirements, which could harm our business, financial condition, results of operations and prospects.~~authorities.

Disruptions at the FDA and other government agencies caused by funding shortages or global health concerns could hinder their ability to hire, retain or deploy key leadership and other personnel, or otherwise prevent new or modified products from being developed, or approved or commercialized in a timely manner or at all, which could negatively impact our business.

The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, statutory, regulatory, and policy changes, the FDA’s ability to hire and retain key personnel and accept the payment of user fees, and other events that may otherwise affect the FDA’s ability to perform routine functions. Average review times at the agency have fluctuated in recent years as a result. In addition, government funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable. Disruptions at the FDA and other agencies may also slow the time necessary for new biologics to be reviewed and/or approved by necessary government agencies, which would adversely affect our business. For example, over the last several years, including for 35 days beginning on December 22, 2018, the U.S. government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough critical FDA employees and stop critical activities.

4145

~~Separately,~~In addition, we cannot assure you that any such products that are approved will be manufactured or produced economically, successfully commercialized or widely accepted in ~~response to~~ the global COVID-19 pandemic, in March 2020, the FDA announced its intention to postpone most foreign inspections of manufacturing facilities and products, and to temporarily postpone routine surveillance inspections of domestic manufacturing facilities. Subsequently, in July 2020 the FDA resumed certain on-site inspections of domestic manufacturing facilities on a risk-based prioritization system. The FDA intends to use this risk-based assessment systemmarketplace or be more effective than other commercially available alternatives.

Research activities to identify product candidates require substantial technical, financial and human resources, whether or not any product candidates are ultimately identified. Our research activities may initially show promise in identifying potential product candidates, yet fail to yield product candidates for clinical development for many reasons, including the ~~categories of regulatory activity~~following:

•

the research methodology used may not be successful in identifying potential product candidates;

•

competitors may develop alternatives that ~~can occur within a given geographic area, ranging from mission critical inspections to resumption of all regulatory activities. Regulatory authorities outside the United States~~render our potential product candidates obsolete;

•

product candidates that we develop may ~~adopt similar restrictions~~nevertheless be covered by third parties’ patents or other ~~policy measures~~exclusive rights;

•

a product candidate may, on further study, be shown to have harmful side effects or other characteristics that indicate it is unlikely to be effective or otherwise does not meet applicable regulatory criteria;

•

a product candidate may not be capable of being produced in ~~response~~commercial quantities at an acceptable cost, or at all; and

•

a product candidate may not be accepted as safe and effective by patients, the medical community or third-party payors.

If we are unsuccessful in identifying and developing neffy for additional indications or other product candidates, its potential for growth and achieving its strategic objectives may be impaired.

Even if neffy is approved for the emergency treatment of Type I allergic reactions, there remains significant uncertainty as to whether neffy will be successfully developed and ultimately approved for any other indication we are exploring or pursuing.

As part of our longer-term growth strategy, we plan to evaluate and potentially develop neffy for other indications. Our programs for such other indications are at a very early stage and there remains significant uncertainty as to whether neffy will be successfully developed and ultimately approved for any other indication we are exploring or pursuing. Even if neffy is approved for the ~~COVID-19 pandemic.~~emergency treatment of Type I allergic reactions, there will remain significant uncertainty regarding whether neffy will be successfully developed or approved for any other indication. If ~~a prolonged government shutdown occurs,~~we are unable to successfully develop, or if ~~global health concerns continue to prevent the FDA or other~~ regulatory authorities ~~from conducting their regular inspections, reviews, or~~do not approve, neffy for any other ~~regulatory activities, it could significantly impact the ability of the FDA or other regulatory authorities to timely review~~indication, our potential for growth and ~~process~~achieving our ~~regulatory submissions, which could have a material adverse effect on our business.~~strategic objectives may be impaired.

We may not be successful in our efforts to expand our pipeline by identifying additional indications for which to investigate neffy in the future. We may expend our limited resources to pursue a particular ~~product candidate~~indication or ~~indication~~formulation for neffy and fail to capitalize on product candidates, indications or ~~indications~~formulations that may be more profitable or for which there is a greater likelihood of success.

Because we have limited financial and managerial resources, we ~~must prioritize our research programs and will need to focus our discovery and development~~are focused on ~~select product candidates and indications. Correctly prioritizing our research and development activities is particularly important~~specific indications for ~~us due to the breadth of potential product candidates and indications that we believe could be pursued using our platform technologies.~~neffy. As a result, we may ~~forego~~fail to generate additional clinical development opportunities for neffy for a number of reasons, including, that neffy may in certain indications, on further study, be shown to have harmful side effects, limited to no efficacy or other characteristics that suggest it is unlikely to receive marketing approval and achieve market acceptance in such additional indications. In addition, we may forgo or delay pursuit of opportunities with other ~~product candidates or for other~~ indications that ~~later prove to~~could have had greater commercial ~~potential.~~potential or likelihood of success. Furthermore, research activities to identify additional indications for neffy require substantial technical, financial and human resources. We may not be able to develop neffy for any additional indications based on resource allocation decisions and other reasons. 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 and product candidates~~activities for specific indications may not yield any commercially viable products. ~~If we do not accurately evaluate the commercial potential or target market for a particular product candidate,~~

Additionally, we may ~~also relinquish valuable rights~~pursue in-licenses or acquisitions of development-stage assets or programs, which entails additional risk to ~~that product candidate through collaboration, licensing or other royalty arrangements in cases in which it would have been more advantageous for us to retain sole development~~us. Identifying, selecting and commercialization rights to such product candidate. For example, on March 28, 2022, we made the decision to discontinue our clinical development programs for SBT6050 and SBT6290 and to prioritize resources on the development of SBT8230 and our early-stage discovery programs.

~~We may not be successful in our efforts to identify or discover additional~~acquiring promising product candidates ~~in the future.~~

~~Our research programs may initially show promise in identifying potential product candidates, yet fail to yield product candidates for clinical development for a number of reasons, including:~~

•

~~our inability to design such product candidates with the properties that we desire; or~~

•

potential product candidates may, on further study, be shown to have harmful side effects or other characteristics that indicate that they are unlikely to be products that will receive marketing approval and achieve market acceptance.

~~Research programs to identify new product candidates require~~requires substantial technical, financial and human ~~resources.~~resources expertise. Efforts to do so may not result in the actual acquisition or license of a particular product candidate, potentially resulting in a diversion of our management’s time and the expenditure of our resources with no resulting benefit.

For example, if we are unable to identify programs that ultimately result in approved products, we may spend material amounts of our capital and other resources evaluating, acquiring and developing products that ultimately do not provide a return on our investment.

Competitive products may reduce or eliminate the commercial opportunity for neffy for its current or future indications. If our competitors develop technologies or product candidates more rapidly than us, or their technologies or product candidates are more effective or safer than ours, our ability to develop and successfully commercialize neffy may be adversely affected.

The clinical and commercial landscape for the emergency treatment of Type I allergic reactions is highly competitive and subject to significant technological change. We face competition with respect to our current indications for neffy and will face competition with respect to any future indications of neffy or other product candidates that we may seek to develop or commercialize in the future from large pharmaceutical and biotechnology companies, specialty pharmaceutical and generic drug companies, academic institutions, government agencies and research institutions. If approved, we anticipate that neffy will compete primarily against epinephrine intra-muscular injectable products, for the emergency treatment of Type I allergic reactions including EpiPen® and its generics, which is marketed by Viatris, Inc. and Teva Pharmaceuticals, Inc.; Adrenaclick®, which is marketed by Amneal Pharmaceuticals, Inc.; Auvi-Q®, which is marketed by Kaleo, Inc.; and Symjepi®, which is marketed by Sandoz, Inc., a Novartis division. Several other companies are also clinically developing larger dose intranasal epinephrine product candidates that may compete with neffy, including Bryn Pharma, Nasus Pharma and Hikma Pharmaceuticals, Inc. (previously INSYS Therapeutics, Inc.), Amphastar Pharmaceuticals is developing an intranasal candidate with an undisclosed dose, and Aquestive Therapeutics is developing a sublingual candidate based on a prodrug of epinephrine. If neffy is approved for other indications, it would also compete with a range of other therapeutic treatments that are well established or in development.

Many of our potential competitors have substantially greater financial, technical, commercial and human resources than we do and significantly more experience in the discovery, development and regulatory approval of product candidates and the commercialization of those products. Accordingly, our competitors may be more successful than we may be in obtaining regulatory approval for therapies and achieving widespread market acceptance. Our competitors’ products may be more effective, safer, or more effectively marketed and sold, than any product candidate we may commercialize and may render neffy or any future product candidates obsolete or non-competitive before we can recover development and commercialization expenses. In addition, our competitors may succeed in developing, acquiring or licensing technologies and drug products that are more effective or less costly than neffy or any future product candidates that we may develop, which could render such product candidates obsolete and noncompetitive.

If we obtain approval for neffy or any other future product candidate, we may face competition based on many different factors, including the efficacy, safety and tolerability of our products, the ease with which our products can be administered, the timing and scope of regulatory approvals for these products, the availability and cost of manufacturing, marketing and sales capabilities, price, reimbursement coverage and patent position. Such competitors could also recruit our employees, which could negatively impact our level of expertise and our ability to execute our business plan.

In addition, our competitors may obtain patent protection, regulatory exclusivities or regulatory approval and commercialize products more rapidly than we do, which may impact future approvals or sales of any of our product candidates that receive regulatory approval. If the FDA or the EMA approves the marketing and commercial sale of neffy or any future product candidate, we will also be competing with respect to marketing capabilities and manufacturing efficiency. We expect competition among products will be based on product efficacy and safety, the timing and scope of regulatory approvals, availability of supply, marketing and sales capabilities, product price, reimbursement coverage by government and private third-party payors, regulatory exclusivities and patent position. Our profitability and financial position will suffer if our product candidates receive regulatory approval but cannot compete effectively in the marketplace.

Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in even more resources being concentrated among a smaller number of our competitors. Smaller and other early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These third parties compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites, as well as in acquiring technologies complementary to, or necessary for, our activities.

If the FDA, the EMA or other comparable foreign regulatory authorities approve generic versions of neffy or any future product candidate of ours that receives regulatory approval, or such authorities do not grant our products appropriate periods of non-patent exclusivity before approving generic versions of such products, the sales of such products could be adversely affected.

In the United States, once an NDA is approved, the product covered thereby becomes a “reference listed drug” in the FDA’s publication, “Approved Drug Products with Therapeutic Equivalence Evaluations,” or the Orange Book. Manufacturers may seek approval of generic versions of reference listed drugs through submission of ANDAs in the United States. In support of an ANDA, a generic manufacturer generally must show that its product has the same active ingredient(s), dosage form, strength, route of administration, and adequate labeling as the reference listed drug and that the generic version is bioequivalent to the reference listed drug, meaning, in part, that it is absorbed in the body at the same rate and to the same extent. Generic products may be significantly less costly to bring to market than the reference listed drug and companies that produce generic products are generally able to offer them at lower prices. Moreover, third-party insurers require, and many states allow or require, substitution of therapeutically equivalent generic drugs at the pharmacy level even if the branded drug is prescribed. Thus, following the introduction of a generic drug, a significant percentage of the sales of any branded product or reference listed drug may be lost to the generic product.

The FDA may not finally approve an ANDA for a generic product or a Section 505(b)(2) NDA of a competitor until any applicable period of non-patent exclusivity for the reference listed drug has expired. The FDCA provides a period of five years of non-patent exclusivity for a new drug containing a new chemical entity (“NCE”). For the purposes of this provision, an NCE is a drug that contains no active moiety that has previously been approved by the FDA in any other NDA. An active moiety is the molecule or ion responsible for the physiological or pharmacological action of the drug substance. Specifically, in cases where such exclusivity has been granted, an ANDA may not be filed with the FDA until the expiration of five years unless the submission is accompanied by a Paragraph IV certification that a patent covering the listed drug is invalid, unenforceable or will not be infringed by the generic product. In that case, the applicant may submit its application four years following approval of the listed drug and seek to launch its generic product even if we still have patent protection for our product unless an infringement suit is timely filed by the NDA or patent holder in which case the FDA cannot approve the ANDA or a Section 505(b)(2) NDA for 30 months unless a court decision in favor of the generic manufacturer is issued earlier.

Competition that neffy or any future products, if approved, may face from competitor versions of such products could negatively impact our future revenue, profitability and cash flows and substantially limit our ability to obtain a return on our investments in those product candidates. Obtaining and maintaining regulatory approval of neffy or any future product candidates in one jurisdiction does not mean that we will be successful in obtaining regulatory approval of those product candidates in other jurisdictions.

Obtaining and maintaining regulatory approval of neffy and any future product candidates in one jurisdiction does not guarantee that we will be able to obtain or maintain regulatory approval in any other jurisdiction, while a failure or delay in obtaining regulatory approval in one jurisdiction may have a negative effect on the regulatory approval process in others. For example, even if a regulatory authority, such as the EMA, grants marketing approval of neffy, comparable regulatory authorities in the United States and other foreign jurisdictions must also approve the manufacturing, marketing and promotion of neffy in those countries. Approval procedures vary among jurisdictions and can involve requirements and administrative review periods different from, and greater than, those in the United States or the EU including additional nonclinical studies or clinical trials, as clinical trials conducted in one jurisdiction may not be accepted by regulatory authorities in other jurisdictions. In many jurisdictions outside the United States including certain jurisdictions in the EU, a product candidate must be approved for reimbursement before it can be approved for sale in that jurisdiction. In some cases, the price that we intend to charge for our products is also subject to approval.

We have submitted and plan to submit additional marketing applications in the United States and in the EU. Regulatory authorities in jurisdictions outside of the United States have requirements for approval of product candidates with which we must comply prior to marketing in those jurisdictions and such regulatory requirements can vary widely from country to country. Obtaining other regulatory approvals and compliance with other regulatory requirements could result in significant delays, difficulties and costs for us and could require additional nonclinical studies or clinical trials, which could be costly and time-consuming and could delay or prevent the introduction of our products in certain countries. The foreign regulatory approval process involves all of the risks associated with FDA approval. We do not have any product candidates approved for sale in any jurisdiction, including international markets, and we do not have experience in obtaining regulatory approval in either domestic or international markets. If we fail to comply with the regulatory requirements in international markets and/or obtain and maintain applicable marketing approvals, our target market will be reduced and our ability to realize the full market potential of neffy or any future product candidates will be harmed.

We received Fast Track designation for neffy in the United States and may in the future pursue Fast Track designation for other product candidates that we may develop, but we might not receive such future designations, and Fast Track designations may not lead to a faster development or regulatory review or approval process.

If the FDA determines that a product candidate is intended for the treatment of a serious or life-threatening condition and preclinical or clinical data demonstrate the potential to address an unmet medical need for this condition, the FDA may grant a product candidate Fast Track designation. Fast Track designation is intended to expedite or facilitate the process for reviewing new drug products meeting the specified criteria and gives the sponsor of a Fast Track product opportunities for more frequent interactions with the applicable FDA review team during product development and, once an NDA is submitted, the product candidate may be eligible for priority review. We were granted Fast Track designation for neffy for the treatment of Type I allergic reactions and may in the future request Fast Track designation for additional indications for neffy or for any future product candidates, however, we cannot assume that any such applications will meet the criteria for that designation. The FDA has broad discretion whether or not to grant this designation, so even if we believe a particular product candidate is eligible for this designation, we cannot assure you that the FDA would decide to grant it. Even if we do receive Fast Track Designation, we may not experience a faster development process, review or approval compared to conventional FDA procedures. The FDA may rescind the Fast Track designation if it believes that the designation is no longer supported by data from our clinical development activities.

We may seek priority review by the FDA for neffy or a future product candidate, and we may be unsuccessful. If we are successful, the designation may not actually lead to a faster development or regulatory review or approval process.

A priority review designation means that the goal for the FDA to review an application is six months, rather than the standard review period of ten months. We may in the future request priority review designation for neffy and any future product candidates, however, we cannot assume that any application for priority review will meet the criteria for that designation. A product is eligible for priority review if it is designed to treat a serious condition, and if approved, would provide a significant improvement in the treatment, diagnosis or prevention of a serious condition compared to marketed products. The FDA has broad discretion with respect to whether or not to grant priority review status to a product candidate, so even if we believe a particular product candidate is eligible for such designation or status, the FDA may decide not to grant it. Moreover, a priority review designation does not necessarily mean a faster development or regulatory review or approval process or necessarily confer any advantage with respect to approval compared to standard FDA review and approval. Receiving priority review from the FDA does not guarantee approval within the six-month review cycle or at all.

Product liability lawsuits against us or any of our current and future licensing and collaboration partners could divert our resources and attention, cause us to incur substantial liabilities and limit commercialization of neffy or any future product candidates.

We are exposed to potential product liability and professional indemnity risks that are inherent in the research, development, manufacturing, marketing and use of pharmaceutical products. Currently, we have no products that have been approved for commercial sale; however, the use of neffy by us and any current and future licensing and collaboration partners in clinical trials, and the sale of neffy, if approved, in the future, may expose us to liability claims. Product liability claims may be brought against us or our partners by participants enrolled in our clinical trials, patients, health care providers, pharmaceutical companies, our current and future licensing and collaboration partners or others using, administering or selling any of our future approved products. If we cannot successfully defend ourself against any such claims, we may incur substantial liabilities or be required to limit commercialization of neffy or any future product candidates. Regardless of the merits or eventual outcome, liability claims may result in:

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decreased demand for any of our future approved products;

•

injury to our reputation;

•

withdrawal of clinical trial participants;

•

termination of clinical trial sites or entire trial programs;

•

significant litigation costs, including with respect to potential class action lawsuits;

•

substantial monetary awards to, or costly settlements with, patients or other claimants;

•

product recalls or a change in the indications for which they may be used;

•

loss of revenue;

•

diversion of management and scientific resources from our business operations; and

•

the inability to commercialize neffy or any future product candidates.

Although the clinical trial process is designed to identify and assess potential side effects and adverse events, clinical development does not always fully characterize the safety and efficacy profile of a new drug, and it is always possible that a drug, even after regulatory approval, may exhibit unforeseen side effects. If neffy was to cause adverse events or side effects during clinical trials or after approval, we may be exposed to substantial liabilities. Physicians and patients may not comply with any warnings that identify known potential adverse effects, side effects, and patients who should not use neffy or any of our future product candidates. If any of our current or future product candidates, including neffy, are approved for marketing and commercial sale, we will be highly dependent upon consumer perceptions of us and the safety and quality of our products. We could be adversely affected if we are subject to negative publicity associated with illness or other adverse effects resulting from patients’ use or misuse of our products or any similar products distributed by other companies.

Although we maintain product liability insurance coverage in the amount of up to $5.0 million in the aggregate, including clinical trial liability, this insurance may not fully cover potential liabilities that we may incur. The cost of any product liability litigation or other proceeding, even if resolved in our favor, could be substantial. We will need to increase our insurance coverage if we commercialize neffy or any future product candidate that receives regulatory approval. In addition, insurance coverage is becoming increasingly expensive. If we are unable to ~~identify suitable~~maintain sufficient insurance coverage at an acceptable cost or to otherwise protect against potential product liability claims, it could prevent or inhibit the development and commercial production and sale of neffy or any future product candidates, which could harm our business, financial condition, results of operations and prospects.

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 harm 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. From time to time and in the future, our operations may involve the use of hazardous and flammable materials, including chemicals and biological materials, and may also produce hazardous waste products. Even if we contract with third parties for the disposal of these materials and waste products, we cannot completely eliminate the risk of contamination or injury resulting from these materials. In the event of contamination or injury resulting from the use or disposal of our 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 for failure to comply with such laws and regulations.

We maintain workers’ compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees, but this insurance may not provide adequate coverage against potential liabilities. However, we do not maintain insurance for environmental liability or toxic tort claims that may be asserted against us.

In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations. Environmental laws and regulations may impair our research, development or production efforts. In addition, failure to comply with these laws and regulations may result in substantial fines, penalties or other sanctions.

Our business activities may be subject to the FCPA and similar anti-bribery and anti-corruption laws of other countries in which we may operate, as well as U.S. and certain foreign export controls, trade sanctions, and import laws and regulations. Compliance with these legal requirements could limit our ability to compete in foreign markets and subject us to liability if we violate them.

If we further expand our operations outside of the United States, we must dedicate additional resources to comply with numerous laws and regulations in each jurisdiction in which we plan to operate. Our business activities may be subject to the Foreign Corrupt Practices Act (“FCPA”) and similar anti-bribery or anti-corruption laws, regulations or rules of other countries in which we operate. The FCPA generally prohibits companies and their employees and third-party intermediaries from offering, promising, giving or authorizing the provision of anything of value, either directly or indirectly, to a non-U.S. government official in order to influence official action or otherwise obtain or retain business. The FCPA also requires public companies to make and keep books and records that accurately and fairly reflect the transactions of the corporation and to devise and maintain an adequate system of internal accounting controls. Our business is heavily regulated and therefore involves significant interaction with public officials, including officials of non-U.S. governments. Additionally, in many other countries, hospitals owned and operated by the government, and doctors and other hospital employees would be considered foreign officials under the FCPA. Recently the SEC and Department of Justice have increased their FCPA enforcement activities with respect to biotechnology and pharmaceutical companies. There is no certainty that all of our employees, agents or contractors, or those of our affiliates, will comply with all applicable laws and regulations, particularly given the high level of complexity of these laws. Violations of these laws and regulations could result in fines, criminal sanctions against us, our officers or employees, disgorgement, and other sanctions and remedial measures, and prohibitions on the conduct of our business. Any such violations could include prohibitions on our ability to offer neffy or any future product candidates in one or more countries and could materially damage our reputation, brand, international activities, ability to attract and retain employees, and business, prospects, operating results and financial condition.

In addition, neffy and any of our future product candidates and activities may be subject to U.S. and foreign export controls, trade sanctions and import laws and regulations. Governmental regulation of the import or export of neffy or any future product candidates, or our failure to obtain any required import or export authorization for ~~preclinical~~neffy or any future product candidates, when applicable, could harm our international sales and ~~clinical development,~~adversely affect our ~~opportunities~~revenue. Compliance with applicable regulatory requirements regarding the export of neffy or any future product candidates may create delays in the introduction of our product candidates in international markets or, in some cases, prevent the export of our product candidates to ~~successfully develop~~some countries altogether. Furthermore, U.S. export control laws and ~~commercialize therapeutic~~economic sanctions prohibit the shipment of certain products and services to countries, governments, and persons targeted by U.S. sanctions. If we fail to comply with export and import regulations and such economic sanctions, penalties could be imposed, including fines and/or denial of certain export privileges. Moreover, any new export or import restrictions, new legislation or shifting approaches in the enforcement or scope of existing regulations, or in the countries, persons, or products targeted by such regulations, could result in decreased use of neffy or any future product candidates by, or in our decreased ability to export neffy or any future product candidates to existing or potential customers with international operations. Any decreased use of neffy or any future product candidates or limitation on our ability to export or sell access to neffy or any future product candidates would likely adversely affect our business.

Cyber-attacks or other failures in our telecommunications or information technology systems, or those of our licensing and collaboration partners, CROs, third-party logistics providers, distributors or other contractors or consultants, could result in information theft, data corruption and significant disruption of our business operations.

We, our licensing and collaboration partners, our CROs, third-party logistics providers, distributors and other contractors and consultants utilize information technology (“IT”) systems and networks to process, transmit and store electronic information in connection with our business activities. As use of digital technologies has increased, cyber incidents, including third parties gaining access to employee accounts using stolen or inferred credentials, computer malware, viruses, spamming or other means, and deliberate attacks and attempts to gain unauthorized access to computer systems and networks, have increased in frequency and sophistication. Cyber-attacks also could include phishing attempts or e-mail fraud to cause payments or information to be transmitted to an unintended recipient. These threats pose a risk to the security of our, our licensing and collaboration partners’, our CROs’, third-party logistics providers’, distributors’ and other contractors’ and consultants’ systems and networks, and the confidentiality, availability and integrity of our data. There can be no assurance that we will be ~~limited.~~successful in preventing cyber-attacks or successfully mitigating their effects. Similarly, there can be no assurance that our licensing and collaboration partners, CROs, third-party logistics providers, distributors and other contractors and consultants will be successful in protecting our clinical and other data that is stored on their systems. Any cyber-attack, data breach or destruction or loss of data could result in a violation of applicable U.S. and international privacy, data protection and other laws, and subject us to litigation and governmental investigations and proceedings by federal, state and local regulatory entities in the United States and by international regulatory entities, resulting in exposure to material civil and/or criminal liability. Further, our general liability insurance and corporate risk program may not cover all potential claims to which we are exposed and may not be adequate to indemnify us for all liability that maybe imposed; and could have a material adverse effect on our business and prospects. For example, the loss of clinical trial data from completed, ongoing or future clinical trials for neffy or any of our future product candidates could result in delays in our development and regulatory approval efforts and significantly increase our costs to recover or reproduce the data. In addition, we may suffer reputational harm or face litigation or adverse regulatory action as a result of cyber-attacks or other data security breaches and may incur significant additional expense to implement further data protection measures.

Risks Related to ~~Manufacturing, Commercialization, and Reliance~~Our Dependence on Third Parties

We intend to rely completely on third parties to manufacture and distribute our supply of neffy and intend to rely on third parties to manufacture and distribute any future product candidates.

We do not currently have, nor do we plan to acquire, the infrastructure or capability to manufacture or distribute commercial quantities of neffy. Our ability to commercially supply neffy, if approved, depends, in part, on the ability of third-party manufacturers to supply and manufacture neffy, the raw materials, API and other important components related to the manufacture of neffy, including Intravail® and our nasal sprayer apparatus. We also intend to rely on third parties to label and package the finished product. These third-party manufacturers may have limited experience manufacturing neffy, the raw materials and API for neffy to be supplied to patients in the United States. While we will work with our third-party suppliers and manufacturers to optimize the manufacturing process for neffy and any future product candidates, if approved, we cannot guarantee that such efforts will be successful. If we fail to develop and maintain supply relationships with these third parties, we may be unable to successfully commercialize neffy or any future product candidate, if approved.

We have entered into a commercial supply agreement with Renaissance Lakewood LLC (“Renaissance”), which has been actively involved in supporting the manufacture of neffy in our clinical development, and we intend to rely on Renaissance as the primary source for drug product manufacturing and final packaging. Unless and until we can secure an alternative source for drug product manufacturing and final packaging, our dependence on Renaissance will subject us to the possible risks of shortages, interruptions and price fluctuations if neffy is approved for commercialization.

We may be unable to maintain or establish required agreements with third-party manufacturers or to do so on acceptable terms. Even if we are able to establish agreements with third-party manufacturers, reliance on third-party manufacturers entails additional risks, including:

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the failure of the third party to manufacture neffy or any future product candidates according to our schedule, or at all, including if our third-party contractors give greater priority to the supply of other products over our products or product candidates or otherwise do not satisfactorily perform according to the terms of the agreements between us and them;

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the reduction or termination of production or deliveries by suppliers, or the raising of prices or renegotiation of terms;

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the termination or nonrenewal of arrangements or agreements by our third-party contractors at a time that is costly or inconvenient for us;

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the breach by the third-party contractors of our agreements with them;

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the failure of third-party contractors to comply with applicable regulatory requirements, whether related to neffy or another product;

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the failure of the third party to manufacture our product candidates according to our specifications;

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the mislabeling of clinical supplies, potentially resulting in the wrong dose amounts being supplied or study drug or placebo not being properly identified;

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clinical supplies not being delivered to clinical sites on time, leading to clinical trial interruptions, or of drug supplies not being distributed to commercial vendors in a timely manner, resulting in lost sales; and

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the misappropriation of our proprietary information, including our trade secrets and know-how.

We do not have complete control over all aspects of the manufacturing process of, and are dependent on, our contract manufacturing partners for compliance with cGMP regulations for manufacturing both active drug substances and finished drug products. Third-party manufacturers may not be able to comply with cGMP regulations or similar regulatory requirements outside of the United States. If our contract manufacturers cannot successfully manufacture material that conforms to our specifications and the strict regulatory requirements of the FDA and other foreign regulatory authorities, this could affect the review of the NDA submitted for neffy or post-approval sales. In addition, other than to conduct audits, we do not have control over the ability of our contract manufacturers to maintain adequate quality control, quality assurance and qualified personnel. If the FDA or a comparable foreign regulatory authority does not approve these facilities for the manufacture of neffy or any future product candidates or if it withdraws any such approval in the future, we may need to find alternative manufacturing facilities, which would significantly impact our ability to develop, obtain marketing approvals for or commercialize neffy or any future product candidate. Our failure, or the failure of our third-party manufacturers, to comply with applicable regulations could result in sanctions being imposed on us, including fines, injunctions, civil penalties, application review delays, suspension or withdrawal of approvals, license revocation, import alerts, seizures or recalls of product candidates or drugs, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect supplies of neffy or any of our future product candidates or drugs and harm our business and results of operations. Our current and anticipated future dependence upon others for the manufacture of neffy or any future product candidates or drugs may adversely affect our future profit margins and our ability to commercialize neffy or any future product candidate that receives marketing approval on a timely and competitive basis.

We rely on third parties to conduct ~~supervise,~~our nonclinical studies and ~~monitor our planned~~ clinical ~~trials and perform some of our research and preclinical studies.~~trials. If these third parties do not ~~satisfactorily~~successfully carry out their contractual duties, comply with applicable regulatory requirements or ~~fail to~~ meet expected deadlines, our development programs and our ability to seek or obtain regulatory approval for or commercialize neffy or any future product candidates may be ~~delayed or subject to increased costs, each of which may have an adverse effect on our business and prospects.~~delayed.

We ~~do not have the ability to conduct all aspects of our preclinical testing or planned clinical trials ourselves. As a result, we~~ are ~~and expect to remain~~ dependent on third parties to conduct our ~~preclinical studies, including GLP toxicology~~nonclinical studies and any ~~future~~clinical trials. Specifically, we have used and relied on, and intend to continue to use and rely on, medical institutions, clinical investigators, CROs and consultants to conduct our nonclinical studies and past clinical trials ofin accordance with our ~~product candidates. Specifically,~~clinical protocols and regulatory requirements. These CROs, ~~that manage preclinical studies, GLP toxicology studies~~investigators and ~~our planned clinical trials as well as consultants~~other third parties play a significant role in the conduct ~~of our preclinical studies~~ and ~~future clinical studies and the subsequent collection and analysis of data. The~~ timing ~~of the initiation and completion~~ of these studies and ~~trials~~trials. While we have and will ~~therefore be partially controlled by such third parties and may result in delays to~~have agreements governing the activities of our ~~development programs.~~third-party contractors, we have limited influence over their actual performance. Nevertheless, we are responsible for ensuring that each of our ~~preclinical studies and~~ clinical trials is conducted in accordance with the applicable protocol and legal, ~~requirements,~~regulatory and scientific standards, and our reliance on ~~the~~our CROs and other third parties does not relieve us of our regulatory responsibilities. We and our CROs are required to comply with ~~GLP and~~ GCP requirements, which are regulations and guidelines enforced by the FDA ~~the Competent Authorities of the Member States of the European Economic Area,~~ and comparable foreign regulatory authorities for all of our product candidates in clinical development. Regulatory authorities enforce these ~~GLP and GCP requirements~~GCPs through periodic inspections of ~~preclinical study sites,~~ trial sponsors, ~~clinical trial~~principal investigators and ~~clinical~~ trial sites. If we or any of our CROs or ~~future clinical~~ trial sites fail to comply with applicable ~~GLP or GCP requirements,~~GCPs, the clinical data generated in our ~~preclinical studies and planned~~ clinical trials may be deemed unreliable, and the FDA or comparable foreign regulatory authorities may require us to perform additional ~~preclinical or~~ clinical trials before approving our marketing applications. In addition, our clinical trials must be conducted with ~~product~~products produced under cGMP regulations. Our failure to comply with these regulations may require us to ~~stop and/or~~ repeat clinical trials, which would delay the ~~marketing~~regulatory approval process.

There is no guarantee that any ~~such~~of our CROs, ~~clinical trial~~ investigators or other third parties ~~on which we rely~~ will devote adequate time and resources to ~~our development activities~~such trials or studies or perform as contractually required. These risks are heightened as a result of the efforts of government agencies and the CROs themselves to limit the spread of COVID-19, including quarantines and shelter-in-place orders, which have also adversely impacted the supply chain for many research and clinical supplies, including animals for preclinical testing. If any of these third parties fail to meet expected deadlines, adhere to our clinical protocols or meet regulatory requirements, or otherwise performs in a substandard manner, ~~or terminates its engagement with us, the timelines for~~ our ~~development programs~~clinical trials may be extended, or delayed or terminated. In addition, many of the third parties with whom we contract may also have relationships with other commercial entities, including our competitors, for whom they may also be conducting clinical trials or other development activities ~~may be suspended or terminated. If any of~~that could harm our clinical trial sites terminates for any reason, we may experience the loss of follow-up information on subjects enrolled in such clinical trials unless we are able to transfer those subjects to another qualified clinical trial site, which may be difficult or impossible.competitive position. In addition, ~~clinical trial~~principal investigators for our clinical trials ~~may~~are expected to serve as scientific advisors or consultants to us from time to time and may receive cash or equity compensation in connection with such services. If these relationships and any related compensation result in perceived or actual conflicts of interest, or the FDA ~~or any comparable foreign regulatory authority~~ concludes that the financial relationship may have affected the interpretation of the ~~trial,~~study, the integrity of the data generated at the applicable clinical trial site may be questioned and the utility of the clinical trial itself may be jeopardized, which could result in the delay or rejection ~~of any marketing application we submit~~ by the FDA orof any ~~comparable foreign regulatory authority.~~NDA we submit. Any such delay or rejection could prevent us from commercializing ~~our~~neffy or any future product candidates.

~~Furthermore,~~Our CROs have the right to terminate their agreements with us in the event of an uncured material breach. In addition, some of our CROs have an ability to terminate their respective agreements with us if it can be reasonably demonstrated that the safety of the subjects participating in our clinical trials warrants such termination, if we make a general assignment for the benefit of our creditors or if we are liquidated. If any of our relationships with these third parties may also have relationships with other entities, some of which may be our competitors. If these third parties do not successfully carry out their contractual duties, meet expected deadlines or conduct our clinical trials in accordance with regulatory requirements or our stated protocols, we will not be able to obtain, or may be delayed in obtaining, marketing approvals for our product candidates and will not be able to, or may be delayed in our efforts to, successfully commercialize our products.

We contract with third parties for the manufacture and supply of certain of our product candidates for use in preclinical testing and clinical trials and will rely on third parties for commercial supply, which supply may become limited or interrupted or may not be of satisfactory quality and quantity.

We do not have any manufacturing facilities. We produce in our laboratory relatively small quantities of product for evaluation in our research programs. We rely on third parties for the manufacture of a portion of our product candidates for preclinical testing and all of our product candidates for clinical testing and we will continue to rely on such third parties for commercial manufacture if any of our product candidates are approved. We currently have limited manufacturing arrangements and expect that each of our product candidates, including from our SBT8230 program, will only be covered by single source suppliers for the foreseeable future. This reliance increases the risk that we will not have sufficient quantities of our product candidates or products, if approved, or such quantities at an acceptable cost or quality, which could delay, prevent or impair our development or commercialization efforts.

Furthermore, all entities involved in the preparation of therapeutics for clinical trials or commercial sale, including our existing contract manufacturers for our product candidates, are subject to extensive regulation. Components of a finished therapeutic product approved for commercial sale or used in clinical trials must be manufactured in accordance with cGMP requirements. 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 contaminants, or to inadvertent changes in the properties or stability of our product candidates that may not be detectable in final product testing. We or our contract manufacturers must supply all necessary documentation in support of a BLA on a timely basis and must adhere to the FDA’s GLP regulations and cGMP regulations enforced by the FDA through its facilities inspection program. Comparable foreign regulatory authorities may require compliance with similar requirements. The facilities and quality systems of our third-party contract manufacturers must pass a pre-approval inspection for compliance with the applicable regulations as a condition of marketing approval of our product candidates. We do not control the manufacturing activities of, and are completely dependent on, our contract manufacturers for compliance with cGMP regulations.

In the event that any of our manufacturers fails to comply with such requirements or to perform its obligations to us in relation to quality, timing or otherwise, or if our supply of components or other materials becomes limited or interrupted for other reasons, including due to the impact of the COVID-19 pandemic, we may be forced to manufacture the materials ourselves, for which we currently do not have the capabilities or resources, or enter into an agreement with another third-party, whichterminate, we may not be able to doenter into arrangements with alternative third parties on commercially reasonable terms ifor at all. ~~In particular, any replacement of~~Switching or adding additional CROs, investigators and other third parties involves additional cost and requires our ~~manufacturers could require significant effort~~management’s time and expertise because there may be a limited number of qualified replacements. In some cases, the technical skills or technology required to manufacture our product candidates may be unique or proprietary to the original manufacturer and we may have difficulty transferring such skills or technology to another third-party and a feasible alternative may not exist.focus. In addition, certain of our product candidates and our own proprietary methods have never been produced or implemented outside of our company, and we may therefore experience delays to our development programs if andthere is a natural transition period when we attempt to establish new third-party manufacturing arrangements for these product candidates or methods. These factors would increase our reliance on such manufacturer or require us to obtain a license from such manufacturer in order to have another third-party manufacture our product candidates. If we are required to or voluntarily change manufacturers for any reason, we will be required to verify that the new manufacturer maintains facilities and procedures that comply with quality standards and with all applicable regulations and guidelines and that the product produced is equivalent to that produced in a prior facility. The delays associated with the verification of a new ~~manufacturer and equivalent product could negatively affect~~CRO commences work. As a result, delays occur, which can materially impact our ability to ~~develop product candidates~~meet our desired clinical development timelines. Though we carefully manage our relationships with our CROs, investigators and other third parties, there can be no assurance that we will not encounter challenges or delays in the future or that these delays or challenges will not have a ~~timely manner or within budget.~~material adverse impact on our business, financial condition and prospects.

~~Our~~

We are dependent on international third-party licensees and assignees for the development and commercialization of neffy in several countries outside the United States. The failure of these third parties to meet their contractual, regulatory or ~~a third-party’s failure to execute on our manufacturing requirements, do so on commercially reasonable terms and timelines and comply with cGMP requirements~~other obligations could adversely affect our ~~business~~business.

We have entered into exclusive licensing and collaboration agreements for the development and commercialization of neffy with Alfresa Pharma in Japan and Pediatrix Therapeutics in China, Macau, Hong Kong and Taiwan. As a ~~number~~result, we are dependent on these parties to achieve regulatory approval of ~~ways, including:~~neffy

•for marketing in these countries and for the commercialization of

~~inability~~neffy, if approved. The timing and amount of any milestone and royalty payments we may receive under these agreements, as well as the commercial success of neffy in those regions outside of the United States, will depend on, among other things, the efforts, allocation of resources and successful commercialization of neffy by Alfresa Pharma and Pediatrix Therapeutics. We also depend on such licensing and collaboration partners to ~~meet our product specifications~~comply with all applicable laws relative to the development and ~~quality requirements consistently;~~

commercialization of •neffy

~~an inability~~in those countries. They may take actions or fail to ~~initiate or continue preclinical studies or clinical trials~~take actions that result in safety issues with neffy in their licensed territory, and such safety issues could negatively impact neffy in countries outside of the licensed territory. We do not control the individual efforts of our ~~product candidates under development;~~

•

~~delay in submitting regulatory applications,~~licensing and collaboration partners and have limited ability to terminate these agreements or ~~receiving marketing approvals, for our product candidates,~~have assigned assets returned to us if ~~at all;~~

such licensing and collaboration partners do not perform as anticipated.

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~~loss of the cooperation of future collaborators;~~

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~~subjecting third-party manufacturing facilities or our manufacturing facilities to additional inspections by regulatory authorities;~~

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~~requirements to cease development or to recall batches of our product candidates; and~~

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~~in the event of approval to market and commercialize our product candidates, an inability to meet commercial demands for our product or any other future product candidates.~~

4453

~~Manufacturing antibody drug conjugate products is complex and our third-party manufacturers may encounter difficulties in production. If any~~The failure of our ~~third-party manufacturers encounter such difficulties, our ability~~licensing and collaboration partners to ~~provide supply of our product candidates for clinical trials or our products for patients, if approved, could be delayed or prevented.~~

~~Manufacturing antibody drug conjugate products is complex~~devote sufficient time and require the use of innovative technologies to handle living cells. Manufacturing these products requires facilities specifically designed for and validated for this purpose and sophisticated quality assurance and quality control procedures are necessary. Slight deviations anywhere in the manufacturing process, including filling, labeling, packaging, storage and shipping and quality control and testing, may result in lot failures, product recalls or spoilage. When changes are madeeffort to the manufacturing process, we may be required to provide preclinical and clinical data showing the comparable identity, strength, quality, purity or potency of the products before and after such changes. If microbial, viral or other contaminations are discovered at manufacturing facilities, such facilities may need to be closed for an extended period of time to investigate and remedy the contamination, which could delay clinical trials and adversely harm our business. The use of biologically derived ingredients can also lead to allegations of harm, including infections or allergic reactions, or closure of product facilities due to possible contamination.

In addition, there are risks associated with large scale manufacturing for clinical trials or commercial scale including, among others, cost overruns, potential problems with process scale-up, process reproducibility, stability issues, compliance with good manufacturing practices, lot consistency, significant lead times and timely availability of raw materials. Even if we obtain marketing approval for any of our product candidates, there is no assurance that we or our manufacturers will be able to manufacture the approved product to specifications acceptable to the FDA or other comparable foreign regulatory authorities, to produce it in sufficient quantities to meet the requirements for the potential commercial launch of the product or to meet potential future demand. If our manufacturers are unable to produce sufficient quantities for clinical trials or for commercialization, our development and commercialization ~~efforts would be impaired, which would~~of neffy; to meet their obligations to us, including for future royalty and milestone payments; to adequately deploy business continuity plans in the event of a crisis; to adequately respond to the adverse impact of military action, sanctions and market disruptions; and/or to satisfactorily resolve significant disagreements with us or address other factors could have an adverse ~~effect~~impact on our ~~business,~~ financial ~~condition,~~ results and operations. In addition, if these third parties violate, or are alleged to have violated, any laws or regulations during the performance of ~~operations~~their obligations for us, including with respect to safety, patient and ~~growth prospects.~~

Due to the early nature of our product candidates, the drug product may not be stable over time causing changes to be made to the manufacturing or storage process which may result in delays or stopping the development of the product candidate.

~~Changes in methods of product candidate manufacturing may result in additional costs or delays.~~

~~As product candidates progress through preclinical to late-stage clinical trials to marketing approval~~data privacy, antitrust, and ~~commercialization,~~bribery and corruption, it is ~~common~~possible that various aspects of the development program, such as manufacturing methods, are altered along the way in an effort to optimize yield, manufacturing batch size, change drug product dosage form, minimize costswe could suffer financial and achieve consistent quality and results. Such changes carry the risk that they will not achieve these intended objectives. Any of these changes could cause our product candidates to perform differently and affect the results of planned clinical trialsreputational harm or other future clinical trials conducted with the altered materials. This could delay completion of clinical trials, require the conduct of bridging clinical trials or the repetition of one or more clinical trials, increase clinical trial costs, delay approval of our product candidatesnegative outcomes, including possible legal consequences and ~~jeopardize our ability to commercialize our product candidates and generate revenue.~~

~~Any approved products may fail to achieve the degree of market acceptance by physicians, patients, hospitals, healthcare payors and others in the medical community necessary for commercial success.~~

If any of our product candidates receive marketing approval, they may nonetheless fail to gain sufficient market acceptance by physicians, patients, healthcare payors and others in the medical community. Our product candidate targets mechanisms for which there are limited or no currently approved products, which may result in slower adoption by physicians, patients and payors. If our product candidates do not achieve an adequate level of acceptance, we may not generate significant product revenue and we may not become profitable. The degree of market acceptance of our product candidates, if approved for commercial sale, will depend on a number of factors, including:

•

~~efficacy and potential advantages compared to alternative treatments;~~

•

~~our ability to offer our products for sale at competitive prices;~~

•

~~convenience and ease of administration compared to alternative treatments;~~

•

~~the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;~~

•

~~the strength of marketing and distribution support; and~~

•

~~the prevalence and severity of any side effects.~~

liabilities. We may not be ~~able to successfully commercialize our product candidates, if approved, due to unfavorable pricing regulations or third-party coverage~~successful in enforcing the terms and ~~reimbursement policies, which could make it difficult for us to sell our product candidates profitably.~~

Obtaining coverage and reimbursement approval for a product from a government or other third-party payor is a time-consuming and costly process, with uncertain results, that could require us to provide supporting scientific, clinical and cost effectiveness data for the useconditions of our ~~products~~licensing and collaboration agreements in court or via agreed upon dispute resolution mechanisms, and even if we were to prevail in any such dispute, the ~~payor. There may be significant delays in obtaining such coverage and reimbursement for newly approved products, and coverage~~remedies may not be available, or may be more limited than the purposes for which the product is approved by the FDA or comparable foreign regulatory authorities. Moreover, eligibility for coverage and reimbursement does not imply that a product will be paid for in all cases or at a rate that covers our costs, including research, development, intellectual property, manufacture, sale and distribution expenses. Interim reimbursement levels for new products, if applicable, may also not be sufficientadequate to cover our costs and may not be made permanent. Reimbursement rates may vary according to the use of the product and the clinical setting in which it is used, may be based on reimbursement levels already set for lower cost products and may be incorporated into existing payments for other services. Net prices for products may be reduced by mandatory discounts or rebates required by government healthcare programs or private payors, by any future laws limiting drug prices and by any future relaxation of laws that presently restrict imports of product from countries where they may be sold at lower prices than in the United States.

There is significant uncertainty related to the insurance coverage and reimbursement of newly approved products. In the United States, there is no uniform policy among third-party payors for coverage and reimbursement. Third-party payors often rely upon Medicare coverage policy and payment limitations in setting reimbursement policies, but also have their own methods and approval process apart from Medicare coverage and reimbursement determinations. Therefore, one third-party payor’s determination to provide coverage for a product does not assure that other payors will also provide coveragecompensate us for the ~~product.~~

~~Coverage and reimbursement by a third-party payor may depend upon a number~~losses. Any termination, breach or expiration of ~~factors, including the third-party payor’s determination that use~~any of ~~a product is:~~

•

~~a covered benefit under its health plan;~~

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~~safe, effective and medically necessary;~~

•

~~appropriate for the specific patient;~~

•

~~cost-effective; and~~

•

~~neither experimental nor investigational.~~

We cannot be sure that reimbursement will be available for any product that we commercialize and, if coverage and reimbursement are available, what the level of reimbursement will be. Obtaining reimbursement for our products may be particularly difficult because of the higher prices often associated with branded therapeutics and therapeutics administered under the supervision of a physician. Our inability to promptly obtain coverage and adequate reimbursement rates from both government-funded and private payors for any approved products that we developthese licensing or collaboration agreements could have a material adverse effect on our ~~operating results, our ability~~financial position by reducing or eliminating the potential for us to ~~raise capital needed to commercialize products~~receive license fees, milestones and ~~our overall financial condition.~~

Reimbursement may impact the demand for, and the price of, any product for which we obtain marketing approval. Even if we obtain coverage for a given product by a third-party payor, the resulting reimbursement payment rates may not be adequate or may require co-payments that patients find unacceptably high. Patients who are prescribed medications for the treatment of their conditions, and their prescribing physicians, generally rely on third-party payors to reimburse all or part of the costs associated with those medications. Patients are unlikely to use our products unless coverage is provided and reimbursement is adequate to cover all or a significant portion of the cost of our products. Therefore, coverage and adequate reimbursement are critical to a new product’s acceptance. Coverage decisions may depend upon clinical and economic standards that disfavor new products when more established or lower cost therapeutic alternatives are already available or subsequently become available.

~~For products administered under the supervision of a physician, obtaining coverage and adequate reimbursement may be particularly difficult because of the higher prices often associated with~~royalties. In such drugs. Additionally, separate reimbursement for the product itself may or may not be available. Instead, the hospital or administering physician may be reimbursed only for providing the treatment or procedure in which our product is used. Further, from time to time, the Centers for Medicine and Medicaid Services (CMS) revises the reimbursement systems used to reimburse health care providers, including the Medicare Physician Fee Schedule and Hospital Outpatient Prospective Payment System, which may result in reduced Medicare payments.

We expect to experience pricing pressures in connection with the sale of any of our product candidates due to the trend toward managed healthcare, the increasing influence of health maintenance organizations, and additional legislative changes. The downward pressure on healthcare costs in general, particularly prescription medicines, medical devices and surgical procedures and other treatments, has become very intense. As a result, increasingly high barriers are being erected to the successful commercialization of new products. Further, the adoption and implementation of any future governmental cost containment or other health reform initiative may result in additional downward pressure on the price that we may receive for any approved product.

Outside of the United States, many countries require approval of the sale price of a product before it can be marketed, and the pricing review period only begins after marketing or product licensing approval is granted. To obtain reimbursement or pricing approval in some of these countries,an event, we may be required to ~~conduct~~devote additional efforts and to incur additional costs associated with pursuing regulatory approval and commercialization of neffy. Alternatively, we may attempt to identify and transact with a ~~clinical trial~~new assignee or licensee, but there can be no assurance that ~~compares~~we would be able to identify a suitable partner or transact on terms that are favorable to us. For example, in February 2023, we terminated the ~~cost-effectiveness~~Recordati License and Supply Agreement, which eliminated the potential for us to receive milestone and royalty payments from Recordati under the Recordati License and Supply Agreement. We intend to pursue strategic partnerships for the commercialization of ~~our~~neffy in additional regions outside of the United States, subject to FDA approval of neffy, including the regions previously licensed to Recordati, but there can be no assurance that we would be able to identify a suitable partner or transaction on terms that are favorable to us. In addition, under the termination agreement with Recordati (the “Termination Agreement”), we are obligated to pay certain milestone and royalty payments to Recordati.

We may seek to enter into additional collaborations, licenses and other similar arrangements for neffy or any future product candidate to other available therapies. In some foreign markets, prescription pharmaceutical pricing remains subject to continuing governmental control even after initial approval is granted. As a result, we might obtain marketing approval for a product candidate in a particular country, but then be subject to price regulations that delay our commercial launch of the product, possibly for lengthy time periods, and negatively impact the revenue, if any, we are able to generate from the sale of the product in that country. Adverse pricing limitations may hinder our ability to recoup our investment in one or more product candidates, even if such product candidates obtain marketing approval.

~~Our product candidates for which we intend to seek approval as biologic products may face competition sooner than anticipated.~~

The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (the Affordable Care Act) signed into law on March 23, 2010, includes a subtitle called the Biologics Price Competition and Innovation Act of 2009 (BPCIA) which created an abbreviated approval pathway for biological products that are biosimilar to or interchangeable with an FDA-licensed reference biological product. Under the BPCIA, an application for a biosimilar product may not be ~~submitted~~successful in doing so, and even if we are, we may relinquish valuable rights and may not realize the benefits of such relationships.

We may seek to enter into collaborations, joint ventures, licenses and other similar arrangements for the ~~FDA until four years following the date that the reference~~development or commercialization of neffy in other geographic regions or of any future product ~~was first licensed by the FDA. In addition, the approval of a biosimilar~~candidates, due to capital costs required to develop or commercialize neffy or any future product candidate or manufacturing constraints. Such collaborative efforts may not be ~~made effective by the FDA until 12 years from the date on which the reference~~profitable. We may not be successful in our efforts to establish or maintain such collaborations for neffy or any future product ~~was first licensed. During this 12-year period of exclusivity, another company~~candidates because our research and development pipeline may still market a competing version of the reference product if the FDA approves a full BLA for the competing product containing the sponsor’s own preclinical data and data from adequate and well-controlled clinical trials to demonstrate the safety, purity and potency of their product.

~~We believe that any of~~be insufficient, our product candidates ~~approved as~~may be deemed to be at too early of a ~~biological product under a BLA should qualify~~stage of development for ~~the 12-year period of exclusivity. However, there is a risk that this exclusivity could be shortened due to congressional action, court decisions~~collaborative effort or ~~otherwise, or that the FDA will~~third parties may not ~~consider~~view our product candidates as having the requisite potential to demonstrate safety and efficacy or significant commercial opportunity. In addition, we face significant competition in seeking appropriate strategic partners, and the negotiation process can be ~~reference products for competing products, potentially creating the opportunity for generic competition sooner than anticipated. Other aspects~~time-consuming and complex. We may have to relinquish valuable rights to our future revenue streams, research programs or product candidates, or grant licenses on terms that may not be favorable to us, as part of ~~the BPCIA, some of which~~any such arrangement, and such arrangements may ~~impact the BPCIA exclusivity provisions, have also been the subject of recent litigation. Moreover, the extent to which~~restrict us from entering into additional agreements with other potential licensing and collaboration partners. We cannot be certain that, following a ~~biosimilar, once approved,~~collaboration, license or strategic transaction, we will ~~be substituted for any one of our reference products in a way~~achieve an economic benefit that ~~is similar to traditional generic substitution for non-biological products is not yet clear, and will depend on a number of marketplace and regulatory factors that are still developing.~~justifies such transaction.

IfEven if we are successful in our efforts to establish such collaborations, the terms that we agree upon may not be favorable to us, and we may not be able to maintain such collaborations if, for example, the development or approval of neffy or any ~~approved products are subject to biosimilar competition sooner than we expect, we will face significant pricing pressure and our commercial opportunity will be limited.~~

~~If the market opportunities for any of our product candidates are smaller than we believe they are, our revenue may be adversely affected, and our business may suffer.~~

We are focused on developing tissue targeted therapeutics for the treatment of chronic viral infections, cancer, and other serious diseases, such as SBT8230 for cHBV. Our projections of addressable patient populations that have the potential to benefit from treatment with a current or future product candidate is delayed, the safety of neffy or any future product candidate is questioned or the sales of an approved product candidate are ~~based on estimates. If~~unsatisfactory.

In addition, any potential future collaborations may be terminable by our strategic partners, and we may not be able to adequately protect our rights under these agreements. Furthermore, strategic partners may negotiate for certain rights to control decisions regarding the development and commercialization of ~~our estimates are inaccurate,~~neffy or any future product candidate, if approved, and may not conduct those activities in the same manner as we do. Any termination of collaborations we enter into in the future, or any delay in entering into collaborations related to neffy or any future product candidate, could delay the development and commercialization of neffy or any future product candidate and reduce their competitiveness if they reach the market, ~~opportunities for any of our product candidates~~which could ~~be significantly diminished and~~ have ana material adverse ~~material impact~~effect on our ~~business.~~business, financial condition and results of operations.

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

Because we currently rely on third parties to ~~research and develop~~ manufacture neffy and to ~~manufacture our product candidates,~~perform quality testing, we must, at times, share our proprietary information, including trade secrets and know-how, with them. We seek to protect our proprietary ~~technology~~information, in part, by entering into confidentiality agreements, and, if applicable, material transfer agreements, collaborative research agreements, consulting agreements or other similar agreements with our current and future licensing and collaboration partners, advisors, employees ~~third-party contractors~~ 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, including our trade secrets.~~proprietary information. Despite the contractual provisions employed when working with third parties, the need to share trade secrets, know-how and other ~~confidential~~proprietary information increases the risk that such ~~trade secrets~~proprietary information become known by our competitors, are intentionally or inadvertently incorporated into the technology of others or are disclosed or used in violation of these agreements. ~~Given that our proprietary position is based,~~We rely, in part, on ~~our~~trade secrets, know-how and ~~trade secrets,~~other proprietary information to develop and maintain our competitive position and a competitor’s ~~independent~~ discovery of our ~~trade secrets~~proprietary information 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~~business, financial condition, results of ~~our advisors, employees, third-party contractors~~operations and consultants to publish data potentially relating to our trade secrets, although our agreements may contain certain limited publication rights. For example, any academic institution that we may collaborate with will likely expect to be granted rights to publish data arising out of such collaboration and any joint research and development programs may require us to share trade secrets under the terms of our research and development or similar agreements. Despite our efforts to protect our trade secrets, our competitors may discover our trade secrets through breach of our agreements with third parties, independent development, or publication of information by any of our third-party collaborators. A competitor’s discovery of our trade secrets would impair our competitive position and have an adverse impact on our business.prospects.

~~If any~~

Risks Related to Commercialization of ~~our product candidates are approved for~~neffy or Any Future Product Candidates

We currently have limited marketing, ~~and commercialization and~~sales or distribution infrastructure. If we are unable to ~~establish~~fully develop our sales, marketing and distribution capability on our own or through collaborations with marketing ~~capabilities or enter into agreements with third parties to sell and market~~partners, we may not be successful in commercializing our product ~~candidates, we will be unable to successfully commercialize our product candidates if and when they are approved.~~candidates.

We ~~have no~~are currently building our marketing, sales ~~marketing~~ or distribution ~~capabilities~~capabilities. As a company we have not commercialized or ~~experience. To achieve commercial success~~marketed any products to date. If neffy is approved for the emergency treatment of Type I allergic reactions or other future indications or any future product candidate is approved, ~~product for which~~ we ~~retain sales and marketing responsibilities, we must either develop a~~will need to expand our sales and marketing organization, on our own and in collaboration with third parties, and add further technical expertise and supporting distribution capabilities to commercialize the approved product in key territories, which ~~would~~will require substantial additional resources. Some or all of these costs may be ~~expensive and time consuming,~~ incurred in advance of any approval of neffy or ~~outsource these functions to other third parties. In the~~any future ~~we may choose to build a focused sales and marketing infrastructure to sell, or participate in sales activities with our collaborators for, some of our~~ product ~~candidates if and when they are approved.~~

candidate. There are risks involved with both establishing our own sales, marketing and ~~marketing~~distribution capabilities and entering into arrangements with third parties to perform these services. For example, recruiting and training a ~~sales force~~commercial organization is expensive and time consuming and could delay any product launch. If the commercial launch of aneffy or any future product candidate for which we recruit a sales force and establish marketing capabilities is delayed or does not occur for any reason, we would have prematurely or unnecessarily incurred these commercialization expenses. This may be costly and our investment would be lost if we cannot retain or reposition our sales and marketing personnel. Any failure or delay in the development of our or third parties’ internal sales, marketing and distribution capabilities would adversely impact the commercialization of neffy and any future product candidates.

Factors that may inhibit our efforts to commercialize neffy or any future ~~products~~product candidate on ~~our~~its own include:

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our inability to recruit and retain adequate numbers of effective sales and marketing personnel;

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the inability of sales personnel to obtain access to ~~physicians~~ or ~~educate~~persuade adequate numbers of allergists, pediatricians and other physicians ~~on the benefits of prescribing~~to prescribe any future products;

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the lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with more extensive product ~~portfolios;~~lines;

•

the availability of adequate coverage by and reimbursement from third-party payors; and

•

unforeseen costs and expenses associated with ~~creating~~building out an independent sales and marketing organization.

~~If we~~We entered into exclusive licensing and collaboration agreements for the development and commercialization of neffy with Alfresa Pharma in Japan and Pediatrix Therapeutics in China, Macau, Hong Kong and Taiwan. These licensing and collaboration partners have direct sales forces and established distribution systems to serve as an alternative to our own sales force and distribution systems. We may enter into ~~arrangements with third parties~~additional licensing and collaboration agreements in other territories for the commercialization of neffy or any future product candidates, however, we may be unable to ~~perform sales, marketing and distribution services, our~~enter into such agreements on favorable terms, if at all. Our product revenue ~~or the profitability of these product revenue to us are likely to~~may be lower than if we ~~were to market and sell any~~directly marketed or sold our products, ~~that we develop ourselves.~~if approved. In addition, we may not be successful in entering into arrangements with third parties to sell and market our product candidates or may be unable to do so on terms that are favorable to us. In entering into third-party marketing or distribution arrangements, any revenue we receive will depend in whole or in part upon the efforts of ~~the~~these third parties, which may not be successful and ~~we cannot assure you~~are generally not within our control.

We also compete with many companies that ~~such~~currently have extensive, experienced and well-funded sales, distribution and marketing operations to recruit, hire, train and retain marketing and sales personnel. We also face competition in our search for third parties ~~will establish adequate~~to assist us with the sales and ~~distribution capabilities or devote the necessary resources~~ marketing efforts of neffy and ~~attention to sell and market~~ any future ~~products effectively.~~ product candidates, if approved. Without an internal team or the support of a third-party to perform marketing and sales functions, we may be unable to compete successfully against these more established companies.

If we do not ~~establish~~expand our sales and marketing capabilities successfully, ~~either~~ on our own orand in collaboration with third parties, we will not be successful in commercializing ~~our~~neffy or any future product candidates. If we are not successful in commercializing any approved products, our future product revenue will suffer and we may incur significant additional losses.

Furthermore, our efforts to educate patients, caregivers, allergists, pediatricians and other physicians, and payors on the benefits of neffy or any future product candidates may require more resources than we anticipate and may never be successful. Even if neffy or any future product candidates are approved, if we are unable to successfully market our products successfully, we will not be able to generate significant revenues from such products, if approved.

The market for neffy and any future product candidates we may develop may be smaller than we expect.

We have focused our development of neffy for the emergency treatment of Type I allergic reactions. We base our market opportunity estimates on a variety of factors, including our estimates of the number of people who have experienced severe Type I allergic reactions and are at risk of anaphylaxis, the continued growth rate of our patient population, the number of those in our patient population who we expect will fill a prescription for neffy, including those that currently do not fill prescriptions for epinephrine intra-muscular injectable devices or whose prescriptions have lapsed, the estimated increase in per patient device acquisition of neffy as compared to epinephrine intra-muscular injectable devices and the net sales of epinephrine intra-muscular injectable devices. These estimates are based on many assumptions and may prove incorrect, and new studies or market research may reduce our estimated patient population and potential device sales. If we are unable to advance neffy, including with respect to the emergency treatment of Type I allergic reactions and other potential indications, or any future product candidates with attractive market opportunities or if our market opportunities are smaller than we expected, our future product revenues may be smaller than anticipated, which would adversely affect our business, financial condition, results of operations and prospects.

Any of our current and future product candidates for which we, or any current or future licensing and collaboration partners, obtain regulatory approval in the future will be subject to ongoing obligations and continued regulatory review, which may result in significant additional expense. If approved, neffy and any future product candidates could be subject to post-marketing restrictions or withdrawal from the market and we, or any current or future licensing and collaboration partners, may be subject to substantial penalties if we, or they, fail to comply with regulatory requirements or if we, or they, experience unanticipated problems with our products following approval.

48neffy or any future product candidates for which we, or any current or future licensing and collaboration partners, obtain regulatory approval, as well as the manufacturing processes, post-approval studies, labeling, post-approval pharmacovigilance monitoring, advertising and promotional activities for such product, among other things, will be subject to ongoing requirements of and review by the FDA, the EMA and other applicable regulatory authorities. These requirements include submissions of safety and other post-marketing information and reports, registration and listing requirements, requirements relating to manufacturing, quality control, quality assurance and corresponding maintenance of records and documents, requirements regarding the distribution of samples to physicians and recordkeeping. For certain commercial prescription drug products, manufacturers and other parties involved in the supply chain must also meet chain of distribution requirements and build electronic, interoperable systems for product tracking and tracing and for notifying the FDA of counterfeit, diverted, stolen and intentionally adulterated products or other products that are otherwise unfit for distribution in the United States. We and our contract manufacturers will also be subject to user fees and periodic inspection by regulatory authorities to monitor compliance with these requirements and the terms of any product approval we may obtain. Even if regulatory approval of a product candidate is granted, the approval may be subject to limitations on the indications or uses for which the product may be marketed or to the conditions of approval, including the requirement in the United States to implement a Risk Evaluation and Mitigation Strategy or the inclusion of a Boxed Warning, which highlights a specific life-threatening safety risk.

The FDA, the EMA and other regulatory authorities may also impose requirements for costly post-marketing studies or clinical trials and surveillance to monitor the safety or efficacy of a product. For example, the FDA and other agencies, including the Department of Justice, closely regulate and monitor the post-approval marketing and promotion of products to ensure that they are manufactured, marketed and distributed only for the approved indications and in accordance with the provisions of the approved labeling. Regulatory authorities impose stringent restrictions on manufacturers’ communications regarding off-label use. However, companies generally may share truthful and not misleading information that is otherwise consistent with a product’s approved labeling. If we, or any current or future licensing and collaboration partners, do not market neffy or any of our future product candidates for which we, or they, receive regulatory approval for only their approved indications, we, or they, may be subject to warnings or enforcement action for off-label marketing if it is alleged that we are doing so. Violation of laws and regulations relating to the promotion and advertising of prescription drugs may lead to investigations or allegations of violations of federal and state health care fraud and abuse laws and state consumer protection laws, including the False Claims Act and any comparable foreign laws. In the EU, the direct-to-consumer advertising of prescription-only medicinal products is prohibited. Violations of the rules governing the promotion of medicinal products in the EU could be penalized by administrative measures, fines and imprisonment. These laws may further limit or restrict the advertising and promotion of our products to the general public, and may also impose limitations on our promotional activities with health care professionals.

In addition, later discovery of previously unknown side effects, adverse events or other problems with our products or their manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may yield various results, including:

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restrictions on the manufacturing of such products;

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restrictions on the labeling or marketing of such products;

•

restrictions on product distribution or use;

•

requirements to conduct post-marketing studies or clinical trials;

•

warning letters or untitled letters;

•

withdrawal of the products from the market;

•

refusal to approve pending applications or supplements to approved applications that we submit;

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recall of products;

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restrictions on coverage by third-party payors;

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fines, restitution or disgorgement of profits or revenues;

•

exclusion from federal health care programs such as Medicare and Medicaid;

•

suspension or withdrawal of regulatory approvals;

•

refusal to permit the import or export of products;

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product seizure; or

•

injunctions or the imposition of civil or criminal penalties.

Even if we, ~~obtain FDA approval~~or any current or future licensing and collaboration partners, obtains regulatory approvals for neffy or any future product candidate, the terms of ~~any~~approvals and ongoing regulation of our ~~product candidates,~~products may limit how we ~~may never obtain approval or commercialize such~~manufacture and market our products, ~~outside of the United States,~~ which ~~would limit~~could impair our ability to ~~realize their full market potential.~~generate revenue.

~~In order~~Once regulatory approval has been granted, an approved product and its manufacturer and distributor are subject to ~~market~~ongoing review and extensive regulation. We, and any ~~products outside of the United States, we~~current and future licensing and collaboration partners, must ~~establish and~~therefore comply with ~~numerous~~requirements concerning advertising and ~~varying~~promotion for neffy or any future product candidate for which we or they obtain regulatory ~~requirements~~approval. Promotional communications with respect to prescription drugs are subject to a variety of ~~other countries regarding safety and efficacy. Clinical trials conducted in one country may not be accepted by regulatory authorities in other countries,~~legal and regulatory ~~approval in one country does not mean that regulatory approval will~~restrictions and must be obtained in any other country. Approval procedures vary among countries and can involve additional product testing and validation and additional administrative review periods. Seeking foreign regulatory approvals could result in significant delays, difficulties and costs for us and may require additional preclinical studies or clinical trials which would be costly and time consuming. Regulatory requirements can vary widely from country to country and could delay or preventconsistent with the introduction of our products in those countries. Satisfying these and other regulatory requirements is costly, time consuming, uncertain and subject to unanticipated delays. In addition, our failure to obtain regulatory approval in any country may delay or have negative effects on the process for regulatory approval in other countries. We do not have any product candidates approved for sale in any jurisdiction, including international markets, and we do not have experience in obtaining regulatory approval in international markets. If we fail to comply with regulatory requirements in international markets or to obtain and maintain required approvals, our ability to realize the full market potential of our products will be harmed.

~~Risks Related to Our In-Licenses and Other Strategic Agreements~~

~~We may not realize the benefits of any acquisitions, in-license, or strategic alliances that we enter into.~~

~~We have entered into in-license agreements with a licensor and~~information in the product’s approved labeling. Thus, we and any current and future ~~may seek~~licensing and ~~form strategic alliances, create joint ventures or collaborations, or enter into acquisitions or additional licensing arrangements with third parties that we believe~~collaboration partners will ~~complement or augment our existing technologies and product candidates.~~

These transactions can entail numerous operational and financial risks, including exposure to unknown liabilities, disruption of our business and diversion of our management’s time and attention in order to manage a collaboration or develop acquired products, product candidates or technologies, incurrence of substantial debt or dilutive issuances of equity securities to pay transaction consideration or costs, higher than expected collaboration, acquisition or integration costs, write-downs of assets or goodwill or impairment charges, increased amortization expenses, difficulty and cost in facilitating the collaboration or combining the operations and personnel of any acquired business, impairment of relationships with key suppliers, manufacturers or customers of any acquired business due to changes in management and ownership and the inability to retain key employees of any acquired business. As a result, if we enter into acquisition or in-license agreements or strategic partnerships, we may not be able to ~~realize the benefit of such transactions if~~promote any products we develop for indications or uses for which they are unable to successfully integrate them with our existing operations and company culture, or if there are materially adverse impacts on our or the counterparty’s operations resulting from COVID-19, which could delay our timelines or otherwise adversely affect our business. We also cannot be certain that, following a strategic transaction or license, we will achieve the revenue or specific net income that justifies such transaction or such other benefits that led us to enter into the arrangement.not approved.

We may wish to form collaborations in the future with respect to our product candidates, but may not be able to do so or to realize the potential benefits of such transactions, which may cause us to alter or delay our development and commercialization plans.

The development and potential commercialization of our product candidates will require substantial additional capital to fund expenses. We may, in the future, decide to collaborate with other biopharmaceutical companies for the development and potential commercialization of those product candidates, including in territories outside the United States or for certain indications. We will face significant competition in seeking appropriate collaborators. We may not be successful in our efforts to establish a strategic partnership or other alternative arrangements for our product candidates because they may be deemed to be at too early of a stage of development for collaborative effort and third parties may not view our product candidates as having the requisite potential to demonstrate safety and efficacy. If and when we collaborate with a third-party for development and commercialization of a product candidate, we can expect to relinquish some or all of the control over the future success of that product candidate to the third-party. Our ability to reach a definitive agreement for a collaboration will depend, among other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator’s evaluation of our technologies, product candidates and market opportunities. The collaborator may also consider alternative product candidates or technologies for similar indications that may be available to collaborate on and whether such a collaboration could be more attractive than the one with us for our product candidate. We may also be restricted under any license agreements from entering into agreements on certain terms or at all with potential collaborators.

4957

~~Collaborations are complex and time-consuming to negotiate and document.~~ In addition, ~~there have been a significant number~~manufacturers of ~~recent business combinations among large pharmaceutical companies~~approved products and those manufacturers’ facilities are required to comply with extensive FDA, EMA and other foreign regulatory requirements, including ensuring that ~~have resulted in a reduced number~~quality control and manufacturing procedures conform to cGMPs, which include requirements relating to quality control and quality assurance as well as the corresponding maintenance of ~~potential~~records and documentation and reporting requirements. We, our contract manufacturers, any current and future ~~collaborators~~licensing and ~~changes~~collaboration partners and their contract manufacturers would be subject to periodic unannounced inspections by the ~~strategies of~~FDA, the ~~combined company. As a result, we may not be able~~EMA and other foreign regulators to ~~negotiate collaborations on a timely basis, on acceptable terms, or at all. If we are unable~~monitor and ensure compliance with cGMPs. Despite our efforts to ~~do so, we may have to curtail the development of such product candidate, reduce or delay~~inspect and verify regulatory compliance, one or more of our third-party manufacturing vendors may be found on regulatory inspection by the FDA, the EMA or other ~~development programs, delay~~foreign regulators to be not in compliance with cGMP regulations, which may result in shutdown of the ~~potential commercialization~~third-party vendor or ~~reduce~~invalidation of drug product lots or processes. In some cases, a product recall may be warranted or required, which would materially affect our ability to supply and market our drug products.

Accordingly, assuming we, or any current or future licensing and collaboration partners, receive regulatory approval for neffy or one or more future product candidates, we, and any current and future licensing and collaboration partners, and our and their contract manufacturers will continue to expend time, money and effort in all areas of regulatory compliance, including manufacturing, production, product surveillance and quality control.

If we, and any current and future licensing and collaboration partners, are not able to comply with post-approval regulatory requirements, we, and any current and future licensing and collaboration partners, could have the ~~scope~~regulatory approvals for neffy or any future products withdrawn by regulatory authorities and our, or any current or future licensing and collaboration partners’, ability to market any future products could be limited, which could adversely affect our ability to achieve or sustain profitability. Further, the cost of compliance with post-approval regulations may have a negative effect on our operating results and financial condition.

Even if neffy or any ~~planned sales or marketing activities for such~~future product candidate ~~or increase our expenditures~~of ours receives regulatory approval, it may fail to achieve the degree of market acceptance by allergists, pediatricians and undertake development, manufacturing or commercialization activities at our own expense. If we elect to increase our expenditures to fund development, manufacturing or commercialization activities on our own, we may need to obtain additional capital,other physicians, patients, caregivers, third-party payors and others in the medical community necessary for commercial success, in which ~~may not be available to us on acceptable terms or at all. If we do not have sufficient funds,~~case we may not ~~be able to further develop our product candidates~~generate significant revenues or ~~bring them to market and generate product revenue.~~become profitable.

~~Our~~We have never commercialized a product, ~~candidates~~and even if neffy for the treatment of any indication, or any future product candidate of ours, is approved by the appropriate regulatory authorities for marketing and sale, it may ~~also require specific components~~nonetheless fail to ~~work effectively~~gain sufficient market acceptance by allergists, pediatricians and ~~efficiently,~~other physicians, patients, caregivers, third-party payors and ~~rights to those components~~others in the medical community. Physicians may be ~~held by others. We~~reluctant to prescribe neffy in place of well-established epinephrine intra-muscular injectable devices. Further, patients and caregivers may be ~~unable~~reluctant to ~~in-license any compositions, methods~~switch unless their physicians recommend switching products or are required to switch due to lack of use, processes or other third-party intellectual property rights from third parties that we identify. We may fail to obtain any of these licenses at a reasonable cost or on reasonable terms, which would harm our business. Evencoverage and adequate reimbursement. In addition, even if we are able to ~~obtain a license, it may be non-exclusive, thereby giving our competitors access to the same technologies licensed to us. In that event, we may be required to expend significant time~~demonstrate neffy’s or any future product candidate’s safety and ~~resources to develop or license replacement technology.~~

~~Risks Related to Our Business Operations~~

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 informationefficacy to the FDA, the EMA and ~~non-U.S.~~other regulators, ~~comply with healthcare fraud and abuse laws and regulations~~safety or efficacy concerns in the ~~United States~~medical community may hinder market acceptance.

Efforts to educate patients, caregivers, the medical community and ~~abroad, report~~third-party payors on the benefits of neffy and any future product candidates may require more resources than we anticipate, including management time and financial ~~information or data accurately or disclose unauthorized activities to us. In particular, sales, marketing~~resources, 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 trials, which could result in regulatory sanctions and cause serious harm to our reputation. 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~~ successful. If neffy 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 those actions could have a significant impact on our business, including the imposition~~future product candidate is approved but does not achieve an adequate level of significant civil, criminal and administrative penalties, damages, fines, disgorgement, imprisonment, exclusion from government funded healthcare programs, such as Medicare and Medicaid, contractual damages, reputational harm, diminished profits and future earnings, additional reporting obligations and oversight if subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with these laws, and the curtailment or restructuring of our operations.

~~We face potential product liability, and, if successful claims are brought against us,~~market acceptance, we may incur substantial liability and costs. If the use of our product candidates harms patients or is perceived to harm patients even when such harm is unrelated to our product candidates, our regulatory approvals could be revoked or otherwise negatively impactednot generate significant revenues and we ~~could be subject to costly~~ may not become profitable. The degree of market acceptance of neffy and ~~damaging product liability claims.~~

~~The use of our product candidates in clinical trials 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 product 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:

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~~impairment of our business reputation;~~

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~~withdrawal of clinical trial participants;~~

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~~costs due to related litigation;~~

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~~distraction of management’s attention from our primary business;~~

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~~substantial monetary awards to patients or other claimants;~~

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~~the inability to commercialize our product candidates; and~~

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~~decreased demand for our~~future product candidates, if approved for commercial ~~sale.~~sale, will depend on a number of factors, including:

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the efficacy and safety of the product;

~~We believe our~~•

the potential advantages of the product ~~liability insurance coverage is sufficient in light of our current programs; however, we may not be able~~compared to ~~maintain insurance coverage at a reasonable cost or in sufficient amounts to protect us against losses due to liability. If~~competitive therapies and when we obtain marketing approval for product candidates, we intend to expand our insurance coverage to include the sale of commercial products; however, we may be unable to obtain product liability insurance on commercially reasonable terms or in adequate amounts. On occasion, large judgments have been awarded in class action lawsuits based on drugs or medical treatments that had unanticipated adverse effects. A successful product liability claims, or series of claims brought against us could cause our stock price to decline and, if judgments exceed our insurance coverage, could adversely affect our results of operations and business.

Patients with infectious disease, such as cHBV, and other diseases targeted by our product candidates are often already in severe and advanced stages of disease and have both known and unknown significant pre-existing and potentially life-threatening health risks. During the course of treatment, patients may suffer adverse events, including death, for reasons that may be related to our product candidates. Such events could subject us to costly litigation, require us to pay substantial amounts of money to injured patients, delay, negatively impact or end our opportunity to receive or maintain regulatory approval to market our products, or require us to suspend or abandon our commercialization efforts. Even in a circumstance in which we do not believe that an adverse event is related to our products, the investigation into the circumstance may be time-consuming or inconclusive. These investigations may interrupt our sales efforts, delay our regulatory approval process in other countries, or impact and limit the type of regulatory approvals our product candidates receive or maintain. As a result of these factors, a product liability claim, even if successfully defended, could have a material adverse effect on our business, financial condition or results of operations.

~~We are highly dependent on our key personnel, and if we are not successful in attracting and retaining highly qualified personnel, we may not be able to successfully implement our business strategy.~~

~~Our ability to compete in the highly competitive biotechnology and pharmaceutical industries depends upon~~ our ability to ~~attract~~successfully publicize these advantages or highlight them in any marketing materials;

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the prevalence and ~~retain highly qualified managerial, scientific~~severity of any side effects;

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our ability, or the ability of any current or future licensing or collaboration partners, to offer the product for sale at competitive prices;

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the product’s convenience and ~~medical personnel. We are highly dependent on our management, scientific and medical personnel. The loss~~ease of administration compared to alternative treatments;

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the willingness of the ~~services~~target patient population to try, and of ~~any of our executive officers, other key employees, and other scientific and medical advisors, and our inability~~physicians to ~~find suitable replacements could result in delays in product development and harm our business.~~prescribe, the product;

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We conduct substantially all of our operations at our facilities in Seattle. This region is headquarters to many other biopharmaceutical companies and many academic and research institutions. Competition for skilled personnel in our market is intense and may limit our ability to hire and retain highly qualified personnel on acceptable terms

limitations or ~~at all.~~

To induce valuable employees to remain at our company, in addition to salary and cash incentives, we have provided stock options and restricted stock units that vest over time. The value to employees of stock options and restricted stock units that vest over time may be 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, scientific and development teams may terminate their employment with us on short notice. Although we have employment agreements with certain of our key employees, these employment agreements provide for at-will employment, which means that any of our employees could leave our employment at any time, withwarnings, including distribution or without notice. We do not maintain “key person” insurance policies on the lives of these individuals or the lives of any of our employees. Our success also depends on our ability to continue to attract, retain and motivate highly skilled junior, mid-level and senior managers as well as junior, mid-level and senior scientific and medical personnel.

We expect to expand our development, regulatory and operational capabilities and, as a result, we may encounter difficulties in managing our growth, which could disrupt our operations.*

As of March 31, 2022, we had 92 employees which represents an increase of 2 employees since January 1, 2022. However, on March 28, 2022, we approved a corporate restructuring plan to discontinue our clinical development programs for SBT6050 and SBT6290 and in connection with this plan, our workforce will be reduced by 27%, with substantially all of the reduction in personnel expected to be completed by July 15, 2022. As we advance our research and development programs, we may be required to further increase the number of our employees and the scope of our operations, particularlyuse restrictions contained in the ~~areas~~product’s approved labeling;

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the strength of ~~clinical development, quality, regulatory affairs and, if any of our product candidates receives marketing approval,~~ sales, marketing and ~~distribution. To manage any future growth, we must:~~

distribution support;

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~~identify, recruit integrate, maintain and motivate additional qualified personnel;~~

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~~manage our development efforts effectively, including~~changes in the ~~initiation and conduct~~standard of ~~clinical trials~~care for ~~our product candidates, both as a monotherapy and in combination with other therapeutics;~~the targeted indications for the product; and

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~~improve our operational, financial~~availability and ~~management controls, reporting systems~~adequacy of coverage and ~~procedures.~~reimbursement from government payors, managed care plans and other third-party payors.

Our future financial performance and our ability to develop, manufacture and commercialize our product candidates, if approved, will depend, in part, on our ability to effectively manage any future growth, and our management may also have to divert financial and other resources, and a disproportionate amount of its attention away from day-to-day activities in order to devote a substantial amount of time, to managing these growth activities.

If we are not able to effectively expand our organization by hiring new employees and expanding our groups of consultants and contractors, we may not be able to successfully implement the tasks necessary to further develop and commercialize our product candidates and, accordingly, may not achieve our research, development and commercialization goals.

We face substantial competition, which may result in others discovering, developing or commercializing products more quickly or marketing them more successfully than us.*

The development and commercialization of new products is highly competitive. We largely compete in the segments of the pharmaceutical, biotechnology and other related markets that develop treatments for infectious diseases. Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, have fewer or less severe side effects, are more convenient, or are less expensive than any products that we may develop. Our competitors also may obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for ours, if ever, which could result in our competitors establishing a strong market position before we are able to enter the market or make our development more complicated. Moreover, with the proliferation of new drugs and therapies into oncology, we expect to face increasingly intense competition as new technologies become available. If we fail to stay at the forefront of technological change, we may be unable to compete effectively. Any product candidates that we successfully develop and commercialize will compete with existing therapies and new therapies that may become available in the future. The highly competitive nature of and rapid technological changes in the biotechnology and pharmaceutical industries could render our product candidates or our technology obsolete, less competitive or uneconomical.

Other products in a similar class as some of our product candidates have already been approved and other products in the same class are further along in development. As more product candidates within a particular class of biopharmaceutical products proceed through clinical development to regulatory review and approval, the amount and type of clinical data that may be required by regulatory authorities may increase or change. Consequently, the results of our clinical trials for product candidates in those class will likely need to show a risk benefit profile that is competitive with or more favorable than those products and product candidates in order to obtain marketing approval or, if approved, a product label that is favorable for commercialization. If the risk benefit profile is not competitive with those products or product candidates, we may have developed a product that is not commercially viable, that we are not able to sell profitably or that is unable to achieve favorable pricing or reimbursement. In such circumstances, our future product revenue and financial condition would be materially and adversely affected.

~~Specifically, there are many companies pursuing therapies against cHBV infection~~, including TLR agonists, such as 3SBio, AICuris, Albireo, Aligos, Allovir, Alnylam, Altimmune, Antios, Arbutus, Arcus, Arrowhead, Ascentage, Assembly Biosciences, Blue Jay Therapeutics, Bristol Myers Squibb, Door Pharmaceuticals, Enanta, ENYO Pharma, Excision Bio, Finch Therapeutics, GC Pharma, Gilead, GlaxoSmithKline, Golden Biotechnology Group, Grifols, HEC Pharm, Hepion, Immunocore, ISA pharmaceuticals, Johnson & Johnson, Kineta, Lupin Limited, Merck, Nucorion, Replicor, Roche, SciClone Pharma, Shanghai Henlius Group, Spring Bank, Tasly, TeneoTen, TRACON, Vaccitech, VBI Vaccines, VenatoRx, Vir, VLP Biotech, Zhimeng Biopharma, and Zydus Cadila.

~~Other companies pursuing TLR agonists for use outside of cHBV, such as therapies for cancer, include but are not limited to~~ Ambrx, Apros Therapeutics, Ascendis, BioNTech, Bolt Biotherapeutics, Bristol Myers Squibb, CureVac, Exicure, Galderma, Gilead, Idera, Mologen, Nektar, Novartis, Primmune, Regeneron, Roche, Seven&Eight, Shanghai De Novo, Sumitomo Dainippon, Tallac Therapeutics, TriSalus, and UroGen. We also face competition from companies that continue to invest in the antibody-drug conjugate field, including but not limited to AbbVie, Actym, ADC Therapeutics, Astellas, BioAtla, Bicycle Therapeutics, Celldex, CytomX, Daiichi Sankyo, Eli Lilly and Company, GlaxoSmithKline, Genmab, ImmunoGen, Millennium, Mersana, MorphoSys AG, Novartis, Pfizer, Sanofi, Seagen, Sutro, and Takeda.

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Many of our competitors, either alone or with their collaboration partners, have significantly greater financial resources and expertise in research and development, preclinical testing, clinical trials, manufacturing and marketing than we do. Future collaborations and mergers and acquisitions may result in further resource concentration among a smaller number of competitors. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These competitors will also compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and subject registration for clinical trials, as well as in acquiring technologies complementary to, or that may be necessary for, our programs.Any failure by

The key competitive factors affecting the success of all of our programs are likely to be efficacy, safety, and convenience. If we are not successful in developing, commercializing and achieving higher levels of reimbursement than our competitors, we will not be able to compete against them and our business would be materially harmed.neffy

~~Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.~~

~~We have incurred substantial losses during our history and do not expect to become profitable in the near future, and we may~~

never achieve profitability. Unused U.S. federal net operating loss carryforwards (NOLs) for taxable years beginning before January 1, 2018, may be carried forward to offset future taxable income, if any, until such unused NOLs expire. Under current law, U.S. federal NOLs incurred in taxable years beginning after December 31, 2017, can be carried forward indefinitely, but the deductibility of such U.S. federal NOLs in taxable years beginning after December 31, 2020, is limited to 80% of taxable income.

As of December 31, 2021, we had $160.3 million of U.S. federal NOLs. If not used, $18.2 million of the U.S. federal NOLs will begin to expire in 2036 and $142.1 million can be carried forward indefinitely under current law. As of December 31, 2021, we also had aggregate U.S. federal research and development (R&D) credits of approximately $2.7 million. Our NOL carryforwards and R&D credits are subject to review and possible adjustment by the U.S. and state tax authorities.

In addition, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50 percentage point change (by value) in its equity ownership over a three-year period, the corporation’s ability to use its pre-change NOL carryforwards, R&D credits and certain other tax attributes to offset its post-change income or taxes may be limited. This could limit the amount of NOLs, R&D credit carryforwards or other applicable tax attributes that we can utilize annually to offset future taxable income or tax liabilities. Subsequent ownership changes and changes to the U.S. tax rules in respect of the utilization of NOLs, R&D credits and other applicable tax attributes carried forward may further affect the limitation in future years. In addition, at the state level, there may be periods during which the use of NOLs is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed.

Our business operations and current and future relationships with investigators, health care professionals, consultants, third-party payors, and customers are subject, directly or indirectly, to federal and state healthcare fraud and abuse laws, transparency laws, privacy laws, and other healthcare laws and regulations. If we are unable to comply, or have not fully complied, with such laws, we could face substantial penalties.*

Although we do not currently have any products on the market, our operations may be, directly or indirectly through our relationships with healthcare professionals, customers and third-party payors, subject to various U.S. federal and state healthcare laws and regulations, including, without limitation, the U.S. federal Anti-Kickback Statute, the U.S. federal civil and criminal false claims laws, the Physician Payments Sunshine Act, and the Health Insurance Portability and Accountability Act (HIPAA), and their implementing regulations. Healthcare providers and others play a primary role in the recommendation and prescription of any products for which we obtain marketing approval. These laws may impact, among other things, our current business operations, including our clinical research activities, and proposed sales, marketing and education programs and constrain the business of financial arrangements and relationships with healthcare providers and other parties through which we may market, sell and distribute our products for which we obtain marketing approval. In addition, we may be subject to additional healthcare, statutory and regulatory requirements and enforcement by foreign regulatory authorities in jurisdictions in which we conduct our business. The laws that may affect our ability to operate include:

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the U.S. federal Anti-Kickback Statute, which prohibits, among other things, persons or entities from knowingly and willfully soliciting, offering, receiving or paying any remuneration (including any kickback, bribe or certain rebates), directly or indirectly, overtly or covertly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, lease, order or recommendation of, any good, facility, item or service, for which payment may be made, in whole or in part, under U.S. federal and state healthcare programs such as Medicare and Medicaid. A person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation;

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the U.S. federal false claims, including the False Claims Act, which can be enforced through whistleblower actions, and Civil Monetary Penalties Laws, which, among other things, impose criminal and civil penalties against individuals or entities for knowingly presenting, or causing to be presented, to the U.S. federal government, claims for payment or approval that are false or fraudulent, knowingly making, using or causing to be made or used, a false record or statement material to a false or fraudulent claim, or from knowingly making a false statement to avoid, decrease or conceal an obligation to pay money to the U.S. federal government. In addition, the government may assert that a claim including items and services resulting from a violation of the U.S. federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act;

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HIPAA, which imposes criminal and civil liability for, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement, in connection with the delivery of, or payment for, healthcare benefits, items or services; similar to the U.S. federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation;

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HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act (HITECH), and their respective implementing regulations, impose requirements on certain covered healthcare providers, health plans, and healthcare clearinghouses as well as their respective business associates that perform services for them, and their covered subcontractors, that involve the use, or disclosure of, individually identifiable health information, relating to the privacy, security, and transmission of such individually identifiable health information;

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~~the U.S. Federal Food, Drug and Cosmetic Act, which prohibits, among other things, the adulteration or misbranding of drugs, biologics and medical devices;~~

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the U.S. Physician Payments Sunshine Act, enacted as part of the Affordable Care Act, and its implementing regulations, which requires certain manufacturers of drugs, devices, biologics and medical supplies that are reimbursable under Medicare, Medicaid or the Children’s Health Insurance Program to report annually to the CMS information related to certain payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), other healthcare professionals (such as physician assistants and nurse practitioners), and teaching hospitals, as well as ownership and investment interests held by the physicians described above and their immediate family members;

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analogous state laws and regulations, including: state anti-kickback and false claims laws, which may apply to our business practices, including, but not limited to, research, distribution, sales and marketing arrangements and claims involving healthcare items or services reimbursed by any third-party payor, including private insurers; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the U.S. federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws and regulations that require drug manufacturers to file reports relating to pricing and marketing information, which requires tracking gifts and other remuneration and items of value provided to healthcare professionals and entities; and state and local laws requiring the registration of pharmaceutical sales representatives; and

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~~European and other foreign law equivalents of each of the laws, including reporting requirements detailing interactions with and payments to healthcare providers.~~

Ensuring that our internal operations and future business arrangements with third parties comply with applicable healthcare laws and regulations will involve substantial costs. It is possible that governmental authorities will conclude that our business practices do not comply with current or future statutes, regulations, agency guidance or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our operations are found to be in violation of any of the laws described above or any ~~other governmental laws and regulations~~future product candidate of ours that ~~may apply~~obtains regulatory approval to us, we may be subject to significant penalties, including civil, criminal and administrative penalties, damages, fines, exclusion from U.S. government funded healthcare programs, such as Medicare and Medicaid,achieve market acceptance or similar programs in other countries or jurisdictions, disgorgement, imprisonment, contractual damages, reputational harm, diminished profits, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws and the delay, reduction, termination or restructuring of our operations. Further, defending against any such actions can be costly and time-consuming, and may require significant financial and personnel resources. Therefore, even if we are successful in defending against any such actions that may be brought against us, our business may be impaired. If any of the physicians or other providers or entities with whom we expect to do business is found to not be in compliance with applicable laws, they may be subject to significant criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs and imprisonment. If any of the above occur, it couldcommercial success would adversely affect our ~~ability to operate our~~ business ~~and our results of operations.~~prospects.

~~Enacted~~Recently enacted and future legislation may increase the difficulty and cost for us to obtain marketing approval of and commercialize ~~our~~neffy or any future product candidates and affect the prices we may ~~charge for such product candidates.~~obtain.*

~~The~~In the United States and ~~many~~some foreign jurisdictions, there have ~~enacted or proposed~~been, and we expect there will continue to be, a number of legislative and regulatory changes ~~affecting~~and proposed changes regarding the healthcare system, including cost-containment measures, that could reduce or limit coverage and reimbursement for newly approved drugs, prevent or delay marketing approval of ~~our~~neffy or any future product candidates, restrict or regulate post-approval activities and affect our ability to profitably sell neffy or any future product candidates for which we obtain marketing approval.

~~In March~~For example, in 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (collectively, the “ACA”), was signed into law. The ACA was intended, among other things, to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against fraud and abuse, add new transparency requirements for the healthcare and health insurance industries, impose new taxes and fees on the health industry and impose additional health policy reforms. The ACA and subsequent regulations increased the Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program for both branded and generic drugs and revised the definition of “average manufacturer price” for reporting purposes, which could further increase the amount of Medicaid drug rebates to states. However, on March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 into law, which eliminates the statutory Medicaid drug rebate cap for single source and innovator multiple source drugs, beginning January 1, 2024. Further, the ACA imposed a significant annual fee on companies that manufacture or import branded prescription drug products, increased the number of entities eligible for discounts under the 340B program and included a discount on brand name drugs for Medicare Part D beneficiaries in the coverage gap, or “donut hole.” Substantial provisions affecting compliance have also been enacted, which ~~includes measures that have significantly changed the way health~~may require us to modify our business practices with healthcare practitioners.

~~care is financed by both governmental and private insurers. There~~Since its enactment, there have been judicial, executive ~~judicial~~ and ~~congressional~~Congressional challenges to certain aspects of the ~~Affordable Care Act.~~ACA. For example, the Tax Cuts and Jobs Act of 2017 included a provision which repealed, effective January 1, 2019, the tax-based shared responsibility payment imposed by the ACA on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate.” On June 17, 2021, the U.S. Supreme Court dismissed a challenge on procedural grounds that argued the ~~Affordable Care Act~~ACA is unconstitutional in its entirety because the ~~“individual mandate”~~individual mandate was repealed by Congress. ~~Thus, the Affordable Care Act will remain in effect in its current form. Further, prior~~Prior to the U.S. Supreme Court ruling on January 28, 2021, President Biden issued an executive order that initiated a special enrollment period for purposes of obtaining health insurance coverage through the ~~Affordable Care Act~~ACA marketplace. The executive order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ~~Affordable Care Act.~~ACA. In addition, on August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (“IRA”) into law, which among other things, extends enhanced subsidies for individuals purchasing health insurance coverage in ACA marketplaces through plan year 2025. The IRA also eliminates the “donut hole” under the Medicare Part D program beginning in 2025 by significantly lowering the beneficiary maximum out-of-pocket cost and creating a new manufacturer discount program. It is possible that the ~~Affordable Care Act~~ACA will be subject to judicial or Congressional challenges in the future. It is unclear how any such challenges, and the healthcare reform measures of the Biden administration will impact the ~~Affordable Care Act~~ACA and our business.

In addition, other legislative changes have been proposed and adopted in the United States since the ~~Affordable Care Act~~ACA was enacted. ~~For example, in August 2011,~~These changes include aggregate reductions to Medicare payments to providers of up to two percent per fiscal year pursuant to the Budget Control Act of 2011, which went into effect on April 1, 2013, and due to subsequent legislative amendments, will remain in effect until 2032, unless additional Congressional action is taken. In addition, the American Taxpayer Relief Act of 2012 was signed into law which, among other things, ~~included aggregate reductions to~~further reduced Medicare payments to several types of providers, including hospitals, imaging centers and cancer treatment centers, and increased the statute of ~~on average, 2% per fiscal year through 2031, with~~limitations period for the ~~exception of a temporary suspension~~government to recover overpayments to providers from ~~May 1, 2020 through December 31, 2021, unless Congress takes additional action. Under current legislation the actual reduction in Medicare payments will vary from 1% in 2022~~three to up to 3% in the final fiscal year of this sequester. Additionally, on March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 into law, which eliminates the statutory Medicaid drug rebate cap, currently set at 100% of a drug’s average manufacturer price, for single source and innovator multiple source drugs, beginning January 1, 2024.five years.

Recently there has also been ~~increasing legislative and enforcement interest~~heightened governmental scrutiny over the manner in ~~the United States with respect to specialty drug pricing practices. Specifically, there have been~~which manufacturers set prices for their marketed products, which has resulted in several ~~recent~~ U.S. Presidential executive orders, congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to ~~drug~~product pricing, ~~reduce the cost of prescription drugs under Medicare,~~ review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for ~~drugs.~~products. At the federal level, the Trump administration used several means to propose or implement drug pricing reform, including through federal budget proposals, executive orders and policy initiatives. For example, on July 24, 2020 and September 13, 2020, the Trump administration announced several executive orders related to prescription drug pricing that seek to implement several of the administration’s proposals. As a result, the FDA released a final rule and guidance in September 2020, providing pathways for states to build and submit importation plans for drugs from Canada. Further, on November 20, 2020, HHS finalized a regulation removing safe harbor protection for price reductions from pharmaceutical manufacturers to plan sponsors under Medicare Part D, either directly or through pharmacy benefit managers, unless the price reduction is required by law. The rule also creates a new safe harbor for price reductions reflected at the point-of-sale, as well as a new safe harbor for certain fixed fee arrangements between pharmacy benefit managers and manufacturers. The implementation of this rule has been delayed until January 1, 2026. On November 20, 2020, CMS issued an interim final rule implementing the Trump administration’s Most Favored Nation (MFN) executive order, which would tie Medicare Part B payments for certain physician-administered drugs to the lowest price paid in other economically advanced countries, effective January 1, 2021. As a result of litigation challenging the MFN model, on December 27, 2021, CMS published a final rule that rescinded the MFN interim final rule. In July 2021, the Biden administration released an executive order, “Promoting Competition in the American Economy,” with multiple provisions aimed at prescription drugs. In response to Biden’s executive order, on September 9, 2021, ~~HHS~~the U.S. Department of Health and Humans Services (“HHS”) released a Comprehensive Plan for Addressing High Drug Prices that outlines principles for drug pricing reform and sets out a variety of potential legislative policies that Congress could pursue as well as potential administrative actions HHS can take to advance these principles. In addition, ~~Congress~~the IRA, among other things, (i) directs HHS to negotiate the price of certain high-expenditure, single-source drugs and biologics covered under Medicare, and subject drug manufacturers to civil monetary penalties and a potential excise tax by offering a price that is ~~considering drug pricing~~not equal to or less than the negotiated “maximum fair price” for such drugs and biologics under the law, and (ii) imposes rebates with respect to certain drugs and biologics covered under Medicare Part B or Medicare Part D to penalize price increases that outpace inflation. The IRA permits HHS to implement many of these provisions through guidance, as ~~part~~opposed to regulation, for the initial years. HHS has and will continue to issue and update guidance as these programs as implemented. These provisions will take effect progressively starting in fiscal year 2023, although they may be subject to legal challenges. It is currently unclear how the IRA will be implemented but is likely to have a significant impact on the pharmaceutical industry. Further, in response to the Biden administration’s October 2022 executive order, on February 14, 2023, HHS released a report outlining three new models for testing by the Centers for Medicare & Medicaid Services Innovation Center which will be evaluated on their ability to lower the cost of ~~other~~drugs, promote accessibility, and improve quality of care. It is unclear whether the models will be utilized in any health reform ~~initiatives. Individual states~~measures in the ~~United States~~future.

At the state level, legislatures have ~~also~~ become increasingly ~~active~~aggressive in passing legislation and implementing regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

~~Any reduction in reimbursement from Medicare~~These laws and ~~other government programs may result in a similar reduction in payments from private payers. At~~ the ~~state level, legislatures have increasingly passed legislation~~regulations and implemented regulations designed to control costs of pharmaceutical and biological products. Moreover, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug andpolicies implementing them, as well as other healthcare ~~programs.~~

~~We expect that the healthcare~~ reform measures ~~that have been adopted, and~~ that may be adopted in the future, may result in more rigorous coverage criteria and in additional downward pressure on the price that we receive for any approved product and could seriously harm our future revenues. Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability or commercialize our products. Further, it is possible that additional governmental action is taken in response to the COVID-19 pandemic.

~~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 our industry generally and on our ability to successfully develop and commercialize neffy or any future product candidates.

Governments outside the ~~success~~United States may impose strict price controls, which may adversely affect our revenues, if any.

In some countries, including certain Member States of the EU, the pricing of prescription drugs is, in part, subject to governmental control. Additional countries may adopt similar approaches to the pricing of prescription drugs. In such countries, pricing negotiations with governmental authorities can take considerable time after receipt of regulatory approval for a product. The EU provides options for the EU Member States to restrict the range of drug products for which their national health insurance systems provide reimbursement and to control the prices of medicinal products for human use. EU Member States may approve a specific price for a product or it may instead adopt a system of direct or indirect controls on the profitability of the company placing the product on the market. Other EU Member States allow companies to fix their own prices for drug products, but monitor and control prescription volumes and issue guidance to physicians to limit prescriptions. In addition, there can be considerable pressure by governments and other stakeholders on prices and reimbursement levels, including as part of cost containment measures. Political, economic and regulatory developments may further complicate pricing negotiations, and pricing negotiations may continue after coverage and reimbursement have been obtained. Reference pricing used by various countries and parallel distribution, or arbitrage between low-priced and high-priced countries, can further reduce prices. In some countries, we may be required to conduct a clinical study or other studies that compare the cost-effectiveness of neffy or any future product candidates to other available therapies in order to obtain or maintain reimbursement or pricing approval, which is time-consuming and costly. We cannot be sure that such prices and reimbursement will be acceptable to us. Publication of discounts by third-party payors or authorities may lead to further pressure on the prices or reimbursement levels within the country of publication and other countries. If pricing is set at unsatisfactory levels or if reimbursement of our ~~business.~~products is unavailable or limited in scope or amount, our revenues from sales by us or our strategic partners and the potential profitability of neffy or any future product candidates in those countries would be negatively affected.

~~We,~~

The successful commercialization of neffy or any future product candidates, if approved, will depend in part on the extent to which governmental authorities and health insurers establish coverage, adequate reimbursement levels and favorable pricing policies. Failure to obtain or maintain coverage and adequate reimbursement for our products could limit our ability to market those products and decrease our ability to generate revenue.

The availability of coverage and the ~~third parties~~adequacy of reimbursement by governmental healthcare programs such as Medicare and Medicaid, private health insurers and other third-party payors are essential for most patients to be able to afford prescription medications such as neffy or any future product candidates, if approved. Our ability to achieve coverage and acceptable levels of reimbursement for our products by third-party payors will have an effect on our ability to successfully commercialize those products. Accordingly, we will need to successfully implement a coverage and reimbursement strategy for any approved product candidate. Even if we obtain coverage for a given product by a third-party payor, the resulting reimbursement payment rates may not be adequate or may require co-payments that patients find unacceptably high. We cannot be sure that coverage and reimbursement in the United States, the EU or elsewhere will be available for neffy or any future product candidate that we may develop, and any reimbursement that may become available may be decreased or eliminated in the future.

Third-party payors increasingly are challenging prices charged for biopharmaceutical products and services, and many third-party payors may refuse to provide coverage and reimbursement for particular drugs when an equivalent generic drug or a less expensive therapy is available. It is possible that a third-party payor may consider neffy or any future product candidate as substitutable and only offer to reimburse patients for the less expensive product. Even if we are successful in demonstrating improved efficacy or improved convenience of administration with ~~whom~~neffy or any future product candidates, pricing of existing drugs may limit the amount we ~~share~~will be able to charge for neffy or any future product candidates. These payors may deny or revoke the reimbursement status of a given product or establish prices for new or existing marketed products at levels that are too low to enable us to realize an appropriate return on our ~~facilities,~~investment in product development. If reimbursement is not available or is available only at limited levels, we may not be able to successfully commercialize or obtain a satisfactory financial return on neffy or any future product candidates that we may develop.

There is significant uncertainty related to third-party payor coverage and reimbursement of newly approved products. In the United States, third-party payors, including private and governmental payors, such as the Medicare and Medicaid programs, play an important role in determining the extent to which new drugs will be covered. Some third-party payors may require pre-approval of coverage for new or innovative devices or drug therapies before they will reimburse healthcare providers who use such therapies. There is significant uncertainty related to third-party payor coverage and reimbursement of newly approved products. In the United States, third-party payors, including private and governmental payors, such as the Medicare and Medicaid programs, play an important role in determining the extent to which new drugs will be covered. Some third-party payors may require pre-approval of coverage for new or innovative devices or drug therapies before they will reimburse healthcare providers who use such therapies. Generally, third-party payors limit coverage and reimbursement for new medication prior to a formal review by the payors’ pharmacy and therapeutics committees. As such, several third-party payors have indicated that our products may be subject to denial or limited coverage prior to formal review. There may be significant delays in obtaining reimbursement for newly-approved drugs, and coverage may be more limited than the purposes for which the drug or therapeutic biologic is approved by the FDA or similar foreign regulatory authorities. Additionally, we may need to conduct expensive pharmaco-economic studies to demonstrate the medical necessity and cost-effectiveness of our product candidates. There can be no assurance that our product candidates will be considered medically necessary or cost-effective. It is difficult to predict at this time what third-party payors will decide with respect to the coverage and reimbursement for neffy or any future product candidates. Further, coverage policies and third-party reimbursement rates may change at any time. Even if favorable coverage and reimbursement status is attained, less favorable coverage policies and reimbursement rates may be implemented in the future. It is difficult to predict at this time what third-party payors will decide with respect to the coverage and reimbursement for neffy or any future product candidates. Further, coverage policies and third-party reimbursement rates may change at any time. Even if favorable coverage and reimbursement status is attained, less favorable coverage policies and reimbursement rates may be implemented in the future.

Obtaining and maintaining reimbursement status is time consuming, costly and uncertain. The Medicare and Medicaid programs increasingly are used as models for how private payors and other governmental payors develop their coverage and reimbursement policies for drugs. However, no uniform policy for coverage and reimbursement for products exists among third-party payors in the United States. Therefore, coverage and reimbursement for products can differ significantly from payor to payor. As a result, the coverage determination process is often a time consuming and costly process that will require us to provide scientific and clinical support for the use of our products to each payor separately, with no assurance that coverage and adequate reimbursement will be applied consistently or obtained in the first instance. Furthermore, rules and regulations regarding reimbursement change frequently, in some cases at short notice, and we believe that changes in these rules and regulations are likely.

Outside the United States, international operations are generally subject to extensive governmental price controls and other market regulations, and we believe the increasing emphasis on cost-containment initiatives in Europe and other countries has and will continue to put pressure on the pricing and usage of neffy or any future product candidates. In many countries, the prices of medical products are subject to ~~numerous environmental,~~varying price control mechanisms as part of national health systems. Other countries allow companies to fix their own prices for medical products but monitor and ~~safety~~control company profits. Additional foreign price controls or other changes in pricing regulation could restrict the amount that we are able to charge for neffy or any future product candidates. Accordingly, in markets outside the United States, the reimbursement for neffy or any future product candidates may be reduced compared with the United States and may be insufficient to generate commercially reasonable revenue and profits.

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 neffy or any future product candidates. We expect to experience pricing pressures in connection with the sale of neffy or any future product candidates due to the trend toward managed healthcare, the increasing influence of health maintenance organizations and additional legislative changes. The downward pressure on healthcare costs in general, particularly prescription drugs and surgical procedures and other treatments, has become very intense. As a result, increasingly high barriers are being erected to the entry of new products.

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

Our relationships with customers, health care professionals and third-party payors may be subject to applicable healthcare laws, which could expose us to penalties, including administrative, civil or criminal penalties, damages, fines, imprisonment, exclusion from participation in federal healthcare programs such as Medicare and Medicaid, reputational harm, the curtailment or restructuring of our operations and diminished future profits and earnings.*

Healthcare professionals and third-party payors will play a primary role in the recommendation and prescription of neffy or any future product candidates for which we obtain marketing approval. Our current and future arrangements with customers, healthcare professionals and third-party payors may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we conduct research, market, sell and distribute neffy or any future product candidates for which we obtain marketing approval. Restrictions under applicable federal and state healthcare laws and regulations include the following, among others:

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the federal Anti-Kickback Statute prohibits, among other things, knowingly and willfully offering, paying, soliciting or receiving remuneration to induce, or in return for, purchasing, leasing, ordering or arranging for the purchase, lease or order of any healthcare item or service reimbursable under Medicare, Medicaid or other federally financed healthcare programs. This statute has been interpreted to apply to arrangements between pharmaceutical manufacturers on the one hand and prescribers, purchasers and formulary managers on the other. Although there are several statutory exceptions and regulatory safe harbors protecting certain common activities from prosecution, the exceptions and safe harbors are drawn narrowly, and practices that involve remuneration intended to induce prescribing, purchasing or recommending may be subject to scrutiny if they do not qualify for an exception or safe harbor. Further a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation;

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federal civil and criminal false claims laws, including ~~those governing laboratory procedures~~the False Claims Act, prohibit any person from knowingly presenting, or causing to be presented, a false claim for payment to the federal government or knowingly making, or causing to be made, a false statement to get a false claim paid. Over the past few years, several pharmaceutical and other healthcare companies have been prosecuted under these laws for a variety of alleged promotional and marketing activities, including: allegedly providing free items and services, sham consulting fees and grants and other monetary benefits to prescribers; reporting to pricing services inflated average wholesale prices that were then used by federal programs to set reimbursement rates; engaging in off-label promotion that caused claims to be submitted to government healthcare programs for non-covered, off-label uses; and submitting inflated best price information to the Medicaid Drug Rebate Program to reduce liability for Medicaid rebates. In addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal False Claims Act;

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federal civil monetary penalties laws impose civil fines for, among other things, the offering or transfer of remuneration to a Medicare or state healthcare program beneficiary if the person knows or should know it is likely to influence the beneficiary’s selection of a particular provider, practitioner, or supplier of services reimbursable by Medicare or a state healthcare program, unless an exception applies;

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the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) which prohibits, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations, or promises, of any of the money or property owned by, or under the custody or control of, any healthcare benefit program, regardless or the payor (e.g., public or private), willfully obstructing a criminal investigation of a healthcare offense, and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services; like the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation;

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the federal Physician Payment Sunshine Act, which requires manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to the government information related to payments or other “transfers of value” made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), other healthcare professionals (such as physician assistants and nurse practitioners) and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members;

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HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (“HITECH”), and their respective implementing regulations, which impose obligations on “covered entities,” including certain healthcare providers, health plans, and healthcare clearinghouses, as well as their respective “business associates” and their covered subcontractors that create, receive, maintain or transmit individually identifiable health information for or on behalf of a covered entity, with respect to safeguarding the privacy, security and transmission of individually identifiable health information;

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federal price reporting laws require manufactures to calculate and report complex pricing metrics to government programs, where such reported prices may be used in the calculation of reimbursement and/or discounts on approved products;

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federal and state consumer protection and unfair competition laws broadly regulate marketplace activities and activities that potentially harm consumers; and

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analogous state laws and regulations, such as state anti-kickback and false claims laws, that may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers; some state laws that require biotechnology companies to comply with the industry’s voluntary compliance guidelines and the ~~handling, use, storage, treatment~~relevant compliance guidance promulgated by the federal government and ~~disposal~~may require drug manufacturers to report information related to payments and other transfers of ~~hazardous materials~~value to physicians and ~~wastes. Each~~other healthcare providers or marketing expenditures; some state laws that require biotechnology companies to report information on the pricing of certain drug products; and some state and local laws require the registration or pharmaceutical sales representatives.

Because of the breadth of these laws and the narrowness of available statutory exceptions and regulatory safe harbors, it is possible that some of our business activities, particularly any sales and marketing activities after neffy or any future product candidate has been approved for marketing in the United States, could be subject to legal challenge and enforcement actions. If our operations are found to be in violation of any of the laws described above or any other governmental regulations that apply to us, we may be subject to significant penalties, including administrative, civil and criminal penalties, damages, fines, disgorgement, exclusion from governmental health care programs, a corporate integrity agreement or other agreement to resolve allegations of non-compliance, imprisonment, and the curtailment or restructuring of our operations, ~~involve the use~~any of ~~hazardous~~which could adversely affect our ability to operate our business and ~~flammable materials, including chemicals and biological and radioactive materials. Each of~~ 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. We could be held liable for any resulting damages in the event of contamination or injury resulting from the use of hazardous materials by us or the third parties with whom we share our facilities, and any liability could exceed our resources. We also could incur significant costs associated with civil or criminal fines and penalties.financial results.

Although we maintain workers’ compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees resulting from the use of hazardous materials, this insurance may not provide adequate coverage against potential liabilities. We do not maintain insurance for environmental liability or toxic tort claims that may be asserted against us in connection with our storage or disposal of biological, hazardous or radioactive materials.

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 and development. Failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions.

~~We are subject to certain U.S. and foreign anti-corruption, anti-money laundering, export control, sanctions, and other trade laws and regulations. We can face serious consequences for violations.~~

U.S. and foreign anti-corruption, anti-money laundering, export control, sanctions, and other trade laws and regulations, or collectively, Trade Laws, prohibit, among other things, companies and their employees, agents, CROs, legal counsel, accountants, consultants, contractors, and other partners from authorizing, promising, offering, providing, soliciting, or receiving directly or indirectly, corrupt or improper payments or anything else of value to or from recipients in the public or private sector. Violations of Trade Laws can result in substantial criminal fines and civil penalties, imprisonment, the loss of trade privileges, debarment, tax reassessments, breach of contract and fraud litigation, reputational harm, and other consequences. We have direct or indirect interactions with officials and employees of government agencies or government-affiliated hospitals, universities, and other organizations. We also expect our non-U.S. activities to increase over time. We expect to rely on third parties for research, preclinical studies, and clinical trials and/or to obtain necessary permits, licenses, patent registrations, and other marketing approvals. We can be held liable for the corrupt or other illegal activities of our personnel, agents, or partners, even if we do not explicitly authorize or have prior knowledge of such activities.

We are subject to stringent and ~~changing~~evolving U.S. and foreign laws, regulations, rules, contractual obligations, policies and other obligations related to data privacy and security. Our actual or perceived failure to comply with such obligations could lead to regulatory investigations or ~~actions, litigation, and/~~actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; and other adverse publicity and could negatively affect our operating results and business.*business consequences.

In the ordinary course of business, we collect, receive, store, process, generate, use, transfer, disclose, make accessible, protect, secure, dispose of, transmit, and share (collectively, ~~processing)~~“process”) personal data and other sensitive information, including proprietary and confidential business data, trade secrets, intellectual property, data we collect about trial participants in connection with clinical trials, ~~and~~ sensitive third-party ~~data. For example, we may obtain clinical trial~~ data, ~~from research institutions.~~ business plans, transactions, and financial information (collectively, “sensitive data”).

Our data processing activities may subject us to numerous data privacy and security obligations, such as various laws, regulations, guidance, industry standards, external and internal privacy and security policies, ~~contracts,~~contractual requirements, and other obligations ~~that govern the processing of personal~~relating to data ~~by us~~privacy and ~~on our behalf.~~security.

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In the United States, ~~numerous~~ federal, state, and local governments have enacted numerous data privacy and security laws, ~~and regulations,~~ including ~~federal health information privacy laws, state~~ data breach notification laws, ~~state health information~~personal data privacy laws, ~~and federal and state~~ consumer protection laws (e.g., Section 5 of the Federal Trade Commission Act), ~~that govern the collection, use, disclosure and protection of health-related~~ and other ~~personal information could apply to our operations or the operations of our collaborators and third-party providers.~~similar laws (e.g., wiretapping laws). For example, ~~HIPAA as amended by HITECH, imposes specific requirements relating to~~ the ~~privacy, security, and transmission of individually identifiable health information.~~

~~The~~ California Consumer Privacy Act ~~(the CCPA) gives~~of 2018 (“CCPA”) applies to personal information of consumers, business representatives, and employees, and requires businesses to provide specific disclosures in privacy notices and honor requests of California residents ~~expanded rights~~ to ~~access~~exercise certain privacy rights. The CCPA provides for civil penalties of up to $7,500 per violation and ~~delete~~allows private litigants affected by certain data breaches to recover significant statutory damages. In addition, the California Privacy Rights Act of 2020 (“CPRA”) expands the CCPA’s requirements, including by adding a new right for individuals to correct their personal information ~~opt out of certain personal information sharing~~ and ~~receive detailed information about how their personal information is used. The CCPA allows for statutory fines for noncompliance (up~~establishing a new regulatory agency to ~~$7,500 per violation).~~implement and enforce the law. Although the CCPA exempts some data processed in the context of clinical trials, the CCPA ~~may increase~~increases compliance costs and potential liability with respect to other personal data we maintain about California residents. In addition, it is anticipated that the California Privacy Rights Act of 2020 (the CPRA), effective January 1, 2023, will expand the CCPA. Additionally, the CPRA establishes a new California Privacy Protection Agency to implement and enforce the CPRA, which could increase the risk of enforcement. At this time, we do not collect personal information relating to residents of California, but should we begin to do so, the CCPA and CPRA will impose new and burdensome privacy compliance obligations on our business and will raise new risks for potential fines and class actions.

Other states, such as Virginia and Colorado, have ~~enacted data~~also passed comprehensive privacy ~~laws. For example, Virginia passed the Consumer Data Protection Act, Colorado passed the Colorado Privacy Act,~~laws, and ~~Utah passed the Consumer Privacy Act, all of which become effective~~similar laws are being considered in ~~2023. Additionally,~~ several other states, ~~and localities have enacted statutes banning or restricting the collection of biometric information. In addition, data privacy and security laws have been proposed~~as well as at the federal ~~state,~~ and local ~~levels~~levels. While these states, like the CCPA, also exempt some data processed in ~~recent years, which could~~the context of clinical trials, these developments may further complicate compliance ~~efforts.~~

~~In addition to data privacy~~efforts, and ~~security laws, we may be contractually subject to data privacy~~increase legal risk and security obligations, including industry standards adopted by industry groups and may become subject to new data privacy and security obligations in the future. For example, certain privacy laws, such as the GDPRcompliance costs for us and the ~~CCPA, require our customers to impose specific contractual restrictions on their service providers.~~third parties upon whom we rely.

Outside the United States, an increasing number of laws, regulations, and industry standards ~~apply to~~may govern data privacy and security. For example, the European Union’s General Data Protection Regulation ~~(the~~ (“EU ~~GDPR),~~GDPR”) and the United Kingdom’s GDPR ~~(the~~ (“UK ~~GDPR)~~GDPR”), ~~Brazil’s General Data Protection Law (the Lei Geral de Proteção de Dados Pessoais, or LGPD) (Law No. 13,709/2018), and China’s Personal Information Protection Law (the PIPL)~~ impose strict requirements for processing personal data.

For example, under the EU GDPR, ~~government regulators~~companies may ~~impose~~face temporary or definitive bans on data processing ~~as well as~~and other corrective actions; fines of up to 20 million ~~euros~~Euros or 4% of annual global revenue, whichever is ~~greater. Further, individuals may initiate~~greater; or private litigation related to processing of personal data brought by classes of data subjects or consumer protection organizations authorized at law to represent their ~~personal data.~~interests.

~~Certain~~In addition, we may be unable to transfer personal data from Europe and other jurisdictions to the United States or other countries due to data localization requirements or limitations on cross-border data flows. Europe and other jurisdictions have enacted laws requiring data ~~localization laws and cross-border personal data transfer laws, which could make it more difficult~~ to ~~transfer information across jurisdictions (such as transferring~~be localized or receiving personal data that originates in the EU or in other foreign jurisdictions). Existing mechanisms that facilitate cross-border personal data transfers may change or be invalidated. For example, absent appropriate safeguards or other circumstances, the EU GDPR generally restrictslimiting the transfer of personal data to ~~countries outside~~other countries. In particular, the EEA and the UK have significantly restricted the transfer of ~~the European Economic Area (the EEA) that the European Commission does not consider~~personal data to ~~provide an adequate level of data privacy and security, such as~~ the United ~~States. The European Commission released a set~~States and other countries whose privacy laws it believes are inadequate. Other jurisdictions may adopt similarly stringent interpretations of ~~“Standard Contractual Clauses” (the SCCs)~~their data localization and cross-border data transfer laws. Although there are currently various mechanisms that ~~are designed to~~may be ~~a valid mechanism to facilitate personal data transfers out of the EEA to these jurisdictions. Currently, these Standard Contractual Clauses are a valid mechanism~~used to transfer personal data ~~outside of~~from the EEA ~~but there exists some uncertainty regarding whether~~and UK to the ~~SCCs will remain a valid mechanism. Additionally, the SCCs impose additional~~United States in compliance ~~burdens,~~with law, such as ~~conducting~~the EEA and UK’s standard contractual clauses, these mechanisms are subject to legal challenges, and there is no assurance that we can satisfy or rely on these measures to lawfully transfer ~~impact assessments~~personal data to ~~determine whether additional security measures~~the United States. If there is no lawful manner for us to transfer personal data from the EEA, the UK, or other jurisdictions to the United States, or if the requirements for a legally-compliant transfer are ~~necessary~~too onerous, we could face significant adverse consequences, including the interruption or degradation of our operations, the need to ~~protect the at-issue personal data. If we cannot implement a valid compliance mechanism for cross-border~~relocate part of or all of our business or data ~~transfers, we may face~~processing activities to other jurisdictions at significant expense, increased exposure to regulatory actions, substantial fines and penalties, the inability to transfer data and work with partners, vendors and other third parties, and injunctions against our processing or transferring of personal data ~~from Europe or~~necessary to operate our business. Additionally, companies that transfer personal data out of the EEA and UK to other ~~foreign jurisdictions. The inability to import personal data~~jurisdictions, particularly to the United States, could significantly and negatively impact our business operations, including by limiting our ability to conduct clinical trial activities in Europe and elsewhere; limiting our ability to collaborate with parties that are subject to ~~such~~increased scrutiny from regulators, individual litigants, and activities groups. Some European regulators have ordered certain companies to suspend or permanently cease certain transfers of personal data out of Europe for allegedly violating the GDPR’s cross-border data transfer or localization laws; or requiring us to increase our personal data processing capabilities and infrastructure in foreign jurisdictions at significant expense. At this time, we do not believe we are subject to the GDPR, but should this change, the GDPR will increase our responsibility and potential liability in relation to personal data that we process, and we may be required to put in place additional mechanisms to ensure compliance with the new EU data protection rules.limitations.

~~Our obligations~~Obligations related to data privacy and security are quickly changing, ~~in an~~becoming increasingly stringent, ~~fashion,~~and creating ~~some uncertainty as to the effective future legal framework.~~regulatory uncertainty. Additionally, these obligations may be subject to differing applications and interpretations, which may be inconsistent or conflict among jurisdictions. Preparing for and complying with these obligations requires us to devote significant resources and may necessitate changes to our services, information technologies, systems, and practices and to those of any third parties that process personal data on our behalf. ~~Although we endeavor to comply with all applicable data privacy and security obligations, we~~

We may at times fail (or be perceived to have failed) in our efforts to ~~do so.~~comply with our data privacy and security obligations. Moreover, despite our efforts, our personnel or third parties ~~upon~~on whom we rely may fail to comply with such obligations, which could negatively impact our business operations and compliance posture. For example, any failure by a third-party processor to comply with applicable law, regulations, or contractual obligations could result in adverse effects, including inability to or interruption in our ability to operate our business and proceedings against us by governmental entities or others.operations. If we or ~~our collaborators and third-party providers~~the third parties on which we rely fail, or are perceived to have failed, to address or comply with ~~U.S. and foreign~~applicable data privacy and security ~~laws and regulations,~~obligations, we could face significant ~~consequences. These~~ consequences, ~~may include,~~including but ~~are~~ not limited ~~to,~~to: government enforcement actions ~~(e,g.~~(e.g., investigations, fines, penalties, audits, inspections, and similar)~~, private~~; litigation (including ~~class-related~~class-action claims),; additional reporting requirements and/or ~~oversight,~~oversight; bans on processing personal ~~data,~~data; and orders to destroy or not use personal ~~data, and imprisonment of company officials.~~data. Any of these events could have a material adverse effect on our reputation, business, or financial condition, including but not limited ~~to,~~to: loss of ~~customers,~~customers; interruptions or stoppages in our business operations (including ~~as relevant,~~ clinical trials),; inability to process personal data or to operate in certain ~~jurisdictions,~~jurisdictions; limited ability to develop or commercialize our ~~products,~~products; expenditure of time and resources to defend any claim or ~~inquiry,~~inquiry; adverse ~~publicity,~~publicity; or revision or restructuring of our operations. Moreover, clinical trial subjects about whom we or our potential collaborators obtain information, as well as the providers who share this information with us, may contractually limit our abilitysubstantial changes to use and disclose such information. Claims that we have violated individuals’ privacy rights, failed to comply with data privacy and security laws or breached our contractual obligations, even if we are not found liable, could be expensive and time consuming to defend, could result in adverse publicity and could have a material adverse effect on our business ~~financial condition, results of operations and prospects.~~model or operations.

If we fail to maintain effective disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired.

As a public company, we are subject to requirements of the Sarbanes-Oxley Act, the rules and regulations of the Nasdaq Global Market, the rules and regulations of the Securities and Exchange Commission. We expect that the requirements of these rules and regulations will continue to increase our legal, accounting and financial compliance costs, make some activities more difficult, time-consuming and costly and place significant strain on our personnel, systems and resources. Company responsibilities required by the Sarbanes-Oxley Act include, among other things, that we maintain corporate oversight and adequate internal control over financial reporting and disclosure controls and procedures. We are continuing to develop and refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file with the SEC is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that information required to be disclosed in reports under the Securities Exchange Act of 1934, as amended (the Exchange Act) is accumulated and communicated to our principal executive and financial officers. We are also continuing to improve our internal control over financial reporting. In order to develop, maintain, and improve the effectiveness of our internal controls and procedures, and internal control over financial reporting, we have expended, and anticipate that we will continue to expend, significant resources, including accounting-related costs and significant management oversight.

Our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business. Further, weaknesses in our disclosure controls and internal control over financial reporting may be discovered in the future. Any failure to develop or maintain effective controls or any difficulties encountered in their implementation or improvement could harm our results of operations or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods. Any failure to implement and maintain, or any disruptions or difficulties in implementing or using, such a system could adversely affect our controls and harm our business. Moreover, such disruption or difficulties could result in unanticipated costs and diversion of management attention. In addition, we may discover weaknesses in our system of internal financial and accounting controls and procedures that could result in a material misstatement of our financial statements. Our internal control over financial reporting will not prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud will be detected.

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If our information technology systems or data, or those of third parties upon which we rely, are or were compromised, we could experience adverse consequences resulting from such compromise, including but not ~~able~~limited to ~~comply with~~regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; and other adverse consequences.

In the ~~requirements~~ordinary course of ~~Section 404~~our business, we and the third parties upon which we rely process sensitive data, and, as a result, we and the third parties upon which we rely face a variety of evolving threats, including but not limited to ransomware attacks, which could cause security incidents. Cyber-attacks, malicious internet-based activity, online and offline fraud, and other similar activities threaten the confidentiality, integrity, and availability of our sensitive data and information technology systems, and those of the ~~Sarbanes-Oxley Act~~third parties upon which we rely. Such threats are prevalent and continue to rise, are increasingly difficult to detect, and come from a variety of sources, including traditional computer “hackers,” threat actors, “hacktivists,” organized criminal threat actors, personnel (such as through theft or misuse), sophisticated nation states, and nation-state-supported actors.

Some actors now engage and are expected to continue to engage in cyber-attacks, including without limitation nation-state actors for geopolitical reasons and in conjunction with military conflicts and defense activities. During times of war and other major conflicts, we and the third parties upon which we rely may be vulnerable to a heightened risk of these attacks, including retaliatory cyber-attacks, which could materially disrupt our systems and operations, supply chain, and ability to produce, sell and distribute our services.

We and the third parties upon which we rely are subject to a variety of evolving threats, including but not limited to social-engineering attacks (including through phishing attacks), malicious code (such as viruses and worms), malware (including as a result of advanced persistent threat intrusions), denial-of-service attacks (such as credential stuffing), credential harvesting, personnel misconduct or error, ransomware attacks, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data or other information technology assets, adware, telecommunications failures, earthquakes, fires, floods, and other similar threats.

In particular, severe ransomware attacks are becoming increasingly prevalent and can lead to significant interruptions in our operations, loss of sensitive data and income, reputational harm, and diversion of funds. Extortion payments may alleviate the negative impact of a ransomware attack, but we may be unwilling or unable to make such payments due to, for example, applicable laws or regulations prohibiting such payments.

Remote work has become more common and has increased risks to our information technology systems and data, as more of our employees utilize network connections, computers, and devices outside our premises or network, including working at home, while in transit and in public locations. Additionally, future or past business transactions (such as acquisitions or integrations) could expose us to additional cybersecurity risks and vulnerabilities, as our systems could be negatively affected by vulnerabilities present in acquired or integrated entities’ systems and technologies. Furthermore, we may discover security issues that were not found during due diligence of such acquired or integrated entities, and it may be difficult to integrate companies into our information technology environment and security program.

In addition, our reliance on third-party service providers could introduce new cybersecurity risks and vulnerabilities, including supply-chain attacks, and other threats to our business operations. We rely on third-party service providers and technologies to operate critical business systems to process sensitive data in a ~~timely manner,~~variety of contexts, including, without limitation, cloud-based infrastructure, data center facilities, encryption and authentication technology, employee email, content delivery to customers, and other functions. We also rely on third-party service providers to provide other products, services, parts, or otherwise to operate our business. Our ability to monitor these third parties’ information security practices is limited, and these third parties may not have adequate information security measures in place. If our third-party service providers experience a security incident or other interruption, we could experience adverse consequences. While we may be entitled to damages if our third-party service providers fail to satisfy their privacy or security-related obligations to us, any award may be insufficient to cover our damages, or we ~~are~~may be unable to recover such award. In addition, supply-chain attacks have increased in frequency and severity, and we cannot guarantee that third parties’ infrastructure in our supply chain or our third-party partners’ supply chains have not been compromised.

Any of the previously identified or similar threats could cause a security incident or other interruption that could result in unauthorized, unlawful, or accidental acquisition, modification, destruction, loss, alteration, encryption, disclosure of, or access to our sensitive data or our information technology systems, or those of the third parties upon whom we rely. A security incident or other interruption could disrupt our ability (and that of third parties upon whom we rely) to provide our services.

We may expend significant resources or modify our business activities (including clinical trials) to try to protect against security incidents. Additionally, certain data privacy and security obligations may require us to implement and maintain ~~proper~~specific security measures or industry-standard or reasonable security measures to protect our information technology systems and ~~effective internal controls,~~sensitive data.

While we have implemented security measures designed to protect against security incidents, there can be no assurance that these measures will be effective. We take steps to detect and remediate vulnerabilities, but we may not be able to ~~produce timely~~detect and ~~accurate financial statements.~~ remediate all vulnerabilities because the threats and techniques used to exploit the vulnerability change frequently and are often sophisticated in nature. Therefore, such vulnerabilities could be exploited but may not be detected until after a security incident has occurred. These vulnerabilities pose material risks to our business. Further, we may experience delays in developing and deploying remedial measures designed to address any such identified vulnerabilities.

Applicable data privacy and security obligations may require us to notify relevant stakeholders of security incidents. Such disclosures are costly, and the disclosure or the failure to comply with such requirements could lead to adverse consequences.

If we ~~cannot provide reliable financial reports~~(or a third party upon whom we rely) experience a security incident or ~~prevent fraud, our business~~are perceived to have experienced a security incident, we may experience adverse consequences, such as government enforcement actions (for example, investigations, fines, penalties, audits, and ~~results of operations could be harmed, investors could lose confidence~~inspections); additional reporting requirements and/or oversight; restrictions on processing sensitive data (including personal data); litigation (including class claims); indemnification obligations; negative publicity; reputational harm; monetary fund diversions; interruptions in our ~~reported~~operations (including availability of data); financial ~~information~~loss; and ~~we could be subject~~other similar harms. Security incidents and attendant consequences may cause customers to ~~sanctions or investigations by Nasdaq, the SEC or other regulatory authorities. Any failure~~stop using our services, deter new customers from using our services, and negatively impact our ability to ~~maintain effective disclosure controls~~grow and ~~internal control over financial reporting could have a material and adverse effect on~~operate our ~~business, results of operations, and financial condition and could cause a decline in the trading price of our common stock.~~business.

Our ~~disclosure controls and procedures~~contracts may not ~~prevent~~contain limitations of liability, and even where they do, there can be no assurance that limitations of liability in our contracts are sufficient to protect us from liabilities, damages, or ~~detect~~claims related to our data privacy and security obligations. We cannot be sure that our insurance coverage will be adequate or sufficient to protect us from or to mitigate liabilities arising out of our privacy and security practices, that such coverage will continue to be available on commercially reasonable terms or at all, ~~errors~~ or ~~acts of fraud.~~that such coverage will pay future claims.

~~We are subject~~In addition to ~~the periodic reporting requirements of the Exchange Act. We designed our disclosure controls and procedures to reasonably assure that~~experiencing a security incident, third parties may gather, collect, or infer sensitive information we must disclose in reports we file or submit under the Exchange Act is accumulated and communicated to management, and recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. We believe that 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. For example, our directors or executive officers could inadvertently fail to disclose a new relationship or arrangement causingabout us to fail to make any related party transaction disclosures. 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.

~~Future changes in financial accounting standards or practices may cause adverse and unexpected revenue fluctuations and adversely affect our reported results of operations.~~

Future changes in financial accounting standards may cause adverse, unexpected revenue fluctuations and affect our reported financial position or results of operations. Financial accounting standards in the United States are constantly under review and new pronouncements and varying interpretations of pronouncements have occurred with frequency in the past and are expected to occur again in the future. As a result, we may be required to make changes in our accounting policies. Those changes could affect our financial condition and results of operations or the way in which such financial condition and results of operations are reported. We intend to invest 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 ~~business activities to compliance activities. See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Recent Accounting Pronouncements.”~~

~~Changes in tax laws or regulations that are applied adversely to us or our customers may have a material adverse effect on our business, cash flow, financial condition or results of operations.~~

~~New income, sales, use,~~public sources, data brokers, or other ~~tax laws, statutes, rules, regulations or ordinances~~means that reveals competitively sensitive details about our organization and could be ~~enacted at any time, which could~~used to undermine our competitive advantage or market position.

adversely affect our business operations and financial performance. Further, existing tax laws, statutes, rules, regulations, or ordinances could be interpreted, changed, modified, or applied adversely to us. For example, the legislation informally titled the Tax Cuts and Jobs Act (the Tax Act) enacted in 2017 enacted many significant changes to the U.S. tax laws. Future guidance from the Internal Revenue Service and other tax authorities with respect to the Tax Act may affect us, and certain aspects of the Tax Act could be repealed or modified in future legislation. For example, legislation enacted on March 27, 2020, entitled the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) modified certain provisions of the Tax Act, and it is possible that the Biden administration and Congress may enact proposed legislation that could have an adverse effect on our operations, cash flows and results of operations and contribute to overall market volatility. In addition, it is uncertain if and to what extent various states will conform to the Tax Act, the CARES Act or any newly enacted federal tax legislation. Changes in corporate tax rates, the realization of net deferred tax assets relating to our operations, the taxation of foreign earnings, and the deductibility of expenses under the Tax Act or future reform legislation could have a material impact on the value of our deferred tax assets, could result in significant one-time charges, and could increase our future U.S. tax expense.

Risks Related to Our Intellectual Property

~~If we are unable~~Our commercial success depends on our ability to obtain and maintain sufficient intellectual property protection for our ~~platform technologies and~~ product candidates ~~or if the scope of the intellectual property protection is not sufficiently broad, our competitors could develop~~ and ~~commercialize products similar or identical to ours, and our ability to successfully commercialize our products may be adversely affected.~~

We rely upon a combination of patents, know-how and confidentiality agreements to protect the intellectual property related to our products and technologies and to prevent third parties from copying and surpassing our achievements, thus eroding our competitive position in our market.other proprietary technologies.

Our commercial success ~~depends~~will depend, in ~~large~~ part, on our ability to obtain and maintain patent protection ~~for~~in the United States and other countries with respect to our ~~platform technologies,~~product candidates. If we are unable to obtain or maintain patent protection with respect to our product candidates, and their uses, ~~as well as~~ our ~~ability to operate without infringing the proprietary rights~~business, financial condition, results of ~~others.~~ operations and prospects could be materially harmed.

We generally seek to protect our proprietary position by filing or in-licensing patents or patent applications in the United States and abroad related to our ~~novel discoveries and technologies~~product candidates that are important to our ~~business.~~business, as appropriate. Our pending and future patent applications ~~may not~~cannot be enforced against third parties practicing the technology claimed in such applications unless, and until, patents issue from such applications, and then only to the extent the issued claims cover the technology. There can be no assurance that our patent applications will result in patents being issued or that issued patents will afford sufficient protection ~~of our product candidates or their intended uses~~ against competitors with similar technology, nor can there be any assurance that the patents issued will not be infringed, designed around or invalidated by third parties. Even issued patents may later be found invalid or unenforceable or may be modified or revoked in proceedings instituted by third parties before various patent offices or ~~effectively prevent others from commercializing~~in courts. The degree of future protection for our proprietary rights is uncertain. Only limited protection may be available and may not adequately protect our rights or permit us to gain or keep any competitive ~~technologies, products or~~advantage. This failure to obtain the intellectual property rights relating to our product ~~candidates.~~candidates could have a material adverse effect on our financial condition and results of operations.

The patent application process is subject to numerous risks and uncertainties, and there can be no assurance that we or any of our potential future collaborators will be successful in protecting our product candidates by obtaining and defending patents. Obtaining and enforcing patents is expensive and time-consuming, and we may not be able to file and prosecute all necessary or desirable patent applications, or maintain and/or enforce patents that may issue based on our patent applications, at a reasonable cost or in a timely ~~manner, including delays as a result of the COVID-19 pandemic impacting our or our licensors’ operations.~~manner. It is also possible that we will fail to identify patentable aspects of our research and development results before it is too late to obtain patent protection.

Although we enter into non-disclosure and confidentiality agreements with parties who have access to patentable aspects of our research and development output, such as our employees, corporate collaborators, outside scientific collaborators, CROs, contract manufacturers, consultants, independent contractors, advisors and other third parties, any of these parties may breach these agreements and disclose such results before a patent application is filed, thereby jeopardizing our ability to seek adequate patent protection.

~~Composition~~If the scope of ~~matter patents for biological and pharmaceutical product candidates often provide a strong form of intellectual property~~any patent protection for those types of products, as such patents provide protection without regard to any method of use. We cannot be certain that the claims in our pending patent applications directed to composition of matter of our product candidates will be considered patentable by the United States Patent and Trademark Office (USPTO)we obtain is not sufficiently broad, or ~~by patent offices in foreign countries, or that the claims in~~if we lose any of our ~~issued patents will be considered valid and enforceable by courts in the United States or foreign countries. Method of use patents protect the use of a product for the specified method. This type of~~ patent ~~does not prevent a competitor from making and marketing a product that is identical to~~protection, our product for an indication that is outside the scope of the patented method. Moreover, even if competitors do not actively promote their product for our targeted indications, physicians may prescribe these products “off-label.” Although off-label prescriptions may infringe or contribute to the infringement of method of use patents, the practice is common and such infringement is difficultability to prevent our competitors from commercializing similar or ~~prosecute.~~identical product candidates would be adversely affected.

The patent position of ~~biopharmaceutical~~pharmaceutical companies generally is highly uncertain, involves complex legal and factual questions and has in recent years been the subject of much litigation, resulting in court decisions, including United States Supreme Court decisions, which have increased uncertainties as to the ability to enforce patent rights in the future. In addition, the laws of foreign countries may not protect our rights to the same extent as the laws of the United States, or vice versa.

The patent application process is subject to numerous risks and uncertainties, and there can be no assurance that we or any of our potential future collaborators will be successful in protecting our product candidates by obtaining and defending patents. For example,Further, we may not be aware of all third-party intellectual property rights potentially relating to our research programs and product candidates, or their intended uses, and as a result the potential impact of such third-party intellectual property rights upon the patentability of our own patents and patent applications, as well as the potential impact of such third-party intellectual property upon our freedom to operate, is highly uncertain. ~~Patent~~Because patent applications inare maintained as confidential for a certain period of time, until the ~~United States~~relevant application is published, we may be unaware of third-party patents that may be infringed by commercialization of any of our product candidates, and ~~other jurisdictions are typically not published until 18 months after filing or, in some cases, not at all. Therefore,~~ we cannot ~~know with certainty whether we were the first to make the inventions claimed in our patents or pending patent applications, or~~be certain that we were the first to file a patent application related to a product candidate or technology. Moreover, because patent applications can take many years to issue, there may be currently pending patent applications that may later result in issued patents that our product candidates may infringe. In addition, identification of third-party patent rights that may be relevant to our technology is difficult because patent searching is imperfect due to differences in terminology among patents, incomplete databases and the difficulty in assessing the meaning of patent claims. There is also no assurance that there is not prior art of which we are aware, but which we do not believe is relevant to our business, which may, nonetheless, ultimately be found to limit our ability to make, use, sell, offer for ~~patent protection~~sale or import our products that may be approved in the future, or impair our competitive position. In addition, third parties may obtain patents in the future and claim that use of ~~such inventions.~~our technologies infringes upon these patents. As a result, the issuance, ~~inventorship,~~ scope, validity, enforceability, and commercial value of our patent rights are highly uncertain.

Our patents or pending patent applications, or the patents or pending patent applications that we license, may be challenged in the courts or patent offices in the United States and ~~abroad. Even issued patents may later be found invalid or unenforceable or may be modified or revoked in proceedings instituted by third parties before various patent offices or in courts.~~other foreign jurisdictions. For example, ~~our pending patent applications~~we may be subject to a third-party pre-issuance ~~submissions~~submission of prior art to the USPTO or ~~our issued patents may be subject to~~become involved in post-grant review ~~(PGR) proceedings, oppositions,~~procedures, derivations, reexaminations, or inter ~~partes~~parties review ~~(IPR)~~ proceedings, in the United States or ~~elsewhere,~~oppositions or similar proceedings in foreign jurisdictions, challenging our patent ~~rights or the patent rights~~rights. The legal threshold for initiating such proceedings may be low, so that even proceedings with a low probability of ~~others.~~success might be initiated. An adverse determination in any such challenges may result in loss of exclusivity or in patent claims being narrowed, invalidated, or held unenforceable, in whole or in part, which could limit our ability to stop others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection of our technology and products. ~~In addition, given~~

Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. As a result, our intellectual property may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours.

We may not be able to protect our intellectual property rights throughout the world, which could negatively impact our business.

Patents are of national or regional effect. Although we co-own or exclusively license four issued United States patents, one granted Australia patent, one granted Japanese patent, one granted Chinese patent, one granted South Korea patent, one granted European patent, and three granted United Kingdom patents for neffy and pending patent applications in the United States, Europe, Japan, Australia, China, South Korea, and other foreign jurisdictions for neffy, filing, prosecuting and defending patents 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 technologies 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 competitor products may compete with our product candidates, 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. As an example, European applications will soon have the option, upon grant of a patent, of becoming a Unitary Patent which will be subject to the jurisdiction of the Unitary Patent Court (“UPC”). The option of a Unitary Patent will be a significant change in European patent practice. As the UPC is a new court system, there is no precedent for the court, increasing the uncertainty. Proceedings to enforce our patent rights in foreign jurisdictions, whether or not successful, 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 and 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. Furthermore, while we intend to protect our intellectual property rights in our expected significant markets, we cannot ensure that we will be able to initiate or maintain similar efforts in all jurisdictions in which we may wish to market our product candidates. Accordingly, our efforts to protect our intellectual property rights in such countries may be inadequate, which may have an adverse effect on our ability to successfully commercialize our product candidates in all of our expected significant foreign markets.

Various countries outside the United States have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. In addition, many countries limit the enforceability of patents against government agencies or government contractors. As a result, a patent owner may have limited remedies in certain circumstances, which could materially diminish the value of such patent. If we are forced to grant a license to third parties with respect to any patents relevant to our business, our competitive position may be impaired, and our business, financial condition, results of operations and prospects may be adversely affected. Accordingly, our efforts to protect or 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. Furthermore, while we intend to protect our intellectual property rights in our expected significant markets, we cannot ensure that we will be able to initiate or maintain similar efforts in all jurisdictions in which we may wish to market our product candidates. Accordingly, our efforts to protect our intellectual property rights in such countries may be inadequate, which may have an adverse effect on our ability to successfully commercialize our product candidates in all of our expected significant foreign markets.

Further, the standards applied by the USPTO and foreign patent offices in granting patents are not always applied uniformly or predictably. As such, we do not know the degree of future protection that we will have on our technologies, products and product candidates. While we will endeavor to try to protect our technologies, products and product candidates with intellectual property rights such as patents, as appropriate, the process of obtaining patents is time-consuming, expensive and unpredictable.

Further, geo-political actions in the United States and in foreign countries could increase the uncertainties and costs surrounding the prosecution or maintenance of our patent applications or those of any current or future licensors and the maintenance, enforcement or defense of our issued patents or those of any current or future licensors. For example, the United States and foreign government actions related to Russia’s invasion of Ukraine may limit or prevent filing, prosecution and maintenance of patent applications in Russia. Government actions may also prevent maintenance of issued patents in Russia. These actions could result in abandonment or lapse of the patents or patent applications that we own, co-own or exclusively license, resulting in partial or complete loss of patent rights in Russia. If such an event were to occur, it could have a material adverse effect on our business. In addition, a decree was adopted by the Russian government in March 2022, allowing Russian companies and individuals to exploit inventions owned by patentees that have citizenship or nationality in, are registered in, or have predominately primary place of business or profit-making activities in the United States and other countries that Russia has deemed unfriendly without consent or compensation. Consequently, we would not be able to prevent third parties from practicing the inventions that we own, co-own or exclusively license in Russia or from selling or importing products made using the inventions that we own, co-own or exclusively license in and into Russia. Accordingly, our competitive position may be impaired, and our business, financial condition, results of operations and prospects may be adversely affected.

Recent patent reform legislation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents.

On September 16, 2011, the Leahy-Smith America Invents Act (the “Leahy-Smith Act”) was signed into law in the United States. The Leahy-Smith Act includes a number of significant changes to U.S. patent law. These include provisions that affect the way patent applications will be prosecuted and may also affect patent litigation. In particular, under the Leahy-Smith Act, the United States transitioned in March 2013 to a “first inventor to file” system in which, assuming that other requirements of patentability are met, the first inventor to file a patent application will be entitled to the patent regardless of whether a third party was first to invent the claimed invention. A third party that files a patent application in the USPTO after March 2013 but before we could therefore be awarded a patent covering any of our inventions even if we had made the invention before it was made by such third party. This will require us to be cognizant going forward of the time from invention to filing of a patent application. Furthermore, our ability to obtain and maintain valid and enforceable patents depends on whether the differences between our technology, or the technologies we license for our ~~proprietary rights is uncertain. Only limited protection may~~product candidates, and the prior art allow the technology we use for our product candidates to be ~~available~~patentable over the prior art. Since patent applications in the United States and ~~may not adequately protect our rights~~most other countries are confidential for a period of time after filing or ~~permit us~~until issuance, we cannot be certain that we were the first to ~~gain or keep~~either file any ~~competitive advantage. Any failure to obtain or maintain~~ patent ~~protection with respect~~application related to our product candidates or ~~their uses~~invent any of the inventions claimed in our patents or patent applications.

The Leahy-Smith Act also includes a number of significant changes that affect the way patent applications will be prosecuted and also may affect patent litigation. These include allowing third-party submission of prior art to the USPTO during patent prosecution and additional procedures to attack the validity of a patent by USPTO administered post-grant proceedings, including Post Grant Review, Inter Partes Review, and derivation proceedings. An adverse determination in any such submission or proceeding could reduce the scope or enforceability of, or invalidate, our patent rights, which could adversely affect our competitive position. Because of a lower evidentiary standard in USPTO proceedings compared to the evidentiary standard in United States federal courts necessary to invalidate a patent claim, a third party could potentially provide evidence in a USPTO proceeding sufficient for the USPTO to hold a claim invalid even though the same evidence would be insufficient to invalidate the claim if first presented in a district court action. Accordingly, a third party may attempt to use the USPTO procedures to invalidate our patent claims that would not have been invalidated if first challenged by the third party as a defendant in a district court action. Thus, the Leahy-Smith Act and its implementation 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, financial condition, results of operations and prospects.

In addition to the protection afforded by patents, we rely on trade secret protection and confidentiality agreements to protect proprietary know-how that is not patentable, processes for which patents are difficult to enforce and any other elements of our discovery and development processes that involve proprietary know-how, information or technology that is not covered by patents. We may also rely on trade secret protection as temporary protection for concepts that may be includedChanges in ~~a future~~ patent filing. However, trade secret protection will not protect us from innovations that a competitor develops independently of our proprietary know how. If a competitor independently develops a technology that we protect as a trade secret and files a patent application on that technology, then we may not be able to patent that technology in the future, may require a license from the competitor to use our own know-how, and if the license is not available on commercially-viable terms, then we may not be able to launch our product. Although we require all of our employees to assign their inventions to us, and require all of our employees, consultants, advisors and any third parties who have access to our proprietary know-how, information or technology to enter into confidentiality agreements, we cannot be certain that our trade secrets and other confidential proprietary information will not be disclosed or that competitors will not otherwise gain access to our trade secrets or independently develop substantially equivalent information and techniques. Furthermore, the laws of some foreign countries do not protect proprietary rights to the same extent or in the same manner as the laws of the United States. As a result, we may encounter significant problems in protecting and defending our intellectual property bothlaw in the United States and ~~abroad.~~other jurisdictions could diminish the value of patents in general, thereby impairing our ability to protect our product candidates.

As is the case with other pharmaceutical companies, our success is heavily dependent on intellectual property, particularly patents relating to our product candidates. Obtaining and enforcing patents in the pharmaceutical industry involves both technological and legal complexity and is therefore costly, time consuming and inherently uncertain. Changes in either the patent laws or interpretation of the patent laws, rules and regulations in the United States and other countries could increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of issued patents. We cannot predict the breadth of claims that may be allowed or enforced in the patents we own, co-own or license from third-parties. In addition, U.S. Congress or other foreign legislative bodies may pass patent reform legislation that is unfavorable to us.

Depending on decisions by the U.S. Congress, the U.S. federal courts, the USPTO, the laws and regulations governing patents could change in unpredictable ways that could weaken our ability to obtain new patents or to enforce the existing patents we own, co-own or license and patents we or our licensors might obtain in the future. For example, the U.S. Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection available in certain circumstances or weakening 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 future actions by the U.S. Congress, the U.S. courts, the USPTO, or similar authorities in foreign jurisdictions, the laws and regulations governing patents could change in unpredictable ways that could weaken our ability to obtain new patents or to enforce the existing patents we own, co-own or license and patents that we or our licensors might obtain in the future.

Obtaining and maintaining patent protection depends on compliance with various procedural, document submissions, 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 patent applications will be due to be paid to the USPTO and various foreign patent agencies at various stages over the lifetime of our patents and/or patent applications. We have systems in place to remind us to pay these fees, and we rely on our outside patent annuity service to pay these fees when due. In addition, the USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. We employ reputable law firms and other professionals to help us comply with these provisions. In many cases, an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with the applicable rules. However, there are situations in which noncompliance can result in abandonment or lapse of a patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. If such an event were to occur, it could have a material adverse effect on our business. If we ~~are unable~~or our licensors fail to ~~prevent unauthorized~~maintain the patents and patent applications covering our product candidates, our competitors might be able to enter the market, which would have a material ~~disclosure~~adverse effect on our business, financial conditions, results of operations and growth prospects.

Patent terms may be inadequate to protect our competitive position on our product candidates for an adequate amount of time and may adversely affect our anticipated future revenues and operating earnings.

We rely on patent, trademark, trade secret and other intellectual property protection in the discovery, development, manufacturing and sale of our ~~intellectual property~~product candidates. In particular, patent protection is important in the development and eventual commercialization of our product candidates. Patents covering our product candidates normally provide market exclusivity, which is important in order for our product candidates to ~~third parties,~~become profitable.

Patents have a limited lifespan. In the United States, the natural expiration of a patent is generally 20 years. In the United States, if all maintenance fees are timely paid, the natural expiration of a patent is generally 20 years from its earliest U.S. non-provisional filing date. Various extensions may be available, but the life of a patent, and the protection it affords, is limited. Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such product candidates might expire before or shortly after such product candidates are commercialized. Even if patents covering our product candidates are obtained, once the patent life has expired for a product, we may be open to competition from generic products. As a result, our patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours.

The patents we currently co-own or exclusively license for neffy are expected to expire as early as 2038, absent any patent term adjustments. The API in neffy is epinephrine, a generic API that is used in FDA-approved intra-muscular injectables. If neffy is approved by the FDA under the 505(b)(2) regulatory pathway, our U.S. patents for neffy will not be ~~able~~eligible for patent term restoration under the Drug Price Competition and Patent Term Restoration Act of 1984. While we are planning to ~~establish~~seek additional patent coverage for neffy, there can be no assurances that such additional patent protection will be granted, or ~~maintain~~if granted, that these patents will not be infringed upon or otherwise held enforceable. Even if we are successful in obtaining a ~~competitive advantage in our market, and this scenario could materially adversely affect our business, financial condition and results~~patent, patents have a limited lifespan. Without patent protection, we may be open to competition from generic versions of ~~operations.~~neffy.

We cannot ensure that patent rights relating to inventions described and claimed in our pending patent applications will issue or that patents based on our patent applications will not be challenged and rendered invalid and/or unenforceable.

~~The patent application process is subject to numerous risks and uncertainties, and there can be no assurance that we~~We co-own or ~~any of our potential future collaborators will be successful in protecting our product candidates by obtaining and defending patents. We have pending U.S. and foreign~~exclusively license patent applications in our ~~portfolio;~~portfolio relating to our product candidates that are pending at the patent offices in the United States, Europe, Japan, and other foreign jurisdictions, however, we cannot predict:

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if and when patents may issue based on ~~our~~the patent ~~applications;~~applications we own, co-own or exclusively license;

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the scope of protection of any patent issuing based on ~~our~~the patent ~~applications;~~applications we own, co-own or exclusively license;

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whether the claims of any patent issuing based on ~~our~~the patent applications we own, co-own or exclusively license will provide protection against ~~competitors;~~competitors,

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whether or not third parties will find ways to invalidate or circumvent our patent rights;

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whether or not others will obtain patents claiming aspects similar to those covered by ~~our patents and~~the patent ~~applications;~~applications we own, co-own or exclusively license;

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whether we will need to initiate litigation or administrative proceedings to enforce and/or defend our patent rights which will be costly whether we win or lose; ~~and/or~~

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whether the patent applications that we own, co-own or ~~in-license~~exclusively license will result in issued patents with claims that cover our product candidates or uses ~~thereof in the United States~~thereof; and/or

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whether we may experience patent office interruption or ~~in other foreign countries.~~delays to our ability to timely secure patent coverage to our product candidates.

We cannot be certain that the claims in our pending patent applications directed to our product candidates ~~and/or technologies~~ will be considered patentable by the USPTO or by patent offices in foreign countries. ~~There can be no assurance that any such patent applications will issue as granted patents.~~ One aspect of the determination of patentability of our inventions depends on the scope and content of the “prior art,” information that was or is deemed available to a person of skill in the relevant art prior to the priority date of the claimed invention. There may be prior art of which we are not aware that may affect the patentability of our patent claims or, if issued, affect the validity or enforceability of a patent ~~claim.~~claim relevant to our business. There is no assurance that there is not prior art of which we are aware, but which we do not believe is relevant to our business, which may, nonetheless, ultimately be found to limit our ability to make, use, sell, offer for sale or import our products that may be approved in the future, or impair our competitive position. Even if the patents do issue based on ~~our~~the patent applications we own, co-own or exclusively license, third parties may challenge the validity, enforceability or scope thereof, which may result in such patents being narrowed, invalidated or held unenforceable. Furthermore, even if they are unchallenged, patents in our portfolio may not adequately exclude third parties from practicing relevant technology or prevent others from designing around our claims. If the breadth or strength of our intellectual property position with respect to our product candidates is threatened, it could dissuade companies from collaborating with us to develop, and threaten our ability to commercialize, our product candidates. In the event of litigation or administrative proceedings, we cannot be certain that the claims in any of our issued patents will be considered valid by courts in the United States or foreign countries.

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

Patent protection is available on a national or regional level. Filing, prosecuting and defending patents on all of our product candidates throughout the world would be prohibitively expensive. As such, our intellectual property rights outside the United States may not extend to all other possible countries outside the United States and we may not be able to prevent third parties from practicing our inventions in countries outside the United States where we do not have patent protection, or from selling in and importing products into other jurisdictions made using our inventions in such countries outside the United States. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products or technology and may export otherwise infringing products or technology to territories where we have patent protection, but enforcement rights are not as strong as those 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. Further, the legal systems of certain countries particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, particularly those relating to pharmaceuticals or biologics, 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 and our patent applications at risk of not issuing and could provoke third parties to assert claims against us. We may not prevail in any such lawsuits that we initiate and the damages and other remedies awarded, if any, may not be commercially meaningful. Similarly, if our trade secrets are disclosed in a foreign jurisdiction, competitors worldwide could have access to our proprietary information and we may be without satisfactory recourse. Such disclosure could have a material adverse effect on our business. Moreover, our ability to protect and enforce our intellectual property rights may be adversely affected by unforeseen changes in foreign intellectual property laws. We currently have and may in the future enter into more contract research and manufacturing relationships with organizations that operate in certain countries that are at heightened risk of theft of technology, data and intellectual property, including through direct intrusion by private parties or foreign actors, and those affiliated with or controlled by state actors. In addition, certain developing countries, including China and India, have compulsory licensing laws under which a patent owner may be compelled under certain circumstances to grant licenses to third parties at nominal or no consideration. In those countries, we and our licensors may have limited remedies if patents are infringed or if we or our licensors are compelled to grant a license to a third-party, which could materially diminish the value of those patents. In addition, many countries limit the enforceability of patents against government agencies or government contractors. This could limit our potential revenue opportunities. 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.

~~Intellectual property rights do not necessarily address all potential threats to our competitive advantage.~~

The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations and may not adequately protect our business or permit us to maintain our competitive advantage. For example:

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~~others may be able to make product candidates that are similar to ours but that are not covered by the claims of the patents that we own or have exclusively licensed;~~

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~~we or our licensors or future collaborators might not have been the first to make the inventions covered by the issued patent or pending patent application that we own or have exclusively licensed;~~

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~~we or our licensors or future collaborators might not have been the first to file patent applications covering certain of our inventions;~~

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~~others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights;~~

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it is possible that noncompliance with the USPTO and foreign governmental patent agencies requirement for a number of procedural, documentary, fee payment and other provisions during the patent process can result in abandonment or lapse of a patent or patent application, and partial or complete loss of patent rights in the relevant jurisdiction;

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~~it is possible that our pending patent applications will not lead to issued patents;~~

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~~issued patents that we own or have exclusively licensed may be revoked, modified, or held invalid or unenforceable, as a result of legal challenges by our competitors;~~

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our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets;

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~~we may not develop additional proprietary technologies that are patentable;~~

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we cannot predict the scope of protection of any patent issuing based on our patent applications, including whether the patent applications that we own or in-license will result in issued patents with claims that directed to our product candidates or uses thereof in the United States or in other foreign countries;

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there may be significant pressure on the U.S. government and international governmental bodies to limit the scope of patent protection both inside and outside the United States for disease treatments that prove successful, as a matter of public policy regarding worldwide health concerns;

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countries other than the United States may have patent laws less favorable to patentees than those upheld by U.S. courts, allowing foreign competitors a better opportunity to create, develop and market competing product candidates;

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~~the claims of any patent issuing based on our patent applications may not provide protection against competitors or any competitive advantages, or may be challenged by third parties;~~

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~~if enforced, a court may not hold that our patents are valid, enforceable and infringed;~~

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~~we may need to initiate litigation or administrative proceedings to enforce and/or defend our patent rights which will be costly whether we win or lose;~~

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~~we may choose not to file a patent application in order to maintain certain trade secrets or know-how, and a third-party may subsequently file a patent application covering such intellectual property;~~

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~~we may fail to adequately protect and police our trademarks and trade secrets; and~~

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the patents of others may have an adverse effect on our business, including if others obtain patents claiming subject matter similar to or improving that covered by our patents and patent applications.

~~Should any of these or similar events occur, they could significantly harm our business, results of operations and prospects.~~

We may not identify relevant third-party patents or may incorrectly interpret the relevance, scope or expiration of a third-party patent which might adversely affect our ability to develop and market our products.

As the pharmaceutical industry expands and more patents are issued, the risk increases that our product candidates may be subject to claims of infringement of the patent rights of third parties. There can be no assurance that our operations do not, or will not in the future, infringe existing or future third-party patents. Identification of third-party patent rights that may be relevant to our operations is difficult because patent searching is imperfect due to differences in terminology among patents, incomplete databases and the difficulty in assessing the meaning of patent claims. We cannot guarantee that any of our patent searches or analyses, including the identification of relevant patents, the scope of patent claims or the expiration of relevant patents, are complete or thorough, nor can we be certain that we have identified each and every third-party patent and pending application in the United States and abroad that is relevant to our operations or necessary for the commercialization of our product candidates in any jurisdiction.

Numerous U.S. and foreign patents and pending patent applications exist in our market that are owned by third parties. Our competitors in both the United States and abroad, many of which have substantially greater resources and have made substantial investments in patent portfolios and competing technologies, may have applied for or obtained or may in the future apply for and obtain, patents that will prevent, limit or otherwise interfere with our ability to make, use and sell our products. We do not always conduct independent reviews of pending patent applications and patents issued to third parties. Patent applications in the United States and elsewhere are typically published approximately 18 months after the earliest filing for which priority is claimed, with such earliest filing date being commonly referred to as the priority date. Certain U.S. patent applications that will not be filed outside the U.S. can remain confidential until patents issue. In addition, patent applications in the United States and elsewhere can be pending for many years before issuance, or unintentionally abandoned patents or applications can be revived. Furthermore, pending patent applications that 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. As such, there may be applications of others now pending or recently revived patents of which we are unaware. These patent applications may later result in issued patents, or the revival of previously abandoned patents, that will prevent, limit or otherwise interfere with our ability to make, use or sell our product candidates.

The scope of a patent claim is determined by an interpretation of the law, the written disclosure in a patent and the patent’s prosecution history. Our interpretation of the relevance or the scope of a patent or a pending application may be ~~incorrect. For example, we~~incorrect, which may negatively impact our ability to market our products. We may incorrectly determine that our products are not covered by a third-party patent or may incorrectly predict whether a ~~third-party’s~~third party’s pending application will issue with claims of relevant scope. Our determination of the expiration date of any patent in the United States or abroad that we consider relevant may be ~~incorrect.~~incorrect, which may negatively impact our ability to develop and market our product candidates. Our failure to identify and correctly interpret relevant patents may negatively impact our ability to develop and market our products.

We ~~are currently party to~~cannot provide any assurances that third-party patents do not exist which might be enforced against our current technology, including our research programs, product candidates, their respective methods of use, and manufacture thereof, and could result in either an ~~in-license agreement under which we were granted rights to~~injunction prohibiting our manufacture ~~certain components of our product candidates. If we breach our obligations under these agreements, we may be required to pay damages, lose our rights to these technologies~~ or ~~both, which would adversely affect our business and prospects.~~

~~We rely, in part, on license and other strategic agreements, which subject us to various obligations, including payment obligations for achievement of certain milestones on product sales. For example,~~future sales, or, with respect to ~~SBT8230, we have licensed a cell line to manufacture a component of this product under~~our future sales, an ~~agreement with WuXi Biologics. If we fail to comply with the obligations under~~obligation on our ~~license agreements, including as a result of COVID-19 impacting our operations, or use the intellectual property licensed to us in an unauthorized manner, we may be required~~part to pay ~~damages and our licensors may have the right~~royalties and/or other forms of compensation to terminate the license. If our license agreements are terminated, we may experience significant delays, difficulties, and costs in developing new cell lines and identifying an alternative source to manufacture components of our candidate products covered by our agreements and those being tested or approved in combination with such products. Such an occurrencethird parties, which could ~~materially adversely affect the value of the product candidates being developed under any such agreement.~~be significant.

In addition, the agreements under which we license intellectual property or technology to or from third parties are complex, and certain provisions in such agreements may be susceptible to multiple interpretations. The resolution of any contract interpretation disagreement that may arise could narrow what we believe to be the scope of our rights to the relevant intellectual property or technology or increase what we believe to be our financial or other obligations under the relevant agreement, either of which could have a material adverse effect on our business, financial condition, results of operations and prospects.

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 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:

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

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

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~~the sublicensing of patent and other rights;~~

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~~our diligence obligations under the license agreement and what activities satisfy those diligence obligations;~~

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~~the ownership of inventions and know-how resulting from the creation or use of intellectual property by us alone or with our licensors and partners;~~

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~~the scope and duration of our payment obligations; and~~

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~~the priority of invention of patented technology.~~

If disputes over intellectual property and other rights 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 product candidates. We are generally also subject to all of the same risks with respect to protection of intellectual property that we license as we are for intellectual property that we own, which are described herein. If we or our licensor fail to adequately protect this intellectual property, our ability to develop, manufacture, or commercialize products could suffer.

In addition, while we cannot currently determine the amount of the royalty obligations we would be required to pay on sales of future products, if any, the amounts may be significant. The amount of our future royalty obligations will depend on the technology and intellectual property we use in products that we successfully develop and commercialize, if any. Therefore, even if we successfully develop and commercialize products, we may be unable to achieve or maintain profitability.

If we are unable to successfully obtain rights to required third-party intellectual property rights or maintain the existing intellectual property rights we have, we may have to abandon development of the relevant research programs or product candidates and our business, financial condition, results of operations and prospects could suffer.

In the future, we may need to obtain additional licenses of third-party technology that may not be available to us or are available only on commercially unreasonable terms, and which may cause us to operate our business in a more costly or otherwise adverse manner that was not anticipated.

We currently own intellectual property directed to our product candidates and other proprietary technologies. Other pharmaceutical companies and academic institutions may also have filed or are planning to file patent applications potentially relevant to our business. From time to time, in order to avoid infringing these third-party patents, we may be required to license technology from additional third parties to further develop or commercialize our product candidates. Should we be required to obtain licenses to any third-party technology, including any such patents required to manufacture, use or sell our product candidates, such licenses may not be available to us on commercially reasonable terms, or at all. The inability to obtain any third-party license required to develop or commercialize any of our product candidates could cause us to abandon any related efforts, which could seriously harm our business and operations.

The licensing or acquisition of third-party intellectual property rights is a competitive area, and several more established companies may pursue strategies to license or acquire third-party intellectual property rights we may consider attractive or necessary. These established companies may have a competitive advantage over us due to their size, capital resources and greater clinical development and commercialization capabilities. In addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us.

Moreover, some of our owned and in-licensed patents or patent applications or future patents are or may be co-owned with third parties. If we are unable to obtain an exclusive license to any such third-party co-owners’ interest in such patents or patent applications, such co-owners may be able to license their rights to other third parties, including our competitors, and our competitors could market competing products and technology. In addition, we may need the cooperation of any such co-owners of our patents in order to enforce such patents against third parties, and such cooperation may not be provided to us. Furthermore, our owned and in-licensed patents may be subject to a reservation of rights by one or more third parties. Any of the foregoing could have a material adverse effect on our competitive position, business, financial conditions, results of operations and prospects.

If we are sued for infringing intellectual property rights of third parties, such litigation could be costly and time consuming and could prevent or delay us from developing or commercializing our product candidates.

Our commercial success depends, in part, on our ability to develop, manufacture, market and sell our product candidates without infringing the intellectual property and other proprietary rights of third parties. Third parties may allege that we have infringed or misappropriated their intellectual property. Litigation or other legal proceedings relating to intellectual property claims, with or without merit, is unpredictable and generally expensive and time consuming and, even if resolved in our favor, is likely to divert significant resources from our core business, including distracting our technical and management personnel from their normal responsibilities. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the market price of our common stock. Such litigation or proceedings could substantially increase our operating losses and reduce the resources available for development activities or any future sales, marketing or distribution activities. We may not have sufficient financial or other resources to adequately conduct such litigation or proceedings. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources and more mature and developed intellectual property portfolios. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace.

There is a substantial amount of intellectual property litigation in the ~~biotechnology and~~ pharmaceutical ~~industries,~~industry, and we may become party to, or threatened with, litigation or other adversarial proceedings regarding intellectual property rights with respect to our products candidates. ~~We cannot be certain that our product candidates and other proprietary technologies we may develop will not infringe existing or future patents owned by third parties.~~ Third parties may assert infringement claims against us based on existing or future intellectual property rights. For example, we have identified certain third-party patents that may be asserted against us with respect to our ImmunoTAC conjugate SBT8230. These patents may expire prior to commercial launch of SBT8230, if approved. We believe that the relevant claims of these third-party patents are likely invalid or unenforceable, and we may choose to challenge those patents, though the outcome of any challenge that we may initiate in the future is uncertain. We may also decide in the future to seek a license to those third-party patents, but we might not be able to do so on reasonable terms. Proving invalidity may be difficult. For example, in the United States, proving invalidity in court requires a showing of clear and convincing evidence to overcome the presumption of validity enjoyed by issued patents. If we are found to infringe a third-party’s intellectual property rights, we could be forced, including by court order, to cease developing, manufacturing or commercializing the infringing candidate product or product. Alternatively, we may be required to obtain a license from such third-party in order to use the infringing technology and continue developing, manufacturing or marketing the infringing candidate product or product. However, we may not be able to obtain any required license on commercially reasonable terms or at all. Even if we were able to obtain a license, it could be non-exclusive,

thereby giving our competitors access to the same technologies licensed to us. In addition, we could be found liable for monetary damages, including treble damages and attorneys’ fees if we are found to have willfully infringed a patent. A finding of infringement could prevent us from commercializing our investigational products or force us to cease some of our business operations, which could materially harm our business.

We may not be aware of patents that have already been issued and that a third-party, for example, a competitor in the fields in which we are developing our product candidates, might assert are infringed by our current or future product candidates, including claims to compositions, formulations, methods of manufacture or methods of use or treatment that cover our product candidates. It is also possible that patents owned by third parties of which we are aware, but which we do not believe are relevant to our product candidates and other proprietary technologies we may develop, could be found to be infringed by our product candidate. In addition, because patent applications can take many years to issue, there may be currently pending patent applications that may later result in issued patents that our product candidates may infringe. Our competitors in both the United States and abroad, many of which have substantially greater resources and have made substantial investments in patent portfolios and competing technologies, may have applied for or obtained or may in the future apply for and obtain, patents that will prevent, limit or otherwise interfere with our ability to make, use and sell our product candidates. The pharmaceutical ~~and biotechnology industries have~~industry has produced a ~~considerable~~significant number of patents, and it may not always be clear to industry participants, including us, which patents cover various types of products or methods of use. The coverage of patents is subject to interpretation by the courts, and the interpretation is not always uniform. If we were sued for patent infringement, we would need to demonstrate that our product candidates, ~~products~~ or ~~methods~~of use either do not infringe the patent claims of the relevant patent or that the patent claims are invalid or unenforceable, and we may not be able to do this. Proving invalidity of third-party patents may be ~~difficult. For example, in the United States, proving invalidity in court requires a showing of clear~~difficult and convincing evidence to overcome the presumption of validity enjoyed by issued patents, and there is no assurance that a court of competent jurisdiction would invalidate the claims of any such U.S. patent.uncertain. Even if we are successful in these proceedings, we may incur substantial costs and the time and attention of our management and scientific personnel could be diverted in ~~pursuing~~defending our rights in these proceedings, which could have a material adverse effect on our business and operations. 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 litigation. In addition, we may not have sufficient resources to bring these actions to a successful conclusion.

~~We may choose to challenge the enforceability or validity of claims in a third-party’s U.S. patent by requesting that the USPTO review the patent claims in an~~ 72~~ex-parte~~

~~re-exam,~~ ~~inter partes~~ review or post-grant review proceedings. These proceedings are expensive and may consume our time or other resources. We may choose to challenge a third-party’s patent in patent opposition proceedings in the EPO, or other foreign patent office. The costs of these opposition proceedings could be substantial and may consume our time or other resources. If we fail to obtain a favorable result at the USPTO, EPO or other patent office then we may be exposed to litigation by a third-party alleging that the patent may be infringed by our product candidates or proprietary technologies.

If we are found to infringe a ~~third-party’s~~third party’s intellectual property rights, we could be forced, including by court order, to cease developing, manufacturing or commercializing the infringing product candidate or product. Alternatively, we may be required to obtain a license from such ~~third-party~~third party in order to use the infringing technology and continue developing, manufacturing or marketing the infringing product candidate. However, we may not be able to obtain any required license on commercially reasonable terms or at all. Even if we were able to obtain a license, it could be non-exclusive, thereby giving our competitors access to the same technologies licensed to us. In addition, we could be found liable for monetary damages, including treble damages and attorneys’ fees if we are found to have willfully infringed a patent. A finding of infringement could prevent us from commercializing our product candidates or force us to cease some of our business operations, and could divert the time and attention of our technical personnel and management, cause development delays, and/or require us to develop non-infringing technology, which may not be possible on a cost-effective basis, any of which could materially harm our business. In the event of a successful claim of infringement against us, we may have to pay substantial monetary damages, including treble damages and attorneys’ fees for willful infringement, pay royalties and other fees, redesign our infringing drug or obtain one or more licenses from third parties, which may be impossible or require substantial time and monetary expenditure. Claims that we have misappropriated the confidential information or trade secrets of third parties could have a similar negative impact on our business.

We may become involved in lawsuits to protect or enforce our patents or other intellectual property, which could be expensive, time consuming and ~~unsuccessful.~~unsuccessful and could result in a court or administrative body finding our patents to be invalid or unenforceable.

Even if the patent applications we own, co-own or license are issued, third parties may challenge or infringe upon our patents. To counter infringement, we may be required to file infringement claims, which can be expensive and time-consuming. In patent litigation in the United States, defendant counterclaims alleging invalidity or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including novelty, non-obviousness (or inventive step), written description or enablement. In addition, patent validity challenges may, under certain circumstances, be based upon non-statutory obviousness-type double patenting, which, if successful, could result in a finding that the claims are invalid for obviousness-type double patenting or the loss of patent term if a terminal disclaimer is filed to obviate a finding of obviousness-type double patenting. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld information material to patentability from the USPTO, or made a misleading statement, during prosecution.

Third parties may 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, inter partes review, interference proceedings, derivation proceedings, and equivalent proceedings in foreign jurisdictions (e.g., opposition proceedings). Such proceedings could result in the revocation or cancellation of or amendment to our patents in such a way that they no longer cover our current or future products or provide any competitive advantage. The outcome following legal assertions of invalidity and unenforceability is unpredictable. If a third party were to prevail on a legal assertion of invalidity or unenforceability, we could lose part or all of the patent protection on one or more of our current or future products, which could result in our competitors and other third parties using our technology to compete with us. Such a loss of patent protection could have a material adverse impact on our business, financial condition, results of operations, cash flows and prospects.

We are currently a party to an inter partes review of U.S. Patent No. 10,682,414 B2 that was instituted on February 14, 2022, and may, in the future, be a party to other intellectual property litigation or administrative proceedings that are very costly and time-consuming and could interfere with our ability to sell and market our products. Some of our competitors may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources. In addition, any uncertainties resulting from the initiation and continuation of any litigation could have a material adverse effect on our ability to raise the funds necessary to continue our operations. In addition, patent holding companies that focus solely on extracting royalties and settlements by enforcing patent rights may target us, especially as we gain greater visibility and market exposure as a public company.

In an infringement proceeding, even one initiated by us, there is a risk that a court will decide that our patents are not valid and that we do not have the right to stop the other party from using the inventions they describe. There is also the risk that, even if the validity of such patents is upheld, the court will refuse to stop the other party on the ground that such other party’s activities do not infringe our rights to these patents.

An adverse outcome in a litigation or proceeding involving our patents could limit our ability to assert our patents against competitors, affect our ability to receive royalties or other licensing consideration from our licensees, and may curtail or preclude our ability to exclude third parties from making, using and selling similar or competitive products. Any of these occurrences could have a material adverse effect on our business, financial condition, results of operations, cash flows and prospects.

Competitors ~~or other third parties~~ may infringe our patents, trademarks, copyrights or other intellectual ~~property.~~property that relate to our research programs and product candidates, their respective methods of use, manufacture and formulations thereof. To counter infringement or unauthorized use, we may be required to file infringement claims, which can be expensive and time consuming and divert the time and attention of our management and scientific personnel. ~~Our pending patent applications cannot be enforced against third parties practicing the technology claimed in such applications unless and until a patent issues from such applications.~~ Any claims we assert against perceived infringers could provoke these parties to assert counterclaims against us alleging that we infringe their patents, in addition to counterclaims asserting that our patents are invalid or unenforceable, or both. 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, non-enablement or insufficient written description. 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. The outcome following legal assertions of invalidity and unenforceability is unpredictable. In any patent infringement proceeding, there is a risk that a court will decide that a patent ~~of ours~~that we own or have licensed is invalid or unenforceable, in whole or in part, and that we do not have the right to stop the other party from using the invention at issue. There is also a risk that, even if the validity of ~~such~~our patents is upheld, the court will construe the ~~patent’s~~ claims of our patents narrowly or decide that we do not have the right to stop the other party from using the invention at issue on the grounds that our patent claims do not cover the invention ~~or decide that the other party’s use of our patented technology falls under the safe harbor to patent infringement under 35 U.S.C. §271I(1).~~at issue. An adverse outcome in a litigation or proceeding involving our patents could limit our ability to assert our patents against those parties or other competitors, and may curtail or preclude our ability to exclude third parties from making and selling similar or competitive products. Any of these occurrences could adversely affect our competitive business position, business prospects and financial condition. Similarly, if we assert trademark infringement claims, a court may determine that the marks we have asserted are invalid or unenforceable, or that the party against whom we have asserted trademark infringement has superior rights to the marks in question. In this case, we could ultimately be forced to cease use of such trademarks.

Even if we ~~establish~~established infringement ~~the~~by competitors, a court may decide not to grant an injunction against further infringing activity by competitors and instead award only monetary damages, which may or may not be an adequate remedy. 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 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 shares of our common stock. Moreover, we cannot assure you that we will have sufficient financial or other resources to file and pursue such infringement claims, which typically last for years before they are concluded. Even if we ultimately prevail in such infringement claims, the monetary cost of such litigation and the diversion of the attention of our management and scientific personnel could outweigh any benefit we receive as a result of the proceedings.

67Our product candidates may face competition sooner than expected, and our patents may be challenged.

Our success will depend in part on our ability to obtain and maintain patent protection for our product candidates and technologies and to prevent third parties from infringing upon our proprietary rights. We must also operate without infringing upon patents and proprietary rights of others, including by obtaining appropriate licenses to patents or other proprietary rights held by third parties, if necessary. However, the patent applications we have filed or may file in the future may never yield patents that protect our inventions and intellectual property assets. Failure to obtain patents that sufficiently cover our formulations and technologies would limit our protection against generic drug manufacturers, pharmaceutical companies and other parties who may seek to copy our products, produce substantially similar products or use technologies substantially similar to those we own, co-own, or exclusively license.

We do not expect to receive non-patent regulatory exclusivity for neffy if approved by the FDA under the 505(b)(2) regulatory pathway. Without non-patent marketing exclusivity for neffy, we may face competition by third parties seeking to market generic versions of neffy as early as our approval by the FDA. In seeking approval for a drug product under the 505(b)(2) regulatory pathway, applicants are required to list with the FDA certain patents of the applicant or that are held by third parties whose claims cover the applicant’s product. Upon approval of an NDA, each of the patents listed in the application for the drug is then published in the Orange Book. Any subsequent applicant who files an ANDA seeking approval of a generic equivalent version of a drug product listed in the Orange Book or an NDA submitted under the 505(b)(2) regulatory pathway referencing a drug listed in the Orange Book must make one of the following certifications to the FDA concerning patents: (1) the patent information concerning the reference listed drug product has not been submitted to the FDA; (2) any such patent that was filed has expired; (3) the date on which such patent will expire; or (4) such patent is invalid or will not be infringed upon by the manufacture, use or sale of the drug product for which the application is submitted. This last certification is known as a paragraph IV certification. A notice of the paragraph IV certification must be provided to each owner of the patent that is the subject of the certification and to the holder of the approved NDA to which the ANDA or 505(b)(2) application refers. Although we expect that our patents will be vigorously defended from infringement by third parties, there can be no assurances that we will be successful with respect to such defense or any other legal proceedings which may arise in the ordinary course of our business. Such a failure may have a material impact on our business, results of operations and financial condition in the future.

Because of the expense and uncertainty of litigation, we may not be in a position to enforce our intellectual property rights against third parties.

Because of the expense and uncertainty of litigation, we may conclude that even if a ~~third-party~~third party is infringing any one of our issued ~~patent, any~~ patents ~~that may be issued as a result of our pending or future patent applications~~ or other intellectual property rights, the risk-adjusted cost of bringing and enforcing such aan infringement claim or action may be too high or not in the best interest of our company or our stockholders, or it may be otherwise impractical or undesirable to enforce our intellectual property against some third parties. Our competitors or other third parties may be able to sustain the costs of complex patent litigation or proceedings more effectively than we can because of their greater financial resources and more mature and developed intellectual property portfolios.stockholders. In such cases, we may decide that the more prudent course of action is to simply monitor the situation or initiate or seek some other non-litigious action or solution. In addition, the uncertainties associated with litigation could compromise our ability to raise the funds necessary to continue our preclinical studies, initiate and continue planned clinical trials, continue our internal research programs, in-license needed technology or other product candidates, or enter into development partnerships that would help us bring our product candidates to market.

We may be subject to claims that we have wrongfully hired an employee from a competitor or that our employees, consultants, or independent contractors have wrongfully used or disclosed confidential information of third parties.

As is common in the pharmaceutical industry, in addition to our employees, we engage the services of consultants to assist us in the development of our product candidates. Many of these consultants, and many of our employees, were previously employed at, or may have previously provided or may be currently providing consulting services to, other pharmaceutical companies including our competitors or potential competitors. We could in the future be subject to claims that we or our employees have inadvertently or otherwise used or disclosed alleged trade secrets or other confidential information of former employers or competitors. Although we try to ensure that our employees and consultants do not use the intellectual property, proprietary information, know-how or trade secrets of others in their work for us, we may become subject to claims that we caused an employee to breach the terms of his or her non-competition or non-solicitation agreement, or that we or these individuals have, inadvertently or otherwise, used or disclosed the alleged trade secrets or other proprietary information of a former employer or competitor.

While we may litigate to defend ourselves against these claims, even if we are successful, litigation could result in substantial costs and could be a distraction to management. If our defenses to these claims fail, in addition to requiring us to pay monetary damages, a court could prohibit us from using technologies or features that are essential to our product candidates, if such technologies or features are found to incorporate or be derived from the trade secrets or other proprietary information of the former employers. Moreover, any such litigation or the threat thereof may adversely affect our reputation, our ability to form strategic alliances or sublicense our rights to collaborators, engage with scientific advisors or hire employees or consultants, each of which would have an adverse effect on our business, results of operations and financial condition. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management.

6874

~~Changes in patent law~~Intellectual property litigation may lead to unfavorable publicity that harms our reputation.

During the course of any intellectual property litigation, there could be public announcements of the initiation of the litigation as well as results of hearings, rulings on motions, and other interim proceedings in the ~~United States and other jurisdictions~~litigation. Such announcements could ~~diminish~~harm our reputation, the ~~value of patents in general, thereby impairing our ability to protect our product candidates.~~

As is the case with other biopharmaceutical companies, our success is heavily dependent on intellectual property, particularly patents. Obtaining and enforcing patents in the biopharmaceutical industry involves both technological and legal complexity and is therefore costly, time consuming and inherently uncertain. Changes in either the patent laws or interpretation of the patent laws in the United States could increase the uncertainties and costs, and may diminish our ability to protect our inventions, obtain, maintain, and enforce our intellectual property rights and, more generally, could affect theperceived value of our intellectual property or ~~narrow~~ the ~~scope of~~market for our owned and licensed patents. Patent reform legislation in the United States and other countries, including the Leahy-Smith America Invents Act (the Leahy-Smith Act), signed into law on September 16, 2011, could increase those uncertainties and costs surrounding the prosecution of our patent applications and the enforcementexisting or defense of our issued patents. The Leahy-Smith Act includes a number of significant changes to U.S. patent law. These include provisions that affect the way patent applications are prosecuted, redefine prior art and provide more efficient and cost-effective avenues for competitors to challenge the validity of patents. These include allowing third-party submission of prior art to the USPTO during patent prosecution and additional procedures to attack the validity of a patent by USPTO administered post-grant proceedings, including post-grant review, ~~inter partes~~ review, and derivation proceedings. Further, because of a lower evidentiary standard in these USPTO post-grant proceedings compared to the evidentiary standard in United States federal courts necessary to invalidate a patent claim, a third-party could potentially provide evidence in a USPTO proceeding sufficient for the USPTO to hold a claim invalid even though the same evidence would be insufficient to invalidate the claim if first presented in a district court action. Accordingly, a third-party may attempt to use the USPTO procedures to invalidate our patent claims that would not have been invalidated if first challenged by the third-party as a defendant in a district court action. Thus, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all offuture products, which could have a material adverse effect on our ~~business, financial condition, results of operations and prospects.~~business.

After March 2013, under the Leahy-Smith Act, the United States transitioned to a first inventor to file system in which, assuming that the other statutory requirements are met, the first inventor to file a patent application will be entitled to the patent on an invention regardless of whether a third-party was the first to invent the claimed invention. A third-party that files a patent application in the USPTO after March 2013, but before we file an application covering the same invention, could therefore be awarded a patent covering an invention of ours even if we had made the invention before it was made by such third-party. This will require us to be cognizant going forward of the time from invention to filing of a patent application. Since patent applications in the United States and most other countries are confidential for a period of time after filing or until issuance, we cannot be certain that we or our licensors were the first to either (i) file any patent application related to our product candidates and other proprietary technologies we may develop or (ii) invent any of the inventions claimed in our or our licensor’s patents or patent applications. Even where we have a valid and enforceable patent, we may not be able to exclude others from practicing the claimed invention where the other party can show that they used the invention in commerce before our filing date or the other party benefits from a compulsory license. However, the Leahy-Smith Act and its implementation 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, financial condition, results of operations and prospects.

In addition, the patent positions of companies in the development and commercialization of pharmaceuticals are particularly uncertain. The U.S. Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations. Depending on future actions by the U.S. Congress, the U.S. courts, the USPTO and the relevant law-making bodies in other countries, 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. For example, in the 2013 case ~~Assoc. for Molecular Pathology v.Myriad Genetics, Inc.~~, the U.S. Supreme Court held that certain claims to DNA molecules are not patentable. While we do not believe that any of the patents owned or licensed by us will be found invalid based on this decision, we cannot predict how future decisions by the courts, the U.S. Congress or the USPTO may impact the value of our patents.

Periodic maintenance fees, renewal fees, annuities fees and various other governmental fees on patents and/or patent applications are due to be paid to the USPTO and foreign patent agencies in several stages over the lifetime of the patent and/or patent application. The USPTO and various foreign governmental patent agencies also require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. While an inadvertent lapse, including due to the effect of the COVID-19 pandemic on us or our patent maintenance vendors, can in many cases be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Non-compliance events that could result in abandonment or lapse of a patent or patent application include, but are not limited to, failure to respond to official actions within prescribed time limits, non-payment of fees and failure to properly legalize and submit formal documents. If we fail to maintain the patents and patent applications covering our product candidates, our competitive position would be adversely affected.

We may rely on trade secret and proprietary know-how, which can be difficult to trace and enforce and, if we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.

In addition to seeking patents for some of our technology and product candidates, we may also rely on trade secrets, including unpatented know-how, technology and other proprietary information, to maintain our competitive position. Elements of our product candidate, including processes for their preparation and manufacture, may involve proprietary know-how, information, or technology that is not covered by patents, and thus for these aspects we may consider trade secrets and know-how to be our primary intellectual property. Any disclosure, either intentional or unintentional, by our employees, the employees of third parties with whom we share our facilities or third-party consultants and vendors that we engage to perform research, clinical trials or manufacturing activities, or misappropriation by third parties (such as through a cybersecurity incident) of our trade secrets or proprietary information could enable competitors to duplicate or surpass our technological achievements, thus eroding our competitive position in our market. Because we expect to rely on third parties in the development and manufacture of our product candidates, we must, at times, share trade secrets with them. 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.

Trade secrets and know-how can be difficult to protect. We require our employees to enter into written employment agreements containing provisions of confidentiality and obligations to assign to us any inventions generated in the course of their employment. We and any third parties with whom we share facilities enter into written agreements that include confidentiality and intellectual property obligations to protect each party’s property, potential trade secrets, proprietary know-how, and information. We further seek to protect our potential trade secrets, proprietary know-how, and information in part, by entering into non-disclosure and confidentiality agreements with parties who are given access to them, such as our corporate collaborators, outside scientific collaborators, CROs, contract manufacturers, consultants, advisors and other third parties. With our consultants, contractors, and outside scientific collaborators, these agreements typically include invention assignment obligations. We cannot guarantee that we have entered into such agreements with each party that may have or has had access to our trade secrets or proprietary technology and processes. We cannot be certain that our trade secrets and other confidential proprietary information will not be disclosed or that competitors will not otherwise gain access to our trade secrets or independently develop substantially equivalent information and techniques. Despite these efforts, any of these parties may breach the agreements and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, some courts inside and outside the United States are less willing or unwilling to protect trade secrets. We may need to share our proprietary information, including trade secrets, with future business partners, collaborators, contractors and others located in countries at heightened risk of theft of trade secrets, including through direct intrusion by private parties or foreign actors, and those affiliated with or controlled by state actors. Further, if any of our trade secrets were to be lawfully obtained or independently developed by a competitor or other third-party, we would have no right to prevent them from using that technology or information to compete with us. If any of our trade secrets were to be disclosed to or independently developed by a competitor or other third-party, our competitive position would be harmed.

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

We may be subject to claims that former employees, consultants, independent contractors, collaborators or other third parties have an interest in our patents or other intellectual property as an owner, co-owner, inventor or co-inventor. The failure to name the proper inventors on a patent application can result in the patents issuing thereon being unenforceable. Inventorship disputes may arise from conflicting views regarding the contributions of different individuals named as inventors, the effects of foreign laws where foreign nationals are involved in the development of the subject matter of the patent, conflicting obligations of third parties involved in developing our product candidates or as a result of questions regarding co-ownership of potential joint inventions. Litigation may be necessary to resolve these and other claims challenging inventorship and/or ownership. Alternatively, or additionally, we may enter into agreements to clarify the scope of our rights in such intellectual property. 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 licensors may have relied on third-party consultants or collaborators or on funds from third parties, such as the U.S. government, such that our licensors are not the sole and exclusive owners of the patents we in-licensed. If other third parties have ownership rights or other rights to our in-licensed patents, they may be able to license such patents to our competitors, and our competitors could market competing products and technology. This could have a material adverse effect on our competitive position, business, financial conditions, results of operations, and prospects.

In addition, while it is our policy to require our employees and contractors who may be involved in the conception or development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who, in fact, conceives or develops intellectual property that we regard as our own. The assignment of intellectual property rights may not be self-executing, or the assignment agreements may be breached, and we may be forced to bring claims against third parties, or defend claims that they may bring against us, to determine the ownership of what we regard as our intellectual property. Such claims could have a material adverse effect on our business, financial condition, results of operations, and prospects.

~~Patent terms may be inadequate to protect our competitive position on our product candidates for an adequate amount of time.~~

Patent rights are of limited duration. In the United States, if all maintenance fees are paid timely, the natural expiration of a patent is generally 20 years after its first effective filing date. Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such product candidates are commercialized. Even if patents covering our product candidates are obtained, once the patent life has expired for a product, we may be open to competition from biosimilar or generic products. As a result, our patent portfolio may not provide us with sufficient rights to exclude others from commercializing product candidates similar or identical to ours. Upon issuance in the United States, the term of a patent can be increased by patent term adjustment, which is based on certain delays caused by the USPTO, but this increase can be reduced or eliminated based on certain delays caused by the patent applicant during patent prosecution. The term of a United States patent may also be shortened if the patent is terminally disclaimed over an earlier-filed patent. A patent term extension (PTE) based on regulatory delay may be available in the United States. However, only a single patent can be extended for each marketing approval, and any patent can be extended only once, for a single product. Moreover, the scope of protection during the period of the PTE does not extend to the full scope of the claim, but instead only to the scope of the product as approved. Laws governing analogous PTEs in foreign jurisdictions vary widely, as do laws governing the ability to obtain multiple patents from a single patent family. Additionally, we may not receive an extension if we fail to exercise due diligence during the testing phase or regulatory review process, apply within applicable deadlines, fail to apply prior to expiration of relevant patents or otherwise fail to satisfy applicable requirements. If we are unable to obtain PTE or restoration, or the term of any such extension is less than we request, the period during which we will have the right to exclusively market our product will be shortened and our competitors may obtain approval of competing products following our patent expiration and may take advantage of our investment in development and clinical trials by referencing our clinical and preclinical data to launch their product earlier than might otherwise be the case, and our revenue could be reduced, possibly materially.

If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected.

We have registered trademarks in the United States, as well as in foreign jurisdictions, including the United Kingdom, European Union, and Japan. Our ~~current or~~ future trademarks or trade names may be challenged, infringed, circumvented, or declared generic or descriptive, or determined to be infringing on other marks. We may not be able to protect our rights to these trademarks and trade names or may be forced to stop using these names, which we need for name recognition by potential partners or customers in our markets of interest. During trademark registration proceedings, we may receive ~~rejections of our applications by the USPTO or in other foreign jurisdictions.~~rejections. Although we would be given an opportunity to respond to or appeal those rejections, we may be unable to overcome such rejections. In addition, in the USPTO and in comparable agencies in many foreign jurisdictions, third parties are given an opportunity to oppose pending trademark applications and to seek to cancel registered trademarks. Opposition or cancellation proceedings may be filed against our trademarks, and our trademarks may not survive such proceedings. If we are unable to establish name recognition based on our trademarks and trade names, we may not be able to compete effectively and our business may be adversely affected. We may license our trademarks and trade names to third parties, such as distributors. ~~Although~~Though these license agreements may provide guidelines for how our trademarks and trade names may be used, a breach of these agreements or misuse of our trademarks and ~~tradenames~~trade names by our licensees may jeopardize our rights in or diminish the goodwill associated with our trademarks and trade names.

~~Moreover,~~75

Intellectual property rights do not necessarily address all potential threats to our competitive advantage.

Once granted, patents may remain open to opposition, interference, re-examination, post-grant review, inter partes review, nullification or derivation action in court or before patent offices or similar proceedings for a given period after allowance or grant, during which time third parties can raise objections against such grant. In the course of such proceedings, which may continue for a protracted period of time, the patent owner may be compelled to limit the scope of the allowed or granted claims thus attacked, or may lose the allowed or granted claims altogether. In addition, the degree of future protection afforded by our intellectual property rights is uncertain because even granted intellectual property rights have limitations, and may not adequately protect our business. The following examples are illustrative:

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others may be able to make formulations that are similar to neffy or any ~~name~~of our future product candidates but that are not covered by the claims of our patent rights;

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the patents of third parties may have an adverse effect on our business;

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we or our licensors or any future strategic partners might not have been the first to conceive or reduce to practice the inventions covered by the issued patents or pending patent applications that we own, co-own or exclusively license;

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we or our licensors or any future strategic partners might not have been the first to file patent applications covering certain of our inventions;

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others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights;

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it is possible that our pending patent applications will not lead to issued patents;

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issued patents that we may own or co-own or that we exclusively license in the future may not provide us with any competitive advantage, or may be held invalid or unenforceable, as a result of legal challenges by our competitors;

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third parties performing manufacturing or testing for us using our product candidates or technologies could use the intellectual property of others without obtaining a proper license;

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we may not develop additional proprietary technologies that are patentable; and

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the patents of others may have an adverse effect on our business.

Should any of these events occur, they could have a material adverse effect on our business, financial condition, results of operations and prospects.

If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.

In addition to seeking patent protection for some of our technology and product candidates, we also rely on trade secrets, including unpatented know-how, technology and other proprietary information, to maintain our competitive position. Elements of our product candidates, including processes for their preparation and manufacture, may involve proprietary know-how, information, or technology that is not covered by patents, and thus for these aspects we may consider trade secrets and know-how to be our primary intellectual property. Any disclosure, either intentional or unintentional, by our employees, the employees of third parties with whom we share our facilities or third-party consultants and vendors that we engage to perform research, clinical trials or manufacturing activities, or misappropriation by third parties (such as through a cybersecurity breach) of our trade secrets or proprietary information could enable competitors to duplicate or surpass our technological achievements, thus eroding our competitive position in our market.

Trade secrets and unpatented know-how can be difficult to protect. We require our employees to enter into written employment agreements containing provisions of confidentiality and obligations to assign to us any inventions generated in the course of their employment. We and any third parties with whom we share facilities enter into written agreements that include confidentiality and intellectual property obligations to protect each party’s property, potential trade secrets, proprietary know-how and information. We further seek to protect our potential trade secrets, proprietary know-how and information in part, by entering into non-disclosure and confidentiality agreements with parties who are given access to them, such as our corporate collaborators, outside scientific collaborators, contract research organizations, contract manufacturers, consultants, advisors and other third parties. With our consultants, contractors and outside scientific collaborators, these agreements typically include invention assignment obligations. Although we have ~~proposed~~taken steps to ~~use with~~protect our ~~product candidate in~~trade secrets and unpatented know-how, we cannot provide any assurances that all such agreements have been duly executed, and 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. Monitoring unauthorized uses and disclosures is difficult, and we do not know whether the steps we have taken to protect our proprietary technologies will be effective. Unauthorized parties may also attempt to copy or reverse engineer certain aspects of our products that we consider proprietary. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, some courts inside and outside the United States ~~must~~are less willing or unwilling to protect trade secrets.

Trade secrets may be ~~approved~~independently developed by the FDA, regardless of whether we have registered it, or applied to register it, as a trademark. Similar requirements exist in Europe. The FDA typically conducts a review of proposed product names, including an evaluation of potential for confusion with other product names. If the FDA (or an equivalent administrative bodyothers in a ~~foreign jurisdiction) objects~~manner that could prevent legal recourse by us. Trade secrets will over time be disseminated within the industry through independent development, the publication of journal articles and the movement of skilled personnel from company to company or academic to industry scientific positions. Though our agreements with third parties typically restrict the ability of our advisors, employees, collaborators, licensors, suppliers, third-party contractors and consultants to publish data potentially relating to our trade secrets, our agreements may contain certain limited publication rights. Because from time-to-time we expect to rely on third parties in the development, manufacture and distribution of our products and provision of our services, we must, at times, share trade secrets with them. Despite employing the contractual and other security precautions described above, the need to share trade secrets 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. If any of our ~~proposed~~trade secrets were to be lawfully obtained or independently developed by a competitor or other third party, we would have no right to prevent them from using that technology or information to compete with us. If any of our trade secrets were to be disclosed to or independently developed by a competitor or other third party, our competitive position would be harmed.

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

We employ individuals who previously worked with other companies, including our competitors or potential competitors. We could in the future be subject to claims that we or our employees, consultants, or independent contractors have inadvertently or otherwise used or disclosed alleged trade secrets or other confidential information of current or former employers or competitors. Although we try to ensure that our employees, consultants and independent contractors do not use the intellectual property, proprietary information, know-how or trade secrets of others in their work for us, we may become subject to claims that we caused an individual to breach the terms of his or her non-competition or non-solicitation agreement, or that we or these individuals have, inadvertently or otherwise, used or disclosed the alleged intellectual property, proprietary information, know-how or trade secrets of a current or former employer or competitor.

While we may litigate to defend against these claims, even if we are successful, litigation could result in substantial costs and could be a distraction to management and other employees. If our defenses to these claims fail, in addition to requiring us to pay monetary damages, a court could prohibit us from using technologies that are essential to our product ~~names, it~~candidates, if such technologies are found to incorporate or be derived from the trade secrets or other proprietary information of the current or former employers. Moreover, any such litigation or the threat thereof may adversely affect our reputation, our ability to form strategic alliances or sublicense our rights to collaborators, engage with scientific advisors or hire employees or consultants, each of which would have an adverse effect on our business, results of operations and financial condition.

From time to time, we may be required to ~~expend significant~~license technologies relating to our therapeutic programs from additional ~~resources in an effort to identify a suitable substitute name that would qualify under applicable trademark laws, not infringe the existing rights of~~ third parties ~~and~~to further develop or commercialize our product candidates. Should we be ~~acceptable~~required to ~~the FDA. Furthermore, in many countries, owning and maintaining a trademark registration~~obtain licenses to any third-party technology, including any such patents required to manufacture, use or sell our product candidates, such licenses may not ~~provide an adequate defense against a subsequent infringement claim asserted by~~be available to us on commercially reasonable terms, or at all. The inability to obtain any third-party license required to develop or commercialize any of our product candidates could cause us to abandon any related efforts, which could seriously harm our business and operations.

Any collaboration arrangements that we may enter into in the ~~owner of a senior trademark. At times, competitors or other third parties~~future may ~~adopt trade names or trademarks similar to ours, thereby impeding~~not be successful, which could adversely affect our ability to ~~build brand identity~~develop and ~~possibly leading~~commercialize our products.

Any future collaborations that we enter into may not be successful. The success of our collaboration arrangements will depend heavily on the efforts and activities of our collaborators. Collaborations are subject to ~~market confusion. In addition,~~numerous risks, which may include that:

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collaborators have significant discretion in determining the efforts and resources that they will apply to collaborations;

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collaborators may not pursue development and commercialization of our products or may elect not to continue or renew development or commercialization programs based on trial or test results, changes in their strategic focus due to the acquisition of competitive products, availability of funding or other external factors, such as a business combination that diverts resources or creates competing priorities;

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collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our products or product candidates;

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a collaborator with marketing, manufacturing and distribution rights to one or more products may not commit sufficient resources to or otherwise not perform satisfactorily in carrying out these activities;

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we could grant exclusive rights to our collaborators that would prevent us from collaborating with others;

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collaborators may not properly maintain or defend our intellectual property rights or may use our intellectual property or proprietary information in a way that gives rise to actual or threatened litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential liability;

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disputes may arise between us and a collaborator that causes the delay or termination of the research, development or commercialization of our current or future products or that results in costly litigation or arbitration that diverts management attention and resources;

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collaborations may be terminated, and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable current or future products;

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collaborators may own or co-own intellectual property covering our products that results from our collaborating with them, and in such cases, we would not have the exclusive right to develop or commercialize such intellectual property; and

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a collaborator’s sales and marketing activities or other operations may not be in compliance with applicable laws resulting in civil or criminal proceedings.

Risks Related to Our Business Operations, Employee Matters and Managing Growth

A pandemic, epidemic, or outbreak of an infectious disease may materially and adversely affect our business, including our nonclinical studies, clinical trials, third parties on whom we rely, our supply chain, our ability to raise capital, our ability to conduct regular business and our financial results.

We are subject to risks related to public health crisis and any efforts to halt the spread of any public health crises. For example, COVID-19 and policies and regulations implemented by governments in response to its outbreak, such as directing businesses and governmental agencies to cease non-essential operations at physical locations, prohibiting certain nonessential gatherings and ceasing non-essential travel had a significant impact, both direct and indirect, on businesses and commerce, as worker shortages occurred, supply chains were disrupted, facilities and production were suspended, and demand for certain goods and services, such as medical services and supplies, spiked, while demand for other goods and services fell. We experienced certain impacts of COVID-19, including inability to conduct clinical trial site monitoring for certain earlier phase clinical trials and delays in completing clinical trials, bioanalytical sample analysis and study reports. There can be no guarantee we will not experience other impacts from a resurgence of COVID-19 or other pandemics, epidemics or infectious disease outbreaks, such as being forced to further delay or pause enrollment, experiencing potential interruptions to our supply chain, facing difficulties or additional costs in enrolling patients in future clinical trials or being able to achieve full enrollment of our studies within the timeframes we anticipate, or at all. Additionally, pandemics, epidemics or other infectious disease outbreaks could have extensive impacts in many aspects of society and could result in significant disruptions to the global economy, as well as businesses and capital markets around the world. Other global health concerns could also result in social, economic, and labor instability in the countries in which we or the third parties with whom we engage operate.

While we have been working closely with our third-party manufacturers, distributors and other partners to manage our supply chain activities and mitigate potential disruptions to the production of neffy as a result of pandemics, epidemics or other infectious disease outbreaks, if such a public health crisis were to persist for an extended period of time, there could be ~~potential trade name~~significant and material disruptions to our supply chain and operations, and associated delays in the manufacturing and supply of neffy and any future product candidates. Any such supply disruptions, including disruptions in procuring items that are essential for our development activities and securing manufacturing slots for the products needed for such activities, could adversely impact our ability to initiate and complete nonclinical studies or ~~trademark infringement claims brought by owners~~clinical trials and generate sales of and revenue from our product candidates, if approved, which could have a material adverse effect on our business, financial condition, results of operations and growth prospects.

COVID-19 affected and a resurgence of COVID-19 or other ~~registered trademarks~~public health crisis may in the future affect employees of third-party CROs located in affected geographies that we rely upon to carry out our clinical trials. If any future public health crisis is not contained, we may experience disruptions that could severely impact our business and clinical trials, including:

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delays or ~~trademarks that incorporate variations~~difficulties in our commercialization efforts;

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delays or difficulties in enrolling patients in our clinical trials;

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delays or difficulties in clinical site initiation, including difficulties in recruiting clinical site investigators and clinical site staff;

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diversion of healthcare resources away from the conduct of clinical trials, including the diversion of sites or facilities serving as our clinical trial sites and staff supporting the conduct of our ~~registered~~clinical trials, including our trained therapists, or ~~unregistered trademarks~~absenteeism that reduces site resources;

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interruption of key clinical trial activities, such as clinical trial site monitoring, due to limitations on travel imposed or ~~trade names.~~recommended by federal, state or national governments, employers and others or interruption of clinical trial subject visits and study procedures, the occurrence of which could affect the integrity of clinical trial data;

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risk that participants enrolled in our clinical trials will acquire a virus or illness while the clinical trial is ongoing, which could impact the results of the clinical trial, including by increasing the number of observed adverse events or patient withdrawals from our trials;

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limitations in employee resources that would otherwise be focused on conducting our clinical trials, including because of sickness of employees or their families or the desire of employees to avoid contact with large groups of people;

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delays in receiving authorizations from regulatory authorities to initiate our future clinical trials;

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delays in clinical sites receiving the supplies and materials needed to conduct our clinical trials;

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interruption in global shipping that may affect the transport of clinical trial materials, such as neffy used in our clinical trials;

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changes in local regulations as part of a response to the public health crisis which may require us to change the ways in which our clinical trials are conducted, which may result in unexpected costs, or the discontinuation of the clinical trials altogether;

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interruptions or delays in nonclinical studies due to restricted or limited operations at research and development laboratory facilities;

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delays in necessary interactions with local regulators, ethics committees and other important agencies and contractors due to limitations in employee resources or forced furlough of government employees; and

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refusal of the FDA, the EMA or the other regulatory bodies to accept data from clinical trials in affected geographies outside the United States, the EU or other relevant local geographies.

Any negative impact a resurgence of COVID-19 or other public health crisis has on patient enrollment or treatment, or the development of neffy and any future product candidates, could cause costly delays to clinical trial activities, which could adversely affect our ability to obtain regulatory approval for and to commercialize neffy and any future product candidates, if approved, increase our operating expenses, which could have a material adverse effect on our financial results. COVID-19 also caused significant volatility in public equity markets and disruptions to the United States and global economies and any future pandemic, epidemic, infectious disease outbreak or similar public health crisis could lead to further market dislocation. Any such increased volatility and economic dislocation may make it more difficult for us to raise capital on favorable terms, or at all. If we ~~assert trademark infringement claims, a court may determine that~~or any of the ~~marks we have asserted are invalid or unenforceable, or that the party against~~third parties with whom we engage were to experience renewed shutdowns or other business disruptions, our ability to conduct our business in the manner and on the timelines presently planned could be materially and negatively affected, which could have ~~asserted trademark infringement has superior rights~~a material adverse impact on our business and our results of operations and financial conditions. To the extent a resurgence of COVID-19 or any future pandemic, epidemic, infectious disease outbreak or other public health crisis adversely affects our business and financial results, it may also heighten many of the other risks described in this “Risk Factors” section, such as those relating to the ~~marks in question. In this case, we could ultimately be forced~~timing and completion of our clinical trials and our ability to ~~cease use of such trademarks.~~obtain future financing.

Our success is highly dependent on our ability to attract and retain highly skilled executive officers and employees.

Our success depends, and will likely continue to depend, upon our ability to hire and retain the services of our current executive officers and our other highly qualified personnel. We have entered into employment agreements with each of our executive officers but they may terminate their employment or engagement with us at any time. The loss of their services might impede the achievement of our research, development and commercialization objectives.

Our ability to compete in the biotechnology and pharmaceuticals industries depends upon our ability to attract and retain highly qualified managerial, scientific and medical personnel. Our industry has experienced a high rate of turnover of management personnel in recent years. Replacing executive officers or other key employees may be difficult and may take an extended period of time because of the limited number of individuals in our industry with the breadth of skills and experience required to develop, gain regulatory approval of and commercialize products successfully.

Our industry has experienced a high rate of turnover in recent years. Competition to hire from this limited pool is intense, and we may be unable to hire, train, retain or motivate these additional key employees on acceptable terms given the competition among numerous pharmaceutical and biotechnology companies for similar personnel. We also experience competition for the hiring of scientific and clinical personnel from universities and research institutions.

We rely on consultants and advisors, including scientific and clinical advisors, to assist us in formulating our research and development and commercialization strategy. Our consultants and advisors, which includes entities owned by our executive officers and directors, may be employed by other entities and may have commitments under consulting or advisory contracts with those entities that may limit their availability to us. If we are unable to continue to attract and retain highly qualified personnel, our ability to develop and commercialize neffy or any future product candidates will be limited.

We only have a limited number of employees to manage and operate our business.*

As of April 30, 2023, we had 27 full-time employees and 4 part-time employees. Our focus on the development of neffy requires us to optimize cash utilization and to manage and operate our business in a highly efficient manner. We cannot assure you that it will be able to hire and/or retain adequate staffing levels to develop neffy or to run our operations and/or to accomplish all of the objectives that we otherwise would seek to accomplish.

Our employees, independent contractors, consultants, current and future licensing and collaboration partners and CROs may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements, which could cause significant liability for us and harm our reputation.

We are exposed to the risk that our employees, independent contractors, consultants, current and future licensing and collaboration partners and CROs may engage in fraudulent conduct or other illegal activity. Misconduct by those parties could include intentional, reckless and/or negligent conduct or disclosure of unauthorized activities to us that violates:

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FDA regulations or similar regulations of comparable non-U.S. regulatory authorities, including those laws requiring the reporting of true, complete and accurate information to such authorities;

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manufacturing standards;

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federal and state healthcare fraud and abuse laws and regulations and similar laws and regulations established and enforced by comparable non-U.S. regulatory authorities; and

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laws that require the reporting of financial information or data accurately.

Activities subject to these laws also involve the improper use or misrepresentation of information obtained in the course of clinical trials, creating fraudulent data in our nonclinical studies or clinical trials or illegal misappropriation of product materials, which could result in regulatory sanctions and serious harm to our reputation. It is not always possible to identify and deter 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, standards or regulations. Additionally, we are subject to the risk that a person or government could allege such fraud or other misconduct, even if none occurred. 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 and results of operations, including the imposition of civil, criminal and administrative penalties, damages, monetary fines, disgorgement, integrity oversight and reporting obligations, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, contractual damages, reputational harm, diminished profits and future earnings, and curtailment of our operations, any of which could have a material adverse effect on our ability to operate our business and our results of operations.

We expect to expand our organization, and as a result, we may encounter difficulties in managing our growth, which could disrupt our operations.

We expect to experience significant growth in the number of our employees and the scope of our operations, particularly in the areas of regulatory affairs and sales, marketing and distribution, as well as to support our public company operations. To manage these growth activities, we must continue to implement and improve our managerial, operational and financial systems, expand our facilities and continue to recruit and train additional qualified personnel. Our management may need to devote a significant amount of our attention to managing these growth activities. Due to our limited financial resources and the limited experience of our management team in managing a company with such anticipated growth, we may not be able to effectively manage the expansion or relocation of our operations, retain key employees, or identify, recruit and train additional qualified personnel. Our inability to manage the expansion or relocation of our operations effectively may result in weaknesses in our infrastructure, give rise to operational mistakes, loss of business opportunities, loss of employees and reduced productivity among remaining employees. Our expected growth could also require significant capital expenditures and may divert financial resources from other projects, such as the development of neffy for additional indications or future product candidates. If we are unable to effectively manage our expected growth, our expenses may increase more than expected, our ability to generate revenues could be reduced and we may not be able to implement our business strategy, including the successful commercialization of neffy or any future product candidates.

Risks Related to the Securities Markets and Ownership of Our Common Stock

~~An active trading~~The market ~~for~~price of our common stock ~~may not continue to~~could be ~~developed or be sustained, which may make it difficult for you to sell your shares.~~volatile.

~~Prior to our initial public offering in December 2020, there had been no public~~The market for our common stock. The trading market for our common stock on The Nasdaq Global Market has been limited and an active trading market for our shares may not be sustained. If an active market for our common stock is not sustained, it may be difficult for you to sell your shares at a price that is attractive to you, or at all.

~~The~~ price of our common stock could be subject to ~~volatility related~~significant fluctuations. Market prices for securities of pre-commercial pharmaceutical, biotechnology and other life sciences companies have historically been particularly volatile. Some of the factors that may cause the market price of our common stock to fluctuate include:

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our ability to obtain regulatory approvals for our product candidates, and delays or ~~unrelated~~failures to obtain such approvals;

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failure of any of our product candidates, if approved, to achieve commercial success;

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failure by us to maintain our existing third-party license and supply agreements;

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failure by us or our licensors to prosecute, maintain, or enforce our intellectual property rights;

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changes in laws or regulations applicable to our ~~operations.~~product candidates;

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any inability to obtain adequate supply of our product candidates or the inability to do so at acceptable prices;

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adverse regulatory authority decisions;

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introduction of new products, services or technologies by our competitors;

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failure to meet or exceed financial and development projections we may provide to the public;

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failure to meet or exceed the financial and development projections of the investment community;

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

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announcements of significant acquisitions, strategic collaborations, joint ventures or capital commitments by us or our competitors;

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disputes or other developments relating to proprietary rights, including patents, litigation matters, and our ability to obtain patent protection for our product candidates;

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additions or departures of key personnel;

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significant lawsuits, including patent or stockholder litigation;

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if securities or industry analysts do not publish research or reports about our business, or if they issue an adverse or misleading opinion regarding our business and stock;

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changes in the market valuations of similar companies;

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general market or macroeconomic conditions;

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sales of our common stock by us or our stockholders in the future;

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trading volume of our common stock;

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announcements by commercial partners or competitors of new commercial products, clinical progress or the lack thereof, significant contracts, commercial relationships or capital commitments;

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adverse publicity generally, including with respect to other products and potential products in such markets;

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the introduction of technological innovations or new therapies that compete with potential products of ours;

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changes in the structure of health care payment systems; and

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period-to-period fluctuations in our financial results.

~~Our~~Moreover, the stock ~~price may be volatile. The stock market~~markets in general ~~and the market for biotechnology and pharmaceutical companies, in particular,~~ have experienced ~~extreme~~substantial volatility that has often been unrelated to the operating performance of ~~particular~~individual companies. ~~As a result~~These broad market fluctuations may also adversely affect the trading price of ~~this volatility, you may not be able to sell your shares at a price that is attractive to you, or at all. The market price for~~ our common ~~stock may be influenced by numerous factors, many of which are beyond our control, including:~~stock.

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~~results from future clinical trials with our current and future product candidates or of our competitors;~~

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~~adverse results or delays in preclinical studies or prior and future clinical trials;~~

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~~failure to commercialize our product candidates;~~

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~~unanticipated serious safety concerns related to the use of our product candidates;~~

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changes in our projected operating results that we provide to the public, our failure to meet these projections or changes in recommendations by securities analysts that elect to follow our common stock;

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any delay in our regulatory filings for our product candidates and any adverse development or perceived adverse development with respect to the applicable regulatory authority’s review of such filings, including without limitation the FDA’s issuance of a “refusal to file” letter or a request for additional information;

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~~regulatory or legal developments in the United States and other countries;~~

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~~the level of expenses related to future product candidates or clinical development programs;~~

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~~our failure to achieve product development goals in the timeframe we announce;~~

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~~announcements of acquisitions, strategic alliances or significant agreements by us or by our competitors;~~

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~~recruitment or departure of key personnel;~~

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~~the economy as a whole and market conditions in our industry;~~

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~~trading activity by a limited number of stockholders who together beneficially own a majority of our outstanding common stock;~~

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~~the expiration of market standoff or contractual lock-up agreements;~~

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~~the size of our market float;~~

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~~political uncertainty and/or instability in the United States;~~

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~~the ongoing and future impact of the COVID-19 pandemic and actions taken to slow its spread; and~~

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~~any other events or factors discussed in this report.~~

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In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many immune-oncology companies. Stock prices of many immune-oncology companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies. The trading prices for common stock of other biopharmaceutical companies have also been highly volatile as a result of the COVID-19 pandemic. In the past, ~~stockholders have filed securities class action lawsuits~~ following periods of volatility in the market ~~volatility.~~price of a company’s securities, stockholders have often instituted class action securities litigation against those companies. For example, following a decline in ~~our~~Silverback’s stock price, a federal securities class action complaint was filed on November 5, 2021 against usSilverback and certain of our officers and directors in the U.S. District for the Western District of Washington, captioned Dresner v. Silverback Therapeutics, Inc., et al., Case No. 2:21-cv-01499, which alleges violations of (i) Sections 11 and 15 of the Securities Act of 1933, as amended (the Securities Act); and (ii) Sections 10(b) and 20(a) of the Exchange Act and SEC Rule 10b-5 promulgated thereunder. Even if we are successful in defending against this action or any similar claims that may be brought in the future, such litigation could subject us to substantial costs, divert resources and the attention of management from our business, and adversely affect our business.

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

Certain of our executive officers, directors and large stockholders own a significant percentage of our outstanding capital stock. As a result of their share ownership, these stockholders will have the ability to influence us through their ownership positions. These stockholders may be able to determine all matters requiring stockholder approval. 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 or offers for our common stock that you may believe are in your best interest as one of our stockholders.

If there are substantial sales of shares of our common stock, the price of our common stock could decline.*

The price of our common stock could decline if there are substantial sales of our common stock, particularly sales by our directors, executive officers and significant stockholders, or if there is a large number of shares of our common stock available for sale and the market perceives that sales will occur. As of March 31, 2022, we had 35,145,218 outstanding shares of our common stock.

~~Unstable market and economic conditions may have serious adverse consequences on our business, financial condition, and stock price.~~

~~As a result of the COVID-19 pandemic and actions taken to slow~~ its spread, as well as actual or perceived changes in interest rates and economic inflation, the global credit and financial markets have experienced extreme volatility and disruptions, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates and uncertainty about economic stability. In addition, government efforts to stimulate economic activity in the face of the COVID-19 pandemic have caused interest rates to fluctuate and created uncertainty as to future fluctuations. There can be no assurance that further deterioration in credit and financial markets and confidence in economic conditions will not occur. Our general business strategy may be adversely affected by any such economic downturn, volatile business environment or continued unpredictable and unstable market conditions. If the current 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 have a material adverse effect on our growth strategy, financial performance and stock price and could require us to delay or abandon clinical development plans. In addition, there is a risk that one or more of our current service providers, manufacturers and other partners may not survive an economic downturn, which could directly affect our ability to attain our operating goals on schedule and on budget.

~~If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.~~

The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business. Securities and industry analysts do not currently, and may never, publish research on our company. If no or only very few securities analysts commence coverage of us, or if industry analysts cease coverage of us, the trading price for our common stock would be negatively affected. If one or more of the analysts who cover us downgrade our common stock or publish inaccurate or unfavorable research about our business, our common stock price would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our common stock could decrease, which might cause our common stock price and trading volume to decline.

Future sales and issuances of our common stock or rights to purchase common stock, including pursuant to our equity incentive plans, could result in additional dilution of the percentage ownership of our stockholders and could cause our stock price to fall.

Additional capital will be needed in the future to continue our planned operations. To the extent we raise additional capital by issuing equity securities, our stockholders may experience substantial dilution. We may sell common stock, convertible securities or other equity securities in one or more transactions at prices and in a manner, we determine from time to time. If we sell common stock, convertible securities or other equity securities in more than one transaction, investors may be materially diluted by subsequent sales. These sales may also result in material dilution to our existing stockholders, and new investors could gain rights superior to our existing stockholders.

Pursuant to our 2020 Equity Incentive Plan, our management is authorized to grant stock options, restricted stock units and other equity-based awards to our employees, directors and consultants. The number of shares of our common stock reserved for issuance under our 2020 Equity Incentive Plan will automatically increase on January 1 of each calendar year through January 1, 2030, in an amount equal to the lesser of (i) 5.0% of the total number of shares of our common stock outstanding on the last day of the calendar month before the date of each automatic increase; or (ii) a lesser number of shares determined by our board of directors prior to the applicable January 1st. If our board of directors elects to increase the number of shares available for future grant by the maximum amount each year, our stockholders may experience additional dilution, which could cause our stock price to fall.

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

We may seek additional capital through a combination of equity offerings, debt financings or other capital sources, including potential collaborations, licenses, or other similar arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms may include liquidation or other preferences that adversely affect your rights as a stockholder. The incurrence of indebtedness would result in increased fixed payment obligations and could involve certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. If we raise additional funds through strategic partnerships and alliances and licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies or product candidates, or grant licenses on terms unfavorable to us.

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

~~We are subject to securities class action litigation and may be subject to additional litigation in the future.~~

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 pharmaceutical companies have experienced significant stock price volatility in recent years. For example, following a decline in our stock price, a federal securities class action complaint was filed against us and certain of ourformer officers and directors in the U.S. District for the Western District of Washington, captioned Dresner v. Silverback Therapeutics, Inc., et al., Case No. 2:21-cv-01499, which alleges violations of (i) Sections 11 and 15 of the Securities Act; and (ii) Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and SEC Rule 10b-5 promulgated thereunder. Defendants filed a motion to dismiss the action in May 2022. The court held a hearing on October 28, 2022 and issued an order granting defendants’ motion to dismiss without prejudice on November 4, 2022. Plaintiffs were given leave to amend and filed a Second Amended Complaint (“SAC”) on December 5, 2022, which asserted Section 11 claims only with respect to Silverback’s December 3, 2020 IPO and Section 10(b) claims during a shorter class period of March 29, 2021 through March 31, 2022. Defendants filed a motion to dismiss the SAC on January 2, 2023. Lead plaintiff filed an opposition brief on January 23, 2023, and defendants filed a reply brief January 27, 2023. The court is expected to issue a ruling on the motion to dismiss in the first half of 2023. Even if we are successful in defending against this action or any similar claims that may be brought in the future, such litigation could result in substantial costs and a diversion of management’s attention and resources, which could harm our business.

Additionally, a decrease in the stock price of our common stock may cause our common stock to no longer satisfy the continued listing standards of Nasdaq. If we are not able to maintain the requirements for listing on Nasdaq, we could be delisted, which could have a materially adverse effect on our ability to raise additional funds as well as the price and liquidity of our common stock.

We ~~are an “emerging growth company,”~~will incur costs and ~~we cannot be certain if~~demands upon management as a result of complying with the ~~reduced reporting requirements applicable to emerging growth companies will make our common stock less attractive to investors.~~laws and regulations affecting public companies.

We will incur significant legal, accounting and other expenses that we did not incur as a private company prior to the Merger, including costs associated with public company reporting requirements. We will also incur costs associated with corporate governance requirements, including requirements under the Sarbanes-Oxley Act, as well as new requirements implemented by the SEC and Nasdaq. These rules and regulations are ~~an “emerging growth company” as defined in~~expected to increase our legal and financial compliance costs and to make some activities more time consuming and costly. For example, our management team consists of the ~~JOBS Act, and we intend~~executive officers of ARS Pharma prior to ~~take advantage of~~the Merger, some of ~~the exemptions from reporting requirements that are~~whom have not previously managed and operated a public company. These executive officers and other personnel will need to devote substantial time to gaining expertise regarding operations as a public company and compliance with applicable laws and regulations. These rules and regulations also may make it difficult and expensive for us to ~~other public companies that are not emerging growth companies, including:~~obtain directors’ and officers’ liability insurance. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as our executive officers, which may adversely affect investor confidence in us and could cause our business or stock price to suffer.

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being permitted to provide only two years of audited financial statements, in addition to any required unaudited interim financial statements, with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure;

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~~not being required to comply with the auditor attestation requirements in the assessment of our internal control over financial reporting;~~

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not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements;

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~~reduced disclosure obligations regarding executive compensation; and~~

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~~not being required to hold a non-binding advisory vote on executive compensation or obtain stockholder approval of any golden parachute payments not previously approved.~~

In addition, as an “emerging growth company” the JOBS Act allows us to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies, unless we later irrevocably elect not to avail ourselves of this exemption. We have elected to use this extended transition period under the JOBS Act. As a result, our financial statements may not be comparable to the financial statements of issuers who are required to comply with the effective dates for new or revised accounting standards that are applicable to public companies, which may make comparison of our financials to those of other public companies more difficult.

We cannot predict if investors will find our common stock less attractive because we will rely on 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. We may take advantage of these reporting exemptions until we are no longer an emerging growth company. We will remain an emerging growth company until the earliest to occur of: (i) the last day of the fiscal year in which we have at least $1.07 billion in annual revenue; (ii) the date upon which we are deemed to be a “large accelerated filer,” as defined in Rule 12b-2 under the Exchange Act; (iii) the date on which we have issued more than $1.0 billion in nonconvertible debt securities during the prior three-year period; and (iv) December 31, 2025.

Delaware law and provisions in our amended and restated certificate of incorporation and amended and restated bylaws could make a merger, tender offer or proxy contest difficult, thereby depressing the trading price of our common stock.

Our status as a Delaware corporation and the anti-takeover provisions of the Delaware General Corporation Law (“DGCL”) may discourage, delay or prevent a change in control by prohibiting us from engaging in a business combination with an interested stockholder for a period of three years after the person becomes an interested stockholder, even if a change of control would be beneficial to our ~~existing~~ stockholders. In addition, our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that may make the acquisition of ~~our company~~us more difficult, including the following:

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a classified board of directors with three-year staggered terms, which could delay the ability of stockholders to change the membership of a majority of our board of directors;

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the ability of our board of directors to issue shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer;

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the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of our board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors;

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a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders;

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the requirement that a special meeting of stockholders may be called only by a majority vote of our entire board of directors, the ~~chairman~~chair of our board of directors or our chief executive officer, which could delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors;

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the requirement for the affirmative vote of holders of at least 66-2/3% of the voting power of all of the then-outstanding shares of ~~the~~our voting stock, voting together as a single class, to amend the provisions of our amended and restated certificate of incorporation relating to the management of our business or our amended and restated bylaws, which may inhibit the ability of an acquirer to affect such amendments to facilitate an unsolicited takeover attempt; and

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advance notice procedures with which stockholders must comply to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us.

In addition, as a Delaware corporation, we ~~are~~will be subject to Section 203 of the ~~Delaware General Corporation Law.~~DGCL. These provisions may prohibit large stockholders, in particular those owning 15% or more of our outstanding voting stock, from merging or combining with us for a certain period of time. A Delaware corporation may opt out of this provision by express provision in its original certificate of incorporation or by amendment to its certificate of incorporation or bylaws approved by its stockholders. However, we have not opted out of this provision.

These and other provisions in our amended and restated certificate of incorporation, amended and restated bylaws and Delaware law could make it more difficult for stockholders or potential acquirors to obtain control of our board of directors or initiate actions that are opposed by our then-current board of directors, including delay or impede a merger, tender offer or proxy contest involving ~~our company.~~us. The existence of these provisions could negatively affect the price of our common stock and limit opportunities for ~~you~~our stockholders to realize value in a corporate transaction.

Our amended and restated certificate of incorporation designates the state courts the State of Delaware or, if no state court located within the State of Delaware has jurisdiction, the federal court for the District of Delaware, and the federal district courts of the United States of America to be the exclusive forums for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers and employees.

Our amended and restated certificate of incorporation provides that, to the fullest extent permitted by law, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if and only if the Court of Chancery of the State of Delaware lacks subject matter jurisdiction, any state court located within the State of Delaware or, if and only if all such state courts lack subject matter jurisdiction, the federal district court for the District of Delaware) and any appellate court therefrom shall will be the sole and exclusive forum for the following types of actions or proceedings under Delaware statutory or common law: (i) any derivative action or proceeding brought on ~~our behalf;~~behalf of us; (ii) any action or proceeding asserting a claim of breach of a fiduciary duty owed by any of our current or former directors, officers or other employees ~~to us~~ or our stockholders; (iii) any action or proceeding asserting a claim against us or any of our current or former directors, officers or other employees, arising out of or pursuant to any provision of the ~~Delaware General Corporation Law,~~DGCL, our amended and restated certificate of incorporation or our amended and restated bylaws; (iv) any action or proceeding to interpret, apply, enforce or determine the validity of our amended and restated certificate of incorporation or our amended and restated bylaws; (v) any action or proceeding as to which the ~~Delaware General Corporation Law~~DGCL confers jurisdiction to the Court of Chancery of the State of Delaware; and (vi) any action asserting a claim against us or any of our directors, officers or other employees, governed by the internal affairs doctrine.

This provision would not apply to suits brought to enforce a duty or liability created by the Exchange Act. Furthermore, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all such Securities Act actions. Accordingly, both state and federal courts have jurisdiction to entertain such claims. To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our amended and restated certificate of incorporation further provides that the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act. While the Delaware courts have determined that such choice of forum provisions are facially valid and several state trial courts have enforced such provisions and required that suits asserting Securities Act claims be filed in federal court, there is no guarantee that courts of appeal will affirm the enforceability of such provisions and a stockholder may nevertheless seek to bring a claim in a venue other than those designated in the exclusive forum provisions. In such instance, we would expect to vigorously assert the validity and enforceability of the exclusive forum provisions of our amended and restated certificate of incorporation. This may require significant additional costs associated with resolving such action in other jurisdictions and there can be no assurance that the provisions will be enforced by a court in those other jurisdictions. If a court were to find either exclusive forum provision in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur further significant additional costs associated with litigating Securities Act claims in state court, or both state and federal court, which could seriously harm our business, financial condition, results of operations, and prospects.

These exclusive forum provisions may make it more expensive for stockholders to bring a claim than if the stockholders were permitted to select another jurisdiction and limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees, which may discourage lawsuits against us and our directors, officers and other employees. If a court were to find either exclusive-forum provision in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur further significant additional costs associated with resolving the dispute in other jurisdictions, all of which could seriously harm our business.

We do not anticipate paying any cash dividends in the foreseeable future.

We plan to retain our future earnings, if any, to fund the development and growth of our business. As a result, capital appreciation, if any, of our common stock will be our stockholders’ sole source of gain, if any, for the foreseeable future.

Future sales of shares by existing stockholders could cause our stock price to decline.

If our existing stockholders sell, or indicate an intention to sell, substantial amounts of our common stock in the public market after any applicable legal restrictions on resale lapse, the trading price of our common stock could decline. We are not able to predict the effect that sales may have on the prevailing market price of our common stock.

~~General Risk Factors~~If equity research analysts do not publish research or reports, or publish unfavorable research or reports, about us, our business or our market, our stock price and trading volume could decline.

~~Our internal information technology systems, or those~~The trading market for our common stock will be influenced by the research and reports that equity research analysts publish about us and our business. Equity research analysts may elect not to provide research coverage of our ~~third-party CROs~~common stock, and such lack of research coverage may adversely affect the market price of our common stock. In the event we do have equity research analyst coverage, we will not have any control over the analysts, or the content and opinions included in their reports. The price of our common stock could decline if one or more equity research analysts downgrade our stock or issue other ~~contractors~~unfavorable commentary or ~~consultants,~~research. If one or more equity research analysts ceases coverage of us or fails to publish reports on us regularly, demand for our common stock could decrease, which in turn could cause our stock price or trading volume to decline.

If we fail to maintain proper and effective internal controls, our ability to produce accurate financial statements on a timely basis could be impaired.

We are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act and the rules and regulations of Nasdaq. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. We must perform system and process evaluation and testing of our internal control over financial reporting to allow management to report on the effectiveness of our internal controls over financial reporting in our Annual Report on Form 10-K filing for that year, as required by Section 404 of the Sarbanes-Oxley Act. As a private company prior to the Merger, we have never been required to test our internal controls within a specified period. This will require that we incur substantial professional fees and internal costs to expand our accounting and finance functions and that we expend significant management efforts. We may ~~fail or suffer security breaches, loss or leakage~~experience difficulty in meeting these reporting requirements in a timely manner.

We may discover weaknesses in our system of ~~data,~~internal financial and ~~other disruptions, which~~accounting controls and procedures that could result in a material ~~disruption~~misstatement of our ~~product candidates’ development programs, compromise sensitive information related~~financial statements. Our internal control over financial reporting will not prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud will be detected.

If we are not able to comply with the requirements of Section 404 of the Sarbanes-Oxley Act, or if we are unable to maintain proper and effective internal controls, we may not be able to produce timely and accurate financial statements. If that were to happen, the market price of our ~~business,~~common stock could decline and we could be subject to sanctions or ~~prevent us from accessing critical information, potentially exposing us~~investigations by Nasdaq, the SEC or other regulatory authorities.

We are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to ~~liability or otherwise adversely affecting~~“emerging growth companies” will make our ~~business.~~common stock less attractive to investors.*

We are ~~increasingly dependent upon information technology systems, infrastructure and data~~an “emerging growth company,” as defined under the Jumpstart Our Business Startups Act (the “JOBS Act”). For so long as we are an “emerging growth company,” we plan to ~~operate our business. In the ordinary course~~take advantage of business, we collect, store, process, generate, use, transfer, disclose, make accessible, protect, secure, dispose of, share, and transmit (collectively, processing) proprietary, confidential, and sensitive data, including personal data (such as health-related data), intellectual property, and proprietary business information (collectively, sensitive information). It is criticalcertain exemptions from reporting requirements that ~~we do so in a secure manner~~are applicable to maintain the confidentiality and integrity of such sensitive information. We also have outsourced elements of our operations to third parties, including, without limitation, third-party providers of cloud-based infrastructure, encryption and authentication technology, employee email, and other functions, and as a result we manage a number of third-party contractors who have access to our sensitive information. Moreover, we may share or receive sensitive information with or from third parties. Our ability to monitor these third parties’ information security practice, is limited, and these third parties maypublic companies that are not ~~have adequate information security measures in place.~~

Despite the implementation of security measures, given the size and complexity and the increasing amounts of sensitive information that we maintain, our internal information technology systems and those of our third-party CROs and other contractors and consultants are potentially vulnerable to cyberattacks, malicious internet-based activity, and online and offline fraud. These threats are prevalent, continue to increase, and are becoming increasingly difficult to detect. These threats come from a variety of sources, including traditional computer “hackers,” threat actors, personnel (such as through theft or misuse), sophisticated nation-states, and nation-state-supported actor. Some actors now engage and are expected to continue to engage in cyber-attacks, including without limitation nation-state actors for geopolitical reasons and in conjunction with military conflicts and defense activities. We and the third parties upon which we rely may be subject to a variety of evolving threats,“emerging growth companies” including, but not limited to, compliance with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from ~~cyberattacks by malicious third parties (including but~~the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not ~~limited~~previously approved.

We cannot predict if investors will find our common stock less attractive, or us less comparable to ~~malicious code (such as viruses and worms), malware (including~~certain other public companies because we will rely on these exemptions. If some investors find our common stock less attractive as a result, of advanced persistent threat intrusions), ransomware attacks, denial-of-service attacks (such as credential stuffing), social engineering attacks (including through phishing attacks), supply-chain attacks and other means to affect service reliability and threaten the confidentiality, integrity and availability of information), personnel misconduct or error, software bugs, server malfunctions, software or hardware failures, loss of data or other information technology assets, adware, telecommunications failures, earthquakes, fires, floods, and other similar threats which may compromise our system infrastructure or lead to data leakage. Ransomware attacks, including by organized criminal threat actors, nation-states, and nation-state-supported actors, are becoming increasingly prevalent and severe and can lead to significant interruptions in our operations, loss of data and income, reputational harm, and diversion of funds. Extortion payments may alleviate the negative impact of a ransomware attack, but wethere may be ~~unwilling or unable to make such payments due to,~~a less active trading market for ~~example, applicable laws or regulations prohibiting such payments. Similarly, supply-chain attacks have increased in frequency and severity~~ ~~and we cannot guarantee that third parties and infrastructure in~~ our supply chain or our third-party partners’ supply chains have not been compromised or that they do not contain exploitable defects or bugs that could result in a breach of or disruption to our information technology systems or the third-party information technology systems that support uscommon stock and our ~~services. The COVID-19 pandemic and our remote workforce also poses increased risks to our information technology systems and data, as~~stock price may be more of our employees work from home, utilizing network connections outside our premises. Additionally, future or past business transactions (such as acquisitions or integrations) could expose us to additional cybersecurity risks and vulnerabilities, as our systems could be negatively affected by vulnerabilities present in acquired or integrated entities’ systems and technologies.volatile.

~~Any~~Under the JOBS Act, “emerging growth companies” can delay adopting new or revised accounting standards issued subsequent to the enactment of the ~~previously identified or similar threats could cause a security incident or other interruption. To~~JOBS Act until such time as those standards apply to private companies. We have elected to use this extended transition period under the extent that any disruption or security incident were to result in unauthorized, unlawful, or accidental acquisition, modification, destruction, a loss, alteration, encryption, disclosure of, or access to sensitive information, we could incur liability and reputational damage and the further development and commercialization of our product candidates could be delayed.JOBS Act.

~~We may expend significant resources or modify our business activities (including our clinical trial activities)~~Our ability to ~~try to protect against security incidents. Certain data privacy~~use net operating loss carryforwards and security obligations may require us to implement and maintain specific security measures, industry-standard or reasonable security measures to protect our information technology systems and sensitive information. We cannot assure you that our data privacy and security efforts and our investment in information technology will prevent significant breakdowns or security incidents that could have a material adverse effect upon our reputation, business, operations or financial condition. Wecertain other tax attributes may be unable in the future to detect vulnerabilities in our information technology systems because such threats and techniques change frequently, are often sophisticated in nature, and may not be detected until after a security incident has occurred. Despite our efforts to identify and remediate vulnerabilities, if any, in our information technology systems, our efforts may not be successful. Further, we may experience delays in developing and deploying remedial measures designed to address any such identified vulnerabilities. For example, if such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our programs and the development of our product candidates could be delayed. In addition, the loss of clinical trial data for our product candidates could result in delays in our marketing approval efforts and significantly increase our costs to recover or reproduce the data.

Applicable data privacy and security obligations may require us to notify relevant stakeholders of security incidents. Such disclosures are costly, and the disclosures or the failure to comply with such requirements could lead to adverse consequences. If we (or a third party upon whom we rely) experience a security incident or are perceived to have experienced a security incident, we may experience adverse consequences. These consequences may include: government enforcement actions (for example, investigations, fines, penalties, audits, and inspections); additional reporting requirements and/or oversight; restrictions on processing sensitive information (including personal data); litigation (including class claims); indemnification obligations; negative publicity; reputational harm; monetary fund diversions; interruptions in our operations (including availability of data); financial loss; and other similar harms. Security incidents and attendant consequences may cause customers to stop using our products, deter new customers from using our products, and negatively impact our ability to grow and operate our business.

Additionally, our contracts may not contain limitations of liability, and even where they do, there can be no assurance that limitations of liability in our contracts are sufficient to protect us from liabilities, damages, or claims related to our data privacy and security obligations. We cannot be sure that our insurance coverage will be adequate or sufficient to protect us from or to mitigate liabilities arising out of our privacy and security practices, that such coverage will continue to be available on commercially reasonable terms or at all, or that such coverage will pay future claims.limited.

We orhave incurred substantial losses during our history. Unused federal net operating losses (“NOLs”) for the ~~third parties upon whom we depend~~tax years beginning before January 1, 2018, will carry forward to offset future taxable income, if any, until such unused losses expire. Unused federal NOLs generated in tax years beginning after December 31, 2017, will not expire and may be ~~adversely affected~~carried forward indefinitely, but the deductibility of such federal NOL carryforwards in taxable years beginning after December 31, 2020, is limited to 80% of taxable income. In addition, both current and future unused losses and other tax attributes may be subject to limitation under Sections 382 and 383 of the Code if we undergo an “ownership change,” generally defined as a greater than 50 percentage point change (by value) in our equity ownership by ~~earthquakes, fires or other natural disasters and our business continuity and disaster recovery plans may not adequately protect us from~~certain stockholders over a ~~serious disaster.~~

~~Our headquarters and main research facility are located~~three-year period. The Merger resulted in Seattle, Washington, which in the past has experienced severe earthquakes and fires. If these earthquakes, fires, other natural disasters, terrorism and similar unforeseen events beyond our control prevented us from using all or a significant portionan ownership change of our ~~headquarters or research facility, it~~company. The NOL carryforwards of pre-Merger, privately-held ARS Pharmaceuticals, Inc. (“ARS Pharma”) may also be ~~difficult or, in certain cases, impossible for us~~subject to ~~continue our business for a substantial period of time. We do not have a disaster recovery or business continuity plan in place and may incur substantial expenses~~limitation as a result of prior shifts in equity ownership and/or the ~~absence~~Merger. Additional ownership changes in the future could result in additional limitations on our NOL carryforwards. Similar provisions of state tax law may also apply to limit our use of accumulated state tax attributes. In addition, at the state level, there may be periods during which the use of NOLs is suspended or otherwise limited, ~~nature~~which could accelerate or permanently increase state taxes owed. Consequently, even if we achieve profitability, we may not be able to utilize a material portion of our ~~internal or third-party service provider disaster recovery~~NOL carryforwards and ~~business continuity plans,~~other tax attributes, which ~~particularly when taken together with our lack of earthquake insurance,~~ could have a material adverse effect on our business. Furthermore, integral parties in our supply chain are operating from single sites, increasing their vulnerability to natural disasters or other sudden, unforeseen and severe adverse events. If such an event were toadversely affect our ~~supply chain, it could have a material adverse effect on our ability to conduct our preclinical studies and future clinical trials, our development plans and business.~~business, cash flow, financial condition or results of operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Use of Proceeds

On December 3, 2020, we commenced our initial public offering ~~(IPO)~~(“IPO”) pursuant to a registration statement on Form S-1 (File No. 333-250009) that was declared effective by the SEC on December 3, 2020, for 11,500,000 shares of our common stock for sale to the public at a price of $21.00 per share. In addition, in December 2020, the underwriters exercised their over-allotment option to purchase 1,725,000 additional shares of our common stock in the initial public offering at the public offering price of $21.00 per share, such that the aggregate offering price of ~~our initial public offering~~the IPO was $277.7 million. The net offering proceeds to us, after deducting underwriting discounts and commissions and offering costs, were $255.3 million. No offering expenses were paid directly or indirectly to any of our directors or officers (or their associates) or persons owning 10% or more of any class of our equity securities or to any other affiliates. The underwriters for our initial public offering were Goldman Sachs & Co. LLC, SVB Leerink LLC, Stifel, Nicolaus & Company, Incorporated, and H.C. Wainwright & Co., LLC.

On November 8, 2022, Silverback completed its reverse merger with Private ARS Pharma. On November 9, 2022, the combined company changed its name to ARS Pharmaceuticals, Inc.

The net proceeds from ~~our~~the IPO are held in cash and cash equivalents, primarily in treasury money market accounts, and investments, primarily in U.S. Treasury securities. Through March 31, ~~2022, we have used~~2023, approximately ~~$59.0~~$109.3 million of the net proceeds from ~~our IPO.~~ the IPO have been used, of which, (i) an estimated $51.7 million was used toward development of Silverback’s product candidates, (ii) $0.8 million was used to repay outstanding indebtedness, (iii) $16.0 million was used for transaction costs related to the Merger, including $7.0 million in severance and change in control benefit payments made to Silverback’s former officers, (iv) an estimated $9.7 million was used for the development and pre-commercial launch activities related to neffy, and (v) an estimated $31.0 million was used for working capital and general corporate purposes.

There ~~has~~have been no ~~material change in~~updates to the planned use of proceeds information from ~~our initial public offering~~the IPO as described in our final prospectus filed with the SEC pursuant to Rule 424(b)(4) on December 4, 2020, ~~and updated~~except as otherwise disclosed in our Annual Report on Form 10-K, filed with the SEC on March 31, 2022, and our Quarterly Report on Form 10-Q, filed with the SEC on August 11, 2022. We continue to intend to use the remaining net proceeds from the IPO, together with our existing cash and cash equivalents, to fund the development and, if approved, commercialization of neffy for the emergency treatment of Type I allergic reactions and other indications, as well as for working capital and other general corporate purposes. We may also use a portion of the net proceeds from the IPO to license, acquire or invest in complementary businesses, technologies, products or assets. However, we have no current commitments or obligations to do so.

Item 3. Defaults Upon Senior Securities

~~Not applicable.~~None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

~~Not applicable.~~None.

8088

Item 6. Exhibits


Exhibit Number		Description

3.1		Amended and Restated Certificate of Incorporation, as amended (incorporated by reference to Exhibit 3.1 to the registrant’s ~~Current~~Annual Report on Form ~~8-K,~~10-K, filed with the SEC on ~~December 8, 2020)~~March 23, 2023).
3.2
~~3.2~~	Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the registrant’s Current Report on Form 8-K, filed with the SEC on December 8, 2020).

4.1		Reference is made to Exhibit 3.1 and 3.2.

4.2	Form of Common Stock Certificate of the registrant (incorporated by reference to Exhibit 4.1 to the registrant’s Registration Statement on Form S-1 (File No. 333-250009), as amended, filed with the SEC on November 30, 2020).

~~4.3~~	Amended and Restated Investors’ Rights Agreement, by and between the registrant and certain of its stockholders, dated September 22, 2020 (incorporated by reference to Exhibit 4.2 to the registrant’s Registration Statement on Form S-1 (File No. 333-250009), as amended, filed with the SEC on November 10, 2020).

~~4.4~~4.3		Warrant to purchase stock issued to Silicon Valley Bank, dated ~~November 21, 2016~~as of September 30, 2019, as amended on December 7, 2020 (incorporated by reference to Exhibit ~~4.3~~4.1 to the ~~registrant’s Registration Statement~~registrant's Current Report on Form ~~S-1 (File No. 333-250009), as amended,~~8-K, filed with the SEC on November ~~10, 2020)~~8, 2022).
10.1*‡
~~4.5~~	~~Warrant to purchase stock issued to Silicon Valley Bank,~~Termination Agreement, dated ~~December~~as of February 22, ~~2017~~2023, by and between ARS Pharmaceuticals, Inc. and Recordati Ireland, Ltd. (incorporated by reference to Exhibit ~~4.4~~10.10 to the registrant’s ~~Registration Statement~~Annual Report on Form ~~S-1~~10-K (File No. ~~333-250009)~~001-39756), ~~as amended,~~ filed with the SEC on ~~November 10, 2020)~~March 23, 2023).

~~10.1+~~	~~Non-Employee Director Compensation Policy, as amended.~~

31.1		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
~~31.2~~	Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1#		Certification of Principal Executive and Financial Officers Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		Inline XBRL Instance Document ~~– the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.~~
101.SCH
~~101.SCH~~	Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File ~~(formatted in~~(embedded within the Inline XBRL ~~and included in Exhibit 101)~~document)

~~+ Indicates management contract~~* Certain information in this exhibit is omitted because it is both not material and is the type that the registrant treats as private or ~~compensatory plan.~~confidential.

‡ Schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant undertakes to furnish supplemental copies of any of the omitted schedules upon request by the SEC.

# The information in Exhibit 32.1 shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act or the Exchange Act (including this Quarterly Report on Form 10-Q), unless the Registrant specifically incorporates the foregoing information into those documents by reference.

8189

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	ARS PHARMACEUTICALS, INC.

	~~SILVERBACK THERAPEUTICS, INC.~~

Date: May ~~12, 2022~~15, 2023	By:	/s/ ~~Laura Shawver, Ph.D.~~Richard Lowenthal

		~~Laura Shawver, Ph.D.~~Richard Lowenthal, M.S., MBA

		President and Chief Executive Officer ~~and Director (Principal Executive Officer~~)
		(Principal Executive Officer)


Date: May ~~12, 2022~~15, 2023	By:	/s/ ~~Jonathan Piazza~~Kathleen D. Scott

		~~Jonathan Piazza~~Kathleen D. Scott

		Chief Financial Officer
		(Principal Financial ~~Officer~~)and Accounting Officer)

8290



Delaware	81-1489190
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

~~500 Fairview Ave N~~11682 El Camino Real, Suite ~~600~~120 ~~Seattle~~San Diego, ~~Washington~~California	~~98109~~92130
(Address of principal executive offices)	(Zip Code)



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	~~SBTX~~SPRY	The Nasdaq Stock Market LLC



		Page
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements ~~(Unaudited)~~	5
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Operations and Comprehensive Loss	6
	Condensed ~~Balance Sheets~~	6
	~~Condensed~~Consolidated Statements of ~~Operations~~Convertible Preferred Stock and ~~Comprehensive Loss~~Stockholders’ Equity (Deficit)	7
	Condensed Consolidated Statements of ~~Stockholders’ Equity~~Cash Flows	8
	~~Condensed Statements of Cash Flows~~	9
	Notes to Unaudited Condensed Consolidated Financial Statements	109
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2125
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2733
Item 4.	Controls and Procedures	2833

PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	2934
Item 1A.	Risk Factors	2934
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	7987
Item 3.	Defaults Upon Senior Securities	8087
Item 4.	Mine Safety Disclosures	8087
Item 5.	Other Information	8088
Item 6.	Exhibits	8189


	March 31, 2023			December 31, 2022
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	87,862		$	210,518
Short-term investments		176,687			63,863
Prepaid expenses and other current assets		2,801			3,319
Total current assets		267,350			277,700
Right-of-use asset		398			445
Fixed assets, net		584			329
Other assets		2,860			2,961
Total assets	$	271,192		$	281,435
Liabilities, convertible preferred stock and stockholders’ equity
Current liabilities:
Accounts payable and accrued liabilities (including related party amounts of $307 and $16, respectively)	$	9,596		$	4,931
Lease liability, current		232			230
Contract liability, current		10			283
Total current liabilities		9,838			5,444
Lease liability, net of current portion		199			251
Contract liability, net of current portion		—			2,854
Total liabilities		10,037			8,549
Commitments and contingencies (Note 7)
Stockholders’ equity
Preferred stock, $0.0001 par value per share; 10,000,000 shares authorized at March 31, 2023 and December 31, 2022; no shares issued and outstanding at March 31, 2023 and December 31, 2022		—			—
Common stock, $0.0001 par value per share; 200,000,000 shares authorized at March 31, 2023 and December 31, 2022; 94,448,028 and 93,943,316 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively		9			9
Additional paid-in capital		352,977			349,408
Accumulated other comprehensive gain		68			407
Accumulated deficit		(91,899	)		(76,938	)
Total stockholders’ equity		261,155			272,886
Total liabilities, convertible preferred stock and stockholders’ equity	$	271,192		$	281,435


	March 31,			December 31,
	2022			2021
Assets
Current assets:
Cash and cash equivalents	$	233,989		$	254,045
Short-term investments		19,858			0
Prepaid expenses and other current assets		7,485			7,447
Total current assets		261,332			261,492
Long-term investments		43,973			64,780
Restricted cash		250			250
Right-of-use asset		4,484			4,733
Property and equipment, net		2,430			2,212
Total assets	$	312,469		$	333,467
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	2,631		$	2,078
Accrued expenses		11,054			11,727
Current portion of lease liability		1,123			1,087
Total current liabilities		14,808			14,892
Lease liability, net of current portion		4,431			4,760
Total liabilities		19,239			19,652
Commitments and contingencies (Note 10)
Stockholders’ equity:
Preferred Stock, $0.0001 par value per share; 10,000,000 shares authorized at March 31, 2022 and December 31, 2021; 0 shares issued and outstanding at March 31, 2022 and December 31, 2021		0			0
Common stock, $0.0001 par value per share; 200,000,000 shares authorized at March 31, 2022 and December 31, 2021, 35,145,281 and 35,133,934 shares issued and 35,123,330 and 35,107,651 shares outstanding at March 31, 2022 and December 31, 2021, respectively		4			4
Additional paid-in capital		505,317			500,349
Accumulated other comprehensive loss		(1,248	)		(326	)
Accumulated deficit		(210,843	)		(186,212	)
Total stockholders’ equity		293,230			313,815
Total liabilities and stockholders’ equity	$	312,469		$	333,467


Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

Emerging growth company	☒


	•		any statements regarding future economic conditions or performance;


	•		research and development plans, including planned clinical trials, for neffy, including for additional indications;


	•		our plans to submit a supplemental New Drug Application (“NDA”) to the U.S. Food and Drug Administration (“FDA”) and a post approval variation to the European Medicines Agency (“EMA”) for 1.0 mg neffy and the timing thereof;


	•		our expectations regarding the timing for FDA review of our NDA for neffy, including the anticipated Prescription Drug User Fee Act (“PDUFA”) target action date;


	•		our plans to submit regulatory filings for neffy in Japan and China in collaboration with our partners and the timing thereof;


	•		the expected timing for regulatory review decisions for neffy;


	•		the timing of the commercial launch of neffy, if approved;


	•		the commercial potential of and commercialization strategy for neffy;


	•		the size of the markets for neffy and any other product candidates, the projected growth thereof, and our ability to capture and grow those markets;


	•		the rate and degree of market acceptance of neffy and any other product candidates;


	•		our expectations regarding our ability to achieve gross profit margins similar to small molecule drugs;


	•		our potential to become the standard in treatment and transform the treatment of allergic reactions;


	•		legislative and regulatory developments in the United States and foreign countries;


	•		estimates regarding anticipated operating losses, capital requirements and needs for additional funds;


	•		our ability to obtain, maintain and successfully enforce adequate patent and other intellectual property protection for neffy or any future product candidate; and


	•		statements of belief and any statement of assumptions underlying any of the foregoing.


	•		We are a clinical-stage biopharmaceutical company and have incurred significant losses since our inception. We anticipate that we will continue to incur significant losses for the foreseeable future. We have never generated revenue from product sales and may never be profitable.


	•		We currently have limited marketing, sales or distribution infrastructure. If we are unable to fully develop our sales, marketing and distribution capability on our own or through collaborations with marketing partners, we may not be successful in commercializing our product candidates.


	•		Even if neffy or any future product candidate of ours receives regulatory approval, it may fail to achieve the degree of market acceptance by allergists, pediatricians and other physicians, patients, caregivers, third-party payors and others in the medical community necessary for commercial success, in which case we may not generate significant revenues or become profitable.


	•		Our commercial success depends on our ability to obtain and maintain sufficient intellectual property protection for our product candidates and other proprietary technologies.


	Three Months Ended March 31,						Three Months Ended March 31,
	2022			2021			2023			2022
Revenue under collaboration agreements							$	20		$	663

Operating expenses:
Research and development	$	16,897		$	12,239
General and administrative		7,801			6,646
Research and development (including related party amounts of $591 and $540, respectively)								6,552			5,423
General and administrative (including related party amounts of $337 and $165, respectively)								12,181			2,339
Total operating expenses		24,698			18,885			18,733			7,762
Loss from operations		(24,698	)		(18,885	)		(18,713	)		(7,099	)
Interest income, net		67			18
Other income (expense), net								3,752			(151	)
Net loss	$	(24,631	)	$	(18,867	)	$	(14,961	)	$	(7,250	)
Unrealized loss on available-for-sale securities		(922	)		0
Change in unrealized gain on available-for-sale securities								(339	)		—
Comprehensive loss	$	(25,553	)	$	(18,867	)	$	(15,300	)	$	(7,250	)
Net loss per share, basic and diluted	$	(0.70	)	$	(0.54	)	$	(0.16	)	$	(0.24	)
Weighted-average shares used in computing net loss per share, basic and diluted		35,114,131			34,773,950
Weighted-average shares outstanding used in computing net loss per share, basic and diluted								94,227,313			30,369,413


	Common Stock
	Shares		Amount		Additional Paid-in Capital		Accumulated Other Comprehensive Gain			Accumulated Deficit			Total Stockholders’ Equity
Balance at December 31, 2022		93,943,316	$	9	$	349,408	$	407		$	(76,938	)	$	272,886
Exercise of common stock options		502,687		—		1,319		—			—			1,319
Restricted stock units released		2,025		—		—		—			—			—
Stock-based compensation		—		—		2,250		—			—			2,250
Net loss and comprehensive loss		—		—		—		(339	)		(14,961	)		(15,300	)
Balance at March 31, 2023		94,448,028	$	9	$	352,977	$	68		$	(91,899	)	$	261,155


	Common Stock						Accumulated
	Shares		Amount		Additional Paid-in Capital		Other Comprehensive Loss			Accumulated Deficit			Total Stockholders’ Equity
Balance as of January 1, 2022		35,107,651	$	4	$	500,349	$	(326	)	$	(186,212	)	$	313,815
Exercise of common stock options and vesting of early exercised common stock options		15,679		—		19		—			—			19
Stock-based compensation		—		—		4,949		—			—			4,949
Other comprehensive loss		—		—		—		(922	)		—			(922	)
Net loss		—		—		—		—			(24,631	)		(24,631	)
Balance as of March 31, 2022		35,123,330	$	4	$	505,317	$	(1,248	)	$	(210,843	)	$	293,230


	Series A Convertible Preferred Stock				Series B Convertible Preferred Stock				Series C Convertible Preferred Stock				Series D Convertible Preferred Stock				Common Stock				Additional Paid-in		Accumulated			Total Stockholders’ Equity
	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			(Deficit)
Balance at December 31, 2021		4,764,000	$	365		606,060	$	1,000		7,692,309	$	19,868		9,337,066	$	54,806		30,369,413	$	3	$	10,984	$	(42,256	)	$	(31,269	)
Stock-based compensation		—		—		—		—		—		—		—		—		—		—		264		—			264
Net loss and comprehensive loss		—		—		—		—		—		—		—		—		—		—		—		(7,250	)		(7,250	)
Balance at March 31, 2022		4,764,000	$	365		606,060	$	1,000		7,692,309	$	19,868		9,337,066	$	54,806		30,369,413	$	3	$	11,248	$	(49,506	)	$	(38,255	)


	For the Three Months Ended March 31,
	2022			2021
Cash flows from operating activities:
Net loss	$	(24,631	)	$	(18,867	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense		207			187
Stock-based compensation		4,949			4,285
Non-cash lease expense		249			280
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(38	)		(54	)
Accounts payable and accrued expenses		(186	)		2,208
Lease liability		(293	)		(240	)
Net cash used in operating activities		(19,743	)		(12,201	)
Cash flows from investing activities:
Purchase of property and equipment		(332	)		(35	)
Net cash used in investing activities		(332	)		(35	)
Cash flows from financing activities:
Principal payments on term loan payable		0			(350	)
Proceeds from exercise of common stock options and employee stock purchase plan		19			222
Net cash provided by financing activities		19			(128	)
Change in cash, cash equivalents, and restricted cash		(20,056	)		(12,364	)
Cash, cash equivalents, and restricted cash at beginning of period		254,295			386,919
Cash, cash equivalents, and restricted cash at end of period	$	234,239		$	374,555
Supplemental disclosure of cash flow information:
Purchases of property and equipment included in accounts payable and accrued expenses	$	66		$	136


	March 31, 2022		December 31, 2021
Cash and cash equivalents	$	233,989	$	254,045
Restricted cash		250		250
Total cash and cash equivalents and restricted cash	$	234,239	$	254,295


			Level 1- Quoted prices (unadjusted) in active markets for identical assets or liabilities;


			Level 2- Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable; and


~~Level 3: Unobservable inputs that are supported by little or~~ 0 ~~market activity.~~			Level 3- Unobservable inputs in which little or no market activity exists, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in pricing.