89bio (ETNB) 10-Q 2020 Q3 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2020

OR

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

For the transition period from _______________to ____________

Commission File Number: 001-39122

89bio, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware	36-4946844
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
142 Sansome Street, Second Floor San Francisco, California 94104	94104
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (415) 500-4614

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.001 per share	ETNB	Nasdaq Global Market

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 (§232.405 of this chapter) 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, 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.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☒

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  ☒ 

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.     Yes  ☒    No  ☐

As of November 6, 2020, the registrant had 19,878,852 shares of common stock, $0.001 par value per share, outstanding.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss	2
	Condensed Consolidated Statements of Convertible Preferred Stock and Stockholder’s Equity (Deficit)	3
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	21
Item 4.	Controls and Procedures	22
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	23
Item 1A.	Risk Factors	23
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	66
Item 3.	Default Upon Senior Securities	66
Item 4.	Mine Safety Disclosures	66
Item 5.	Other Information	66
Item 6.	Exhibits	67
Signatures		68

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

89bio, Inc.

Condensed Consolidated Balance Sheets

(In thousands)

	September 30,			December 31,
	2020			2019
	(Unaudited)			(Note 2)
Assets
Current assets:
Cash and cash equivalents	$	141,551		$	93,335
Restricted cash		25			25
Short-term investments		77,602			—
Prepaid and other current assets		3,360			1,966
Total current assets		222,538			95,326
Property and equipment, net		177			155
Other assets		713			72
Total assets	$	223,428		$	95,553
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	4,086		$	989
Accrued expenses		5,338			4,620
Total current liabilities		9,424			5,609
Commitments and contingencies (Note 5)
Stockholders’ equity:
Common stock		20			14
Additional paid-in capital		324,501			163,526
Accumulated other comprehensive loss		(3	)		—
Accumulated deficit		(110,514	)		(73,596	)
Total stockholders’ equity		214,004			89,944
Total liabilities and stockholders’ equity	$	223,428		$	95,553

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

1

89bio, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(In thousands, except share and per share amounts)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2020			2019			2020			2019
Operating expenses:
Research and development	$	11,208		$	6,680		$	27,429		$	14,154
General and administrative		3,225			1,518			9,379			2,875
Total operating expenses		14,433			8,198			36,808			17,029
Loss from operations		14,433			8,198			36,808			17,029
Other expenses, net		146			10,470			87			21,022
Net loss before tax		14,579			18,668			36,895			38,051
Income tax expense		24			57			23			86
Net loss	$	14,603		$	18,725		$	36,918		$	38,137
Other comprehensive (income) loss:
Unrealized gain on available-for-sale securities		(7	)		—			(7	)		—
Foreign currency translation adjustments		10			—			10			—
Total other comprehensive loss	$	3		$	—		$	3		$	—
Comprehensive loss	$	14,606		$	18,725		$	36,921		$	38,137
Net loss per share, basic and diluted	$	(0.86	)	$	(30.63	)	$	(2.49	)	$	(62.39	)
Weighted-average shares used to compute net loss per share, basic    and diluted		16,884,244			611,226			14,809,131			611,226

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

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89bio, Inc.

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity

For the Three and Nine Months Ended September 30, 2020

(Unaudited)

(In thousands, except share amounts)

											Accumulated
									Additional		Other						Total
	Convertible Preferred Stock				Common Stock				Paid-in		Comprehensive			Accumulated			Stockholders’
	Shares		Amount		Shares		Amount		Capital		Loss			Deficit			Equity
Balance as of December 31, 2019		—	$	—		13,788,982	$	14	$	163,526	$	—		$	(73,596	)	$	89,944
Issuance of common stock upon exercise of stock options		—		—		4,876		—		9		—			—			9
Share-based compensation		—		—		—		—		493		—			—			493
Net loss		—		—		—		—		—		—			(10,544	)		(10,544	)
Balance as of March 31, 2020		—		—		13,793,858		14		164,028		—			(84,140	)		79,902
Issuance of common stock upon exercise of stock options		—		—		6,919		—		21		—			—			21
Issuance of common stock upon ESPP purchase		—		—		4,427		—		75		—			—			75
Issuance of common stock warrant in connection with term     loan facility		—		—		—		—		634		—			—			634
Share-based compensation		—		—		—		—		910		—			—			910
Net loss		—		—		—		—		—		—			(11,771	)		(11,771	)
Balance as of June 30, 2020		—		—		13,805,204		14		165,668		—			(95,911	)		69,771
Issuance of common stock upon public offerings,     net of issuance costs of $1,208		—		—		6,072,040		6		157,674		—			—			157,680
Issuance of common stock upon exercise of stock options		—		—		1,608		—		5		—			—			5
Share-based compensation		—		—		—		—		1,154		—			—			1,154
Net loss		—		—		—		—		—		—			(14,603	)		(14,603	)
Other comprehensive loss		—		—		—		—		—		(3	)		—			(3	)
Balance as of September 30, 2020		—	$	—		19,878,852	$	20	$	324,501	$	(3	)	$	(110,514	)	$	214,004

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

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89bio, Inc.

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Deficit

For the Three and Nine Months Ended September 30, 2019

(Unaudited)

(In thousands, except share amounts)

											Accumulated
									Additional		Other					Total
	Convertible Preferred Stock				Common Stock				Paid-in		Comprehensive		Accumulated			Stockholders’
	Shares		Amount		Shares		Amount		Capital		Loss		Deficit			Deficit
Balance as of December 31, 2018		24,000,000	$	23,073		611,226	$	1	$	118	$	—	$	(16,176	)	$	(16,057	)
Share-based compensation		—		—		—		—		35		—		—			35
Net loss		—		—		—		—		—		—		(4,439	)		(4,439	)
Balance as of March 31, 2019		24,000,000		23,073		611,226		1		153		—		(20,615	)		(20,461	)
Issuance of convertible preferred stock, net of issuance    cost of $0 and the partial settlement of the convertible    preferred stock liability of $6,269		18,826,389		25,095		—		—		—		—		—			—
Share-based compensation		—		—		—		—		76		—		—			76
Net loss		—		—		—		—		—		—		(14,973	)		(14,973	)
Balance as of June 30, 2019		42,826,389		48,168		611,226		1		229		—		(35,588	)		(35,358	)
Issuance of convertible preferred stock, net of issuance    costs of $0 and the partial settlement of the convertible    preferred stock liability of $404		1,173,611		1,578		—		—		—		—		—			—
Share-based compensation		—		—		—		—		112		—		—			112
Net loss		—		—		—		—		—		—		(18,725	)		(18,725	)
Balance as of September 30, 2019		44,000,000	$	49,746		611,226	$	1	$	341	$	—	$	(54,313	)	$	(53,971	)

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

4

89bio, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

	Nine Months Ended
	September 30,
	2020			2019
Cash flows from operating activities:
Net loss	$	(36,918	)	$	(38,137	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		47			12
Share-based compensation		2,557			223
Deferred tax assets		—			(69	)
Revaluation of convertible preferred stock liability		—			21,018
Amortization of premium on available-for-sale securities		85			—
Amortization of debt issuance costs		154			—
Changes in operating assets and liabilities:
Prepaid and other current assets		(1,404	)		(314	)
Accounts payable		2,804			1,610
Accrued expenses		459			1,329
Net cash used in operating activities		(32,216	)		(14,328	)
Cash flows from investing activities:
Purchases of available-for-sale securities		(78,705	)		—
Proceeds from maturities of available-for-sale securities		1,025			—
Purchases of property and equipment		(124	)		(28	)
Net cash used in investing activities		(77,804	)		(28	)
Cash flows from financing activities:
Proceeds from issuance of common stock upon public offering, net of issuance costs		158,287			—
Proceeds from issuance of convertible preferred stock and convertible preferred stock liability,     net of issuance cost		—			20,000
Proceeds from issuance of common stock upon stock option exercises		35			—
Proceeds from issuance of common stock upon ESPP purchase		75			—
Proceeds from issuance of common stock		—			11
Payment of debt issuance costs		(161	)		—
Payment of deferred offering costs		—			(686	)
Net cash provided by financing activities		158,236			19,325
Net increase in cash and cash equivalents, and restricted cash		48,216			4,969
Cash and cash equivalents, and restricted cash at beginning of period		93,360			11,257
Cash and cash equivalents, and restricted cash at end of period	$	141,576		$	16,226
Components of cash and cash equivalents, and restricted cash:
Cash and cash equivalents	$	141,551		$	16,188
Restricted cash		25			38
Total cash and cash equivalents, and restricted cash	$	141,576		$	16,226
Supplemental cash flow disclosures:
Issuance of common stock warrant in connection with term loan facility	$	634		$	—
Deferred offering costs included in accounts payable and accrued expenses	$	607		$	942
Cash paid for taxes	$	135		$	—

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

5

89bio, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

1. Organization and Basis of Presentation

Description of Business

89bio, Inc. (“89bio” or the “Company”) is a clinical-stage biopharmaceutical company focused on the development and commercialization of innovative therapies for the treatment of liver and cardio-metabolic diseases. The Company’s lead product candidate, BIO89-100, a specifically engineered glycoPEGylated analog of fibroblast growth factor 21, is currently being developed for the treatment of nonalcoholic steatohepatitis and for the treatment of severe hypertriglyceridemia.

89bio, Inc. was formed as a Delaware corporation on June 28, 2019, for the purpose of completing an initial public offering (“IPO”) and related transactions in order to carry on the business of 89Bio Ltd., which was incorporated in Israel in January 2018.

The Company completed an internal reorganization transaction in September 2019, pursuant to which 89Bio Ltd. became a wholly owned subsidiary of 89bio, Inc. (the “Reorganization”). As part of the Reorganization, all of the equity holders of 89Bio Ltd. exchanged 100% of the equity of 89Bio Ltd. for 100% of the equity of 89bio, Inc. The Reorganization was considered a transaction between entities under common control.

Initial Public Offering

On November 13, 2019, 89bio, Inc. completed its IPO, pursuant to which it issued and sold an aggregate of 6,100,390 shares of common stock (inclusive of 795,703 shares pursuant to the underwriters’ option to purchase additional shares) at the IPO price of $16.00 per share, resulting in net proceeds of $87.7 million after deducting underwriting discounts and commissions of $6.8 million and other offering expenses of $3.1 million. Upon the closing of the IPO, the Company’s outstanding convertible preferred stock automatically converted into 7,077,366 shares of common stock of 89bio, Inc. based on a proportional adjustment to the conversion ratio of the convertible preferred stock on a 1-for-6.217 basis.

Liquidity

The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. To date, the Company has not generated revenues from its activities and has incurred substantial operating losses. Management expects the Company to continue to generate substantial operating losses for the foreseeable future until it completes development of its products and seeks regulatory approvals to market such products. The Company had cash, cash equivalents and short-term investments of $219.2 million as of September 30, 2020.

In July 2020, the Company completed an underwritten public offering of 3,047,040 shares of its common stock, including 397,440 shares sold pursuant to the underwriters’ exercise of their option to purchase additional shares, at the public offering price of $27.50. The Company raised a total of $83.8 million in gross proceeds from the offering, or approximately $78.2 million in net proceeds after deducting underwriting discounts and commissions of $5.0 million and offering costs of approximately $0.6 million.

In September 2020, the Company completed an underwritten public offering of 3,025,000 shares of its common stock, at a public offering price of $28.00 per share. The Company raised a total of $84.7 million in gross proceeds from the offering, or approximately $79.5 million in net proceeds after deducting underwriting discounts and commissions of $4.6 million and offering costs of approximately $0.6 million.

The Company expects that its cash, cash equivalents and short-term investments as of September 30, 2020, together with proceeds available from the Company’s term loan (see Note 6), will be sufficient to fund operating expenses and capital expenditure requirements for a period of at least one year from the date these unaudited condensed consolidated financial statements are filed with the Securities and Exchange Commission (“SEC”).

2. Summary of Significant Accounting Policies

Unaudited Condensed Consolidated Financial Statements

The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) and applicable rules and regulations of the SEC regarding interim financial reporting.

6

The accompanying interim condensed consolidated financial statements are unaudited. The interim unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements as of and for the year ended December 31, 2019 and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s consolidated financial position, results of operations and comprehensive loss, and cash flows. The results of operations for the three and nine months ended September 30, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020 or for any other future annual or interim period. The condensed consolidated balance sheet as of December 31, 2019 was derived from the audited financial statements as of that date. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2019, which was filed with the SEC on March 18, 2020.

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of expenses during the reporting period. Significant estimates and assumptions made in the accompanying condensed consolidated financial statements include but are not limited to the fair value of stock options, the convertible preferred stock liability and certain accruals. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could differ from those estimates.

Investments

Investments have been classified as available-for-sale and are carried at estimated fair value as determined based upon quoted market prices or pricing models for similar securities. Management determines the appropriate classification of its investments in debt securities at the time of purchase. Generally, investments with original maturities beyond three months at the date of purchase are classified as short-term because it is management’s intent to use the investments to fund current operations or to make them available for current operations.  

Unrealized gains and losses are excluded from earnings and are reported as a component of comprehensive loss. The Company periodically evaluates whether declines in fair values of its available-for-sale securities below their book value are other-than-temporary. This evaluation consists of several qualitative and quantitative factors regarding the severity and duration of the unrealized loss as well as the Company’s ability and intent to hold the available-for-sale security until a forecasted recovery occurs. Additionally, the Company assesses whether it has plans to sell the security or it is more likely than not it will be required to sell any available-for-sale securities before recovery of its amortized cost basis. Realized gains and losses and declines in fair value judged to be other than temporary, if any, on available-for-sale securities are included in other expenses, net. The cost of investments sold is based on the specific-identification method. There were no realized gains or losses on investments for the periods presented. Interest on available-for-sale securities is included in other expenses, net and was not material for all periods presented.

Fair Value Measurements

Financial assets and liabilities are recorded at fair value on a recurring basis in the balance sheets. The carrying values of the Company’s financial assets and liabilities, including cash and cash equivalents, restricted cash, prepaid and other current assets, accounts payable, and accrued expenses approximate their fair values due to the short-term maturity of these instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. Assets and liabilities recorded at fair value are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels are directly related to the amount of subjectivity with the inputs to the valuation of these assets or liabilities as follows:

Level 1—Observable inputs such as unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;

Level 2—Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable inputs for similar assets or liabilities. These include quoted prices for identical or similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active;

7

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with original maturities of three months or less from the purchase date to be cash equivalents. Cash equivalents consist primarily of amounts invested in money market funds and commercial paper that are stated at fair value.

Convertible Preferred Stock Liability

The freestanding instruments related to the commitment by the Series A convertible preferred stockholders to purchase and by the Company to sell its Series A convertible preferred stock in subsequent closings, contingent upon the achievement of certain developmental milestones and approval by the board of directors, at a fixed price per stock, were considered a liability (or an asset), measured at fair value as the shares underlying the rights contained liquidation preferences upon certain “deemed liquidation events” that were not solely within the Company’s control and which were considered in-substance contingent redemption features. The instruments were subject to revaluation at each balance sheet date until settlement or extinguishment, with revaluations recognized as either a component of other expenses, net in the condensed consolidated statements of operations and comprehensive loss, or additional paid-in capital in the condensed consolidated balance sheets. Upon the completion of the Company’s IPO, the remaining shares of convertible preferred stock that were previously issuable under a subsequent closing were no longer issuable. Accordingly, the preferred stock liability was extinguished and because the transaction occurred between related parties, the resulting $25.6 million was accounted for as a capital contribution by the preferred stockholders.

Risk and Uncertainties

Due to the ongoing COVID-19 pandemic, the Company may experience disruptions that could negatively impact the Company’s growth, employee productivity and its ability to recruit and onboard new employees. The pandemic has disrupted and may continue to disrupt the Company’s business and delay its preclinical and clinical programs and timelines. The extent to which the COVID-19 pandemic may impact the Company’s future operating results and financial condition is uncertain.

Comprehensive Loss

The Company’s comprehensive loss is comprised of changes in unrealized gains (losses) on available-for-sale securities and foreign currency transaction adjustments.

Recently Adopted Accounting Pronouncement

In August 2018, the FASB issued ASU No. 2018-13, Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement, which amends ASC 820, Fair Value Measurement. This ASU modifies the disclosure requirements for fair value measurements by removing, modifying, or adding certain disclosures. The Company adopted this standard effective from January 1, 2020, with the removed and modified disclosures adopted on a retrospective basis and the new disclosures adopted on a prospective basis. The standard did not have a material impact on the Company’s consolidated financial statements and related disclosures.

Recent Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02—Leases (“ASU 2016-02”), requiring the recognition of lease assets and liabilities on the balance sheet. The standard: (a) clarifies the definition of a lease; (b) requires a dual approach to lease classification similar to current lease classifications; and (c) causes lessees to recognize leases on the balance sheet as a lease liability with a corresponding right-of-use asset for leases with a lease-term of more than twelve months. The standard is effective for public entities for fiscal years beginning after December 15, 2018 and for nonpublic entities for fiscal years beginning after December 15, 2021. As an emerging growth company, ASU 2016-02 is effective for the Company for the year ending December 31, 2022 and interim periods within the year ending December 31, 2023. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

8

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify the accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. The new standard is effective for public entities for fiscal years beginning after December 15, 2020 and for nonpublic entities for fiscal years beginning after December 15, 2021. As an emerging growth company, ASU 2019-12 is effective for the Company for the year ending December 31, 2022 and interim periods within the year ending December 31, 2023. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

3. Fair Value Measurements

The following table presents the Company’s financial assets measured at fair value on a recurring basis by level within the fair value hierarchy as of September 30, 2020 (in thousands):

		September 30, 2020
	Valuation	Amortized		Unrealized		Unrealized
	Hierarchy	Cost		Gains		Losses			Fair Value
Money market funds	Level 1	$	32,445	$	—	$	—		$	32,445
Commercial paper	Level 2		45,034		1		(1	)		45,034
Agency bonds	Level 2		28,751		12		(3	)		28,760
U.S. government bonds	Level 2		7,135		1		—			7,136
Corporate debt securities	Level 2		5,822		—		(3	)		5,819
U.S. treasury bills	Level 2		2,150		—		—			2,150
Agency discount securities	Level 2		460		—		—			460
Municipal bonds	Level 2		177		—		—			177
Total cash equivalents and available-for-sale securities		$	121,974	$	14	$	(7	)	$	121,981
Classified as:
Cash equivalents									$	44,379
Short-term investments										77,602
Total cash equivalents and available-for-sale securities									$	121,981

The following table summarizes the Company’s available-for-sale securities by contractual maturity as of September 30, 2020 (in thousands):

	September 30, 2020
Within one year	$	103,643
After one year through two years		18,338
Total cash equivalents and available-for-sale securities	$	121,981

The Company did not hold any financial assets as of December 31, 2019.

The Company’s convertible preferred stock liability represented a Level 3 financial liability measured at fair value on a recurring basis prior to its extinguishment in the fourth quarter of 2019. Accordingly, there was no Level 3 financial liability outstanding during the nine months ended and as of September 30, 2020.

For the nine months ended September 30, 2019, changes in the fair value of the Company’s Level 3 financial liability were measured on a recurring basis as follows (in thousands):

	Nine Months Ended
	September 30, 2019
Beginning balance	$	1,671
Revaluation of convertible preferred stock liability recorded in other    expenses, net		21,018
Partial settlement of convertible preferred stock liability in subsequent    closings		(6,673	)
Ending balance	$	16,016

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The Company’s convertible preferred stock liability resulted from the initial sale of Series A convertible preferred stock where the investors committed to purchase additional shares of Series A convertible preferred stock in subsequent closings, contingent upon the achievement by the Company of certain development milestones and approval by the board of directors. The investors’ commitment to purchase and the Company’s commitment to sell shares of Series A convertible preferred stock represented a freestanding instrument accounted for at fair value and revalued at each reporting date. The Company estimated the fair value of this commitment using the Black-Scholes option-pricing model using the following assumptions:

	Nine Months Ended
	September 30, 2019
Stock price	$	0.99 - 1.97
Exercise price	$		1.00
Expected term (years)		0.00 - 2.25
Expected volatility			72.0	%
Risk-free interest rate		0.0 - 2.4		%

4. Consolidated Balance Sheet Components

Accrued Expenses

Accrued expenses consist of the following (in thousands):

	September 30,		December 31,
	2020		2019
Accrued research and development expense	$	2,602	$	2,326
Accrued employee and related expenses		1,679		1,396
Accrued professional and legal fees		769		573
Accrued other		288		325
Total accrued expenses	$	5,338	$	4,620

5. Commitments and Contingencies

Leases

Future minimumleasepaymentsunder the Company’s non-cancellableoperatingleaseobligationsas of September 30, 2020, are as follows(in thousands):

	September 30, 2020
Remainder of 2020	$	64
2021		232
2022		8
Total future minimum annual payments	$	304

Rent expense was $61,000 and $48,000 for the three months ended September 30, 2020 and 2019, respectively. Rent expense was $208,000 and $108,000 for the nine months ended September 30, 2020 and 2019, respectively.

Asset Transfer and License Agreement with Teva Pharmaceutical Industries Ltd

In April 2018, the Company concurrently entered into two Asset Transfer and License Agreements (the “Teva Agreements”) with Teva Pharmaceutical Industries Ltd (“Teva”) under which it acquired certain patents and intellectual property relating to two programs: (1) Teva’s glycoPEGylated FGF21 program, including the compound TEV-47948 (BIO89-100), a glycoPEGylated long-acting FGF21 and (2) Teva’s development program of small molecule inhibitors of Fatty Acid Synthase. Pursuant to the Teva Agreements, the Company paid Teva an initial nonrefundable upfront payment of $6.0 million and the Company could be obligated to pay Teva up to $67.5 million under each program, for a total of $135.0 million, upon the achievement of certain clinical development and commercial milestones. In addition, the Company is obligated to pay Teva tiered royalties at percentages in the low-to-mid single-digits on worldwide net sales on all products containing the Teva compounds.

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The Teva Agreements can be terminated (i) by the Company without cause, after the first anniversary of the effective date, upon 120 days’ written notice to Teva, (ii) by either party, if the other party materially breaches any of its obligations under the Agreements and fails to cure such breach within 60 days after receiving notice thereof, or (iii) by either party, if a bankruptcy petition is filed against the other party and is not dismissed within 60 days. In addition, Teva can also terminate the agreement related to the Company’s glycoPEGylated FGF21 program in the event the Company, or any of its affiliates or sublicensees, challenges any of the Teva patents licensed to the Company, and the challenge is not withdrawn within 30 days of written notice from Teva.

During the three and nine months ended September 30, 2020 and 2019, there were no license payment expenses related to the Teva Agreements.

6. Term Loan

Loan and Security Agreement

On April 7, 2020, the Company and certain of its subsidiaries entered into a Loan and Security Agreement (the “Loan Agreement”) with the lenders referred to therein (the “Lenders”), and Silicon Valley Bank, as collateral agent. The Loan Agreement provides for (i) a secured term A loan facility (the “Term A Loan Facility”) of up to $10.0 million and (ii) a secured term B loan facility (the “Term B Loan Facility”) of up to $5.0 million that is available upon the Company satisfying certain milestones. The Term A Loan Facility matures on November 1, 2022, provided, that if the Term B Loan Facility is funded, the facilities instead mature on September 1, 2023. The loans will bear interest at the greater of (i) 4.50% and (ii) the sum of (a) the Prime Rate as reported in The Wall Street Journal plus (b) 1.25%. As of September 30, 2020, the Company had not drawn any amount under the Loan Agreement.

In connection with the execution of the Loan Agreement, the Company agreed to issue the Lenders warrants to purchase shares of the Company’s common stock. On April 7, 2020, the Company issued Silicon Valley Bank a warrant to purchase 25,000 shares of the Company’s common stock with a warrant exercise price of $22.06 per share that is immediately exercisable. The initial expiration date of April 7, 2030 was changed to June 30, 2025 in connection with the July 2020 offering. The Company determined the fair value of the warrant at the issuance date by using the Black-Scholes option-pricing model with the following assumptions: risk-free interest rate of 0.75%, no dividends, expected volatility of 92.30% and expected term of 10.0 years. Upon issuance, the fair value allocated to the warrant of $0.6 million was recorded as a debt issuance cost and classified within other assets and met the requirements for equity classification within additional paid-in capital on the consolidated condensed balance sheets. An additional warrant to purchase 8,333 shares of the Company’s common stock will be issued in connection with the Term B Loan Facility, if funded, with the exercise price determined on the Company’s stock price at the time of issuance.

Additionally, the Company incurred $0.2 million in closing costs that were recorded as debt issuance costs and classified within other assets on the consolidated condensed balance sheets.

The deferred assets related to the debt issuance cost and warrant are recognized as interest expense over the duration of the Loan Agreement and are recorded within other expenses, net on the condensed consolidated statements of operations and comprehensive loss. As of September 30, 2020, the remaining unamortized debt issuance costs classified within other assets on the consolidated condensed balance sheet is $0.6 million.

7. Stockholders’ Equity

Equity Incentive Plans

In 2018, the Company’s board of directors adopted the 89Bio Ltd. 2018 Equity Incentive Plan (the “2018 Plan”). In connection with the Reorganization, in September 2019, the Company’s board of directors approved the 2019 Equity Incentive Plan (the “2019 Plan”), which became effective on September 17, 2019. From and after the effective date of the 2019 Plan, the Company will no longer be making any future awards under the 2018 Plan.

The Company initially reserved 2,844,193 shares of common stock for issuance under the 2019 Plan. In addition, the number of shares of common stock reserved for issuance under the 2019 Plan will automatically increase on the first day of January for a period of up to ten years, commencing on January 1, 2020, in an amount equal to 4% of the total number of shares of the Company’s capital stock outstanding on the immediately preceding December 31, or a lesser number of shares determined by the Company’s board of directors. As of September 30, 2020, there were 1,506,991 shares of common stock available for issuance as future option grants under the 2019 Plan.

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Employee Stock Purchase Plan (ESPP)

In October 2019, the Company adopted the 2019 Employee Stock Purchase Plan (“ESPP”), which became effective following the date of the IPO. The Company initially reserved 225,188 shares of common stock for purchase under the ESPP. The number of shares of common stock reserved for issuance under the ESPP will automatically increase on the first day of January for a period of up to ten years, in an amount equal to 1% of the total number of shares of the Company’s common stock outstanding on the immediately preceding December 31, or a lesser number of shares determined by the Company’s board of directors. Purchases will be accomplished through the participation of discrete offering periods and each offering is expected to be 6 months long. For each offering period, ESPP participants will purchase shares of common stock at a price per share equal to 85% of the lesser of the fair market value of the Company’s common stock on (1) the first trading day of the applicable offering period or (2) the last trading day of the applicable offering period.

The first six month offering period under the ESPP commenced on January 1, 2020 and ended on June 30, 2020 and the second offering period commenced on July 1, 2020 and is expected to end on December 31, 2020. A total of 4,427 shares of common stock were purchased pursuant to the ESPP during the nine months ended September 30, 2020 for total proceeds of $75,000. As of September 30, 2020, there were 358,651 shares of common stock available for issuance under the ESPP.

The Company recorded share-based compensation for the periods indicated as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Research and development	$	359	$	34	$	848	$	54
General and administrative		795		78		1,709		169
Total share-based compensation	$	1,154	$	112	$	2,557	$	223

The fair value of option awards granted for the periods indicated was estimated at the date of grant using a Black-Scholes option-pricing model with the following assumptions:

	Nine Months Ended
	September 30,
	2020			2019
Stock Options
Expected term (years)	4.00-6.11			5.88-6.11
Expected volatility	86.4-93.7		%	61.8-72.5		%
Risk-free interest rate	0.2-1.5		%	1.6-2.6		%
Expected dividend		—			—

The following table summarizes stock option activity for the nine months ended September 30, 2020:

						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
	Number of			Exercise		Contractual		Intrinsic
	Options			Price		Term		Value
						(In years)		(In thousands)
Balance outstanding as of December 31, 2019		1,320,243		$	3.34		9.23	$	30,353
Granted		609,000			30.29
Exercised		(13,403	)		2.68
Cancelled		(40,482	)		2.87
Balance outstanding as of September 30, 2020		1,875,358			12.08		8.80	$	28,652
Exercisable as of September 30, 2020		492,557		$	2.24		8.32	$	11,537

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Convertible Preferred Stock

In April 2018, the Company entered into the Series A Share Purchase Agreement (the “Series A SPA”), pursuant to which the investors committed to invest an aggregate amount of up to $60.0 million for the issuance of shares of Series A convertible preferred stock at a price of $1.00 per share in subsequent closings. Upon the completion of the Company’s IPO on November 13, 2019, there were 16,000,000 remaining shares of convertible preferred stock that were previously issuable that were no longer issuable. Accordingly, the preferred stock liability was extinguished and because the transaction occurred between related parties, the resulting $25.6 million was accounted for as a capital contribution by the preferred stockholdersAdditionally, immediately prior to the completion of the Company’s IPO, all outstanding shares of convertible preferred stock automatically converted into 7,077,366 shares of common stock and the related carrying value was reclassified to common stock and additional paid-in capital.

8. Net Loss Per Share

Basic net loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding for the period. Since the Company was in a loss position for all periods presented, diluted net loss per share is the same as basic net loss per share for all periods as the inclusion of all potential shares of common stock outstanding would have been anti-dilutive.

The following outstanding potentially dilutive common stock equivalents have been excluded from the calculation of diluted net loss per share for the periods presented due to their anti-dilutive effect:

	Nine Months Ended
	September 30,
	2020		2019
Stock options to purchase common stock		1,260,943		1,251,885
Employee stock purchase plan		2,093		—
Convertible preferred stock, as converted		—		7,077,366
Total		1,263,036		8,329,251

9. Related Party Transactions

The Company and the Series A preferred stockholders amended the Series A SPA on October 25, 2019, and the parties agreed that the Series A SPA would terminate upon consummation of the Company’s IPO. Upon the completion of the Company’s IPO on November 13, 2019, the 16,000,000 shares of convertible preferred stock that were issuable were no longer issuable. Accordingly, the preferred stock liability was extinguished and because the transaction occurred between related parties, the resulting $25.6 million was accounted for as a capital contribution by the preferred stockholders and recorded as part of additional paid-in capital in the condensed consolidated balance sheets (see Note 7).

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

Forward Looking Statements

Youshould read the followingdiscussionand analysisof our financialconditionand resultsof operationstogetherwith our unaudited condensed consolidatedfinancialstatementsand relatednotes and other financialinformation includedelsewherein this Quarterly Report on Form 10-Q and with our Annual Report on Form 10-K for the year ended December 31, 2019.Our actual results could differ materially from those described in or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the section titled “Risk Factors” included elsewhere in this Annual Report on Form 10-Q.

Overview

We are a clinical-stage biopharmaceutical company focused on the development and commercialization of innovative therapies for the treatment of liver and cardio-metabolic diseases. Our lead product candidate, BIO89-100, a specifically engineered glycoPEGylated analog of fibroblast growth factor 21 (“FGF21”), is currently being developed for the treatment of nonalcoholic steatohepatitis (“NASH”) and for the treatment of severe hypertriglyceridemia (“SHTG”). NASH is a severe form of nonalcoholic fatty liver disease (“NAFLD”), characterized by inflammation and fibrosis in the liver that can progress to cirrhosis, liver failure, hepatocellular carcinoma and death. There are currently no approved products for the treatment of NASH. FGF21 is a clinically-validated mechanism that has been shown in humans to reduce steatosis, improve the histological features of NASH and address cardio-metabolic dysregulation. We believe BIO89-100 may be a differentiated FGF21 therapy based on its robust and durable biological effects and a favorable safety and tolerability profile, as well as its potential for every two week dosing. Combining these characteristics with the ability to address the key liver pathologies in NASH, as well as the underlying metabolic dysregulation in NASH patients, BIO89-100 has the potential to become a backbone of treatment in NASH. We successfully completed our proof of concept (“POC”) Phase 1b/2a clinical trial in patients with NASH or patients with NAFLD and a high risk of NASH with 81 patients. All dose groups in the trial demonstrated statistically significant reductions in liver fat at week 13, with relative reduction of up to 60% versus baseline, and up to 70% versus placebo, as measured by magnetic resonance imaging—proton density fat factor (“MRI-PDFF”). Results were consistent across the sub-populations of biopsy-confirmed NASH and phenotypic NASH (“PNASH”) patients enrolled in the trial. Baseline characteristics were similar across these sub-populations as were the reductions in liver fat. Specifically, a total of 23 patients (11 biopsy-confirmed NASH and 12 PNASH) were enrolled across the 18mg once weekly and the 18mg once every two weeks dose cohorts and received a MRI-PDFF at week 13. The reductions in absolute percentage of liver fat from baseline at week 13 were comparable across these sub-populations at 8.5% and 8.3% for biopsy-confirmed NASH and PNASH patients, respectively. The percentage of responders on MRI-PDFF and BIO89-100’s effect on reducing ALT and triglycerides were also similar across these sub-populations. BIO89-100 had a favorable safety and tolerability profile in this trial.

We plan to initiate a Phase 2b trial as part of a potential Phase 2b/3 study in NASH patients in the first half of 2021. We plan to initiate, in parallel with the Phase 2b trial, a new paired-biopsy histology cohort as part of the Phase 1b/2a trial. We believe the new cohort will provide an early opportunity to demonstrate BIO89-100’s benefits on histology endpoints and is planned to start in the near term with results expected by the end of 2021. This new cohort will enroll approximately 20 patients with biopsy-confirmed NASH that will be treated for 20 weeks with 27mg of BIO89-100 once weekly.

We are also developing BIO89-100 for the treatment of SHTG, a condition identified by severely elevated levels of triglycerides (greater than or equal to 500 mg/dL), which is associated with an increased risk of NASH, cardiovascular events and acute pancreatitis. We initiated our Phase 2 trial in SHTG patients in the third quarter of 2020 and expect to report topline data in the second half of 2021. The Phase 2 trial in SHTG patients is evaluating the ability of BIO89-100 to reduce fasting plasma triglyceride levels compared to baseline levels. We also expect to initiate registrational trials in SHTG in 2022, pending positive data from our Phase 2 trial and discussions with regulatory authorities. We have adequate clinical supplies for our ongoing studies and we intend to have adequate clinical supplies for our planned studies.

Based on U.S. Food and Drug Administration (“FDA”) guidance for the development of SHTG treatments, as well as the regulatory path followed by other companies that have successfully developed SHTG therapies, we believe that a combination of smaller clinical trials and shorter development timelines could mean that SHTG potentially represents a quicker path to market for BIO89-100. We believe BIO89-100 has the potential to address multiple drivers underlying metabolic dysregulation, which would make it an ideal candidate for selected liver and cardio-metabolic diseases.

We commencedoperationsin 2018 and have devoted substantiallyallof our resourcesto raisingcapital,acquiringour initialproductcandidate, identifying and developing BIO89-100, licensingcertainrelatedtechnology,conductingresearchand developmentactivities,includingpreclinical studiesand earlyclinicaltrials,and providinggeneraland administrativesupportfor theseoperations. Prior to our initial public offering (“IPO”), we had funded our operations primarily from the issuance and sale of capital stock. In November 2019, we completed our IPO pursuant to which we issued 6,100,390 shares of our common stock at a price of $16.00 per share. We received net proceeds of $87.7 million from the IPO.

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On July 10, 2020, we completed an underwritten public offering of 3,047,040 shares of our common stock, including 397,440 shares sold pursuant to the underwriters’ exercise of their option to purchase additional shares, at a public offering price of $27.50 per share. We raised a total of $83.8 million in gross proceeds from the offering, or approximately $78.2 million in net proceeds after deducting underwriters’ discounts and commissions of $5.0 million and offering costs of approximately $0.6 million.

On September 21, 2020, we completed an underwritten public offering of 3,025,000 shares of our common stock, at a public offering price of $28.00 per share. We raised a total of $84.7 million in gross proceeds from the offering, or approximately $79.5 million in net proceeds after deducting underwriting discounts and commissions of $4.6 million and offering costs of approximately $0.6 million.

Asof September 30, 2020, our cash, cash equivalents and short-term investments totaled$219.2 million.Based on our currentoperatingplan, webelievethatour cash, cash equivalents and short-term investments together with the proceeds available under our term loan facility will be sufficientto meetour anticipated cash requirements through the second quarter of 2023.

We have incurrednet lossessinceour inception. Our net losses for the three months ended September 30, 2020 and 2019 were $14.6 million and $18.7 million, respectively. Our net losses for the nine monthsended September 30, 2020 and 2019 were $36.9 million and $38.1 million, respectively. Asof September 30, 2020, wehad an accumulateddeficitof$110.5 million.We expectto continueto incursignificantexpensesand increasingoperatinglossesas weadvance BIO89-100 and any futureproductcandidatesthrough clinicaltrials,seek regulatoryapprovalfor BIO89-100 and any futureproductcandidates,expand our clinical,regulatory,quality,manufacturingand commercialization capabilities,protectour intellectualproperty,preparefor and, if approved, proceedto commercializationof BIO89-100 and any futureproductcandidates,expand our generaland administrativesupportfunctions, includinghiringadditionalpersonnel,and incuradditionalcostsassociatedwith operatingas a publiccompany. Our net lossesmay fluctuatesignificantlyfromquarter-to-quarterand year-to-year,depending on the timingof our clinicaltrialsand our expenditureson otherresearchand developmentactivities.

Impact of COVID-19 Pandemic

The ongoing COVID-19 pandemic has resulted and may continue to result in significant disruptions to our clinical trials, including adverse effects on our development timelines, or other business operations. We initiated our Phase 2 trial in SHTG patients in the third quarter of 2020, which could be impacted by delays as a result of COVID-19. We plan to initiate a Phase 2b trial as part of a potential Phase 2b/3 study in NASH patients in the first half of 2021, as well as a new paired-biopsy histology cohort as part of the Phase 1b/2a trial, subject to the external environment with respect to COVID-19 remaining conducive to executing the trial safely and effectively. We do not yet know the full extent of other potential delays, which could prevent or delay us from obtaining approval for BIO89-100. For more information regarding risks related to the ongoing COVID-19 pandemic, please see the risk factor entitled “The ongoing COVID-19 pandemic may result in significant disruptions to our clinical trials or other business operations, which could have a material adverse effect on our business.” in Part II. Item 1A of this Quarterly Report on Form 10-Q. To the extent the ongoing COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks set forth under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019 and this Quarterly Report on Form 10-Q.

Components of Results of Operations

Research andDevelopment Expenses

Researchand developmentexpensesconsistprimarilyof costsincurredfor the developmentof our lead productcandidate,BIO89-100. Our researchand developmentexpensesconsistprimarilyof externalcosts relatedto preclinicaland clinicaldevelopment,includingcostsrelatedto acquiringpatentsand intellectual property,expensesincurredunder licenseagreementsand agreementswith contractresearchorganizationsand consultants,costsrelatedto acquiringand manufacturingclinicaltrialmaterials,includingunder agreementswith contractmanufacturingorganizationsand othervendors, costsrelatedto the preparationof regulatory submissionsand expensesrelatedto laboratorysuppliesand services,as well as personnelcosts.Personnelcosts consistof salaries,employeebenefitsand share-basedcompensationfor individualsinvolvedin researchand developmentefforts.

We expense allresearchand developmentexpensesin the periodsin which they are incurred.We accrue for costsincurredas the servicesare being providedby monitoringthe statusof specificactivitiesand the invoicesreceivedfromour externalserviceproviders.We adjustour accrualas actualcostsbecomeknown.

Paymentsassociatedwith licensingagreementsto acquirelicensesto develop, use, manufactureand commercializeproductsthathave not reachedtechnologicalfeasibilityand do not have alternatecommercialuse are expensed as incurred.Wherecontingentmilestonepaymentsare due to thirdpartiesunder researchand developmentarrangementsor licenseagreements,the milestonepaymentobligationsare expensed whenthe milestoneresultsare probableand estimable,which is generallyupon achievementof milestones.

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We expectour researchand developmentexpensesto increasesubstantiallyfor the foreseeablefutureas wecontinuethe developmentof BIO89-100 and continueto investin researchand developmentactivities.The processof conductingthe necessaryclinicalresearchto obtainregulatoryapprovalis costlyand timeconsuming, and the successfuldevelopmentof BIO89-100 and any futureproductcandidatesis highly uncertain.Tothe extentthatBIO89-100 continuesto advance into largerand laterstageclinicaltrials,our expenseswill increase substantiallyand may becomemorevariable.The actualprobabilityof successfor BIO89-100 or any future productcandidatemay be affectedby a varietyof factors,includingthe safetyand efficacyof our product candidates,investmentin our clinicalprograms,manufacturingcapabilityand competitionwith otherproducts. Asa result,weare unable to determinethe timingof initiation,durationand completioncostsof our researchand developmenteffortsor whenand to what extentwewill generaterevenuefromthe commercializationand saleof BIO89-100 or any futureproductcandidate.

Our futureclinicaldevelopmentcostsmay vary significantlybased on factorssuch as:

• the cost and timingof manufacturingBIO89-100 and any futureproductcandidates;

• delays in the development of BIO89-100 related to the ongoing COVID-19 pandemic;

• per-patienttrialcosts;

• the numberof trialsrequiredfor approval;

• the numberof sitesincludedin the trials;

• the countriesin which the trialsare conducted;

• the lengthof timerequiredto enrolleligiblepatients;

• the numberof patientsthatparticipatein the trials;

• the numberof doses evaluatedin the trials;

• the drop-outor discontinuationratesof patients;

• potentialadditionalsafetymonitoringrequestedby regulatoryagencies;

• the durationof patientparticipationin the trialsand follow-up;

• the phase of developmentof BIO89-100 and any futureproductcandidates; and

• the efficacyand safetyprofileof BIO89-100 and any futureproductcandidates.

General andAdministrative Expenses

Generaland administrativeexpensesconsistprimarilyof personnelcosts,expensesfor outside professionalservices,includinglegal,human resource,auditand accountingservices,consultingcostsand allocatedfacilitiescosts.Personneland relatedcostsconsistof salaries,benefitsand share-basedcompensation for personnelin executive,financeand otheradministrativefunctions.Facilitiescostsconsistof rentand maintenanceof facilities.We expectour generaland administrativeexpensesto increasefor the foreseeable futureas weincreasethe sizeof our administrativefunctionto supportthe growth of our businessand support our continuedresearchand developmentactivities.We also anticipateincreasedexpensesas a resultof operating as a publiccompany, includingincreasedexpensesrelatedto audit,legal,regulatoryand tax-relatedservices associatedwith maintainingcompliancewith exchange listingand SECrequirements,directorand officer insurancepremiumsand investorrelationscosts.

Other Expenses (Income), Net

Other expenses (income),net primarily consistsoftherevaluationofourconvertiblepreferredstockliability, prior to extinguishment upon our IPO.

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Results of Operations

Three Months Ended September 30, 2020 and 2019

The followingtablesummarizesour resultsof operationsfor the periodspresented(in thousands):

	Three Months Ended
	September 30,
	2020		2019		Change
Operating expenses:
Research and development	$	11,208	$	6,680	$	4,528
General and administrative		3,225		1,518		1,707
Total operating expenses		14,433		8,198		6,235
Loss from operations		14,433		8,198		6,235
Other expenses, net		146		10,470		(10,324	)
Income tax expense		24		57		(33	)
Net loss	$	14,603	$	18,725	$	(4,122	)

Research andDevelopmentExpenses

The followingtablesummarizesthe period-over-periodchanges in researchand developmentexpenses for the periodsindicated (in thousands):

	Three Months Ended
	September 30,
	2020		2019		Change
Clinical development	$	2,882	$	1,254	$	1,628
Contract manufacturing		6,040		3,931		2,109
Preclinical costs		217		297		(80	)
Personnel-related expenses		1,841		845		996
Other expenses		228		353		(125	)
Total research and development expenses	$	11,208	$	6,680	$	4,528

Researchand developmentexpensesincreased by $4.5 million,or 68%, to $11.2 million for the three monthsended September 30, 2020 from$6.7 million for the three months ended September 30, 2019. The increasewas primarilydue to an increase of $2.1 million in contract manufacturing costs as a result of the manufacture of additional supplies for our ongoing clinical trials, an increase of $1.6 millionin clinicaldevelopmentcosts as a result of our ongoing Phase 1b/2a study in NASH and the initiation of our Phase 2 trial in SHTG patients in the third quarter of 2020 and an increase of $1.0 million in personnel-related costs, including share-based compensation, due to increased headcount. The increase was partially offset by a decrease of $0.2 million in preclinical costsand otherexpenses.

GeneralandAdministrativeExpenses

Generaland administrativeexpensesincreasedby $1.7 million,or 112%, to $3.2 millionfor the three monthsended September 30, 2020 from$1.5 millionfor the three months ended September 30, 2019. The increasewas primarilydue to an increase of $1.2 millionin personnel-relatedcosts,includingshare-based compensation,drivenby an increasein headcount, an increase of $0.4 million in insurance related costs and an increase of $0.2 millionin professionalservices including legal and accounting consulting service fees. The increase was partially offset by a decrease of $0.1 million in travel related expenses.

Other Expenses, Net

Other expenses,net decreasedby $10.3 million to $0.2 million for the three months ended September 30, 2020from$10.5 million for the three months ended September 30, 2019. The decreasewas primarilydue to the revaluationof our convertiblepreferredstockliability in the third quarter of 2019.

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Nine Months Ended September 30, 2020 and 2019

The followingtablesummarizesour resultsof operationsfor the periodspresented(in thousands):

	Nine Months Ended
	September 30,
	2020		2019		Change
Operating expenses:
Research and development	$	27,429	$	14,154	$	13,275
General and administrative		9,379		2,875		6,504
Total operating expenses		36,808		17,029		19,779
Loss from operations		36,808		17,029		19,779
Other expenses, net		87		21,022		(20,935	)
Income tax expense		23		86		(63	)
Net loss	$	36,918	$	38,137	$	(1,219	)

Research andDevelopmentExpenses

The followingtablesummarizesthe period-over-periodchanges in researchand developmentexpenses for the periodsindicated (in thousands):

	Nine Months Ended
	September 30,
	2020		2019		Change
Clinical development	$	10,629	$	3,705		6,924
Contract manufacturing		9,752		6,610		3,142
Preclinical costs		1,533		715		818
Personnel-related expenses		4,775		2,385		2,390
Other expenses		740		739		1
Total research and development expenses	$	27,429	$	14,154	$	13,275

Researchand developmentexpensesincreasedby $13.2 million,or 94%, to $27.4 million for the nine monthsended September 30, 2020 from$14.2 million for the nine months ended September 30, 2019. The increasewas primarilydue to an increase of $6.9 millionin clinicaldevelopmentcosts as a result of our ongoing Phase 1b/2a study in NASH and the initiation of our Phase 2 trial in SHTG patients in the third quarter of 2020, an increase of $3.1 million in contract manufacturing costs as a result of the manufacture of additional supplies for our ongoing clinical trials, an increase of $2.4 million in personnel-related costs, including share-based compensation, due to increased headcount and an increase of $0.8 million in preclinical costs as we rampedup our operations.

GeneralandAdministrativeExpenses

Generaland administrativeexpensesincreasedby $6.5 million,or 226%, to $9.4 millionfor the nine monthsended September 30, 2020 from$2.9 millionfor the nine months ended September 30, 2019. The increase was primarilydue to an increaseof $3.1 millionin personnel-relatedcosts,includingshare-based compensation,drivenby an increasein headcount, an increaseof $2.1 millionin professionalservices including legal and accounting consulting service fees and an increase of $1.3 million in insurance related costs. The increase was partially offset by a decrease of $0.1 million in travel related expenses.

OtherExpenses, Net

Other expenses,net decreasedby $20.9 million to $0.1 million for the nine months ended September 30, 2020from$21.0 million for the nine months ended September 30, 2019. The decreasewas primarilydue to the revaluationof our convertiblepreferredstockliability in the nine months ended September 30, 2019.

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Liquidity andCapital Resources

To date, we have incurred significant net losses and negative cash flows from operations. Asof September 30, 2020, wehad availablecash and cash equivalents and short-term investments of $219.2 millionand an accumulateddeficitof $110.5 million. Prior to our IPO, we funded our operations from the issuance and sale of capital stock. In connection with our IPO, we issued and sold an aggregate of 6,100,390 shares of common stock at a price of $16.00 per share. We received proceeds of $87.7 million, net of underwriting discounts and commissions and estimated offering costs.

On April 7, 2020, we entered into a secured term loan facility with an aggregate committed principal amount of up to $15.0 million. As of September 30, 2020, we had not drawn any amount under the term loan facility.

On July 10, 2020, we completed a public offering of 3,047,040 shares of our common stock, including 397,440 shares sold pursuant to the underwriters’ exercise of their option to purchase additional shares, at a public offering price of $27.50 per share. Upon completion of the offering, we received gross proceeds of $83.8 million, before deducting underwriting discounts and commissions and offering expenses.

On September 21, 2020, we completed an underwritten public offering of 3,025,000 shares of our common stock, at a public offering price of $28.00 per share. Upon completion of the offering, we received gross proceeds of $84.7 million, before deducting underwriting discounts and commissions and offering expenses.

Our primaryuse of cash is to fund operatingexpenses,which consistprimarilyof researchand developmentexpendituresrelatedto our lead productcandidate,BIO89-100. We plan to increaseour research and developmentexpensessubstantiallyfor the foreseeablefutureas wecontinuethe clinicaldevelopmentof our currentand futureproductcandidates.At thistime,due to the inherentlyunpredictablenatureof clinical development,wecannot reasonablyestimatethe costswewill incurand the timelinesthatwill be requiredto completedevelopment,obtainmarketingapproval,and commercializeour currentproductcandidateor any futureproductcandidates.For the samereasons,weare also unable to predictwhen,if ever, wewill generate revenuefromproductsalesor our currentor any futurelicenseagreementswhich wemay enterinto or whether, or when,if ever, wemay achieveprofitability.Clinicaland preclinicaldevelopmenttimelines,the probabilityof success,and developmentcostscan differmateriallyfromexpectations.In addition,wecannot forecastthe timingand amountsof milestone,royaltyand otherrevenuefromlicensingactivities,which futureproduct candidatesmay be subjectto futurecollaborations,whensuch arrangementswill be secured,if at all,and to what degreesuch arrangementswould affectour developmentplans and capitalrequirements.

Based on our researchand developmentplans, weexpectthatour existingcash, cash equivalents and short-term investments together with the proceeds available under our term loan facility,will be sufficientto fund our operationsthrough the second quarter of 2023.However, our operatingplans and otherdemandson our cash resourcesmay change as a resultof many factors,and wemay seek additionalfunds sooner than planned. There can be no assurancethatwewill be successfulin acquiringadditionalfunding at levelssufficientto fund our operationsor on termsfavorableto us.

Our futurefunding requirementswill depend on many factors,includingthe following:

• the progress,timing,scope, resultsand costsof our clinicaltrialsof BIO89-100 and preclinical studiesor clinicaltrialsof otherpotentialproductcandidateswemay choose to pursue in the future, includingthe abilityto enrollpatientsin a timelymannerfor our clinicaltrials;

• the costsand timingof obtainingclinicaland commercialsuppliesand validatingthe commercial manufacturingprocessfor BIO89-100 and any otherproductcandidateswemay identifyand develop;

• the cost, timingand outcomesof regulatoryapprovals;

• the timingand amountof any milestone,royaltyor otherpaymentsweare requiredto make pursuantto currentor any futurecollaborationor licenseagreements;

• costsof acquiringor in-licensingotherproductcandidatesand technologies;

• the termsand timingof establishingand maintainingcollaborations,licensesand othersimilar arrangements;

• the costsassociatedwith attracting,hiringand retainingadditionalqualifiedpersonnelas our businessgrows;

• our effortsto enhance operationalsystemsand hireadditionalpersonnelto satisfyour obligationsas a publiccompany, includingenhanced internalcontrolsover financialreporting;and

• the cost of preparing,filing,prosecuting,defendingand enforcingany patentclaimsand other intellectualpropertyrights.

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We expectto continueto generatesubstantialoperatinglossesfor the foreseeablefutureas weexpand our researchand developmentactivities.We will continueto fund our operationsprimarilythrough utilizationof our currentfinancialresourcesand through additionalraisesof capital to advance our current product candidate through clinical development, to develop, acquire or in-license other potential product candidates and to fund operations for the foreseeable future.However, thereis no assurancethatsuch funding will be availableto us or thatit will be obtainedon termsfavorableto us or will provideus with sufficientfunds to meetour objectives.Any failure to raise capital as and when needed could have a negative impact on our financial condition and on our ability to pursue our business plans and strategies.

Tothe extentthatweraiseadditionalcapitalthrough partnershipsor licensingarrangementswith third parties,wemay have to relinquishvaluablerightsto our productcandidates,futurerevenuestreamsor research programsor to grantlicenseson termsthatmay not be favorableto us. If weraiseadditionalcapitalthrough publicor privateequityofferings,the ownership interestof our then-existingstockholderswill be diluted,and the termsof thesesecuritiesmay includeliquidationor otherpreferencesthatadverselyaffectour stockholders’ rights.If weraiseadditionalcapitalthrough debt financing,wemay be subjectto covenantslimitingor restrictingour abilityto take specificactions,such as incurringadditionaldebt, makingcapitalexpendituresor declaringdividends.If weare unable to obtainadequatefinancingwhenneeded, wemay have to delay, reduce the scope of or suspend one or moreof our clinicaltrialsor preclinicalstudies,researchand development programsor commercializationeffortsor grantrightsto develop and marketour productcandidateseven if we would otherwisepreferto develop and marketsuch productcandidatesourselves.

CashFlows

The followingtablesummarizesour cash flows for the periods presented(in thousands):

	Nine Months Ended
	September 30,
	2020			2019
Net cash used in operating activities	$	(32,216	)	$	(14,328	)
Net cash used in investing activities		(77,804	)		(28	)
Net cash provided by financing activities		158,236			19,325
Net increase in cash and cash equivalents,    and restricted cash	$	48,216		$	4,969

Net CashUsed in Operating Activities

During the nine monthsended September 30, 2020, net cash used in operatingactivitieswas $32.2 million, which consistedof a net loss of $36.9 million,partiallyoffsetby non-cashchargesof $2.8 millionand a net change of $1.9 millionin our net operatingassetsand liabilities.The non-cashchargesare primarilycomprised of $2.6 millionin share-based compensation and $0.2 million in amortization of debt issuance costs.The change in our operatingassetsand liabilitieswas primarilydue to a $3.3 millionincreasein accounts payable and accruedexpensesas wegrew our operations, offset in part by a $1.4 millionincreasein prepaid and other current assetsdue to the timingof payments.

During the nine months ended September 30, 2019, net cash used in operating activities was $14.3 million, which consisted of a net loss of $38.1 million, partially offset by non-cash charges of $21.2 million and a net change of $2.6 million in our net operating assets and liabilities. The non-cash charges are primarily comprised of the revaluation of our convertible preferred stock liability of $21.0 million and $0.2 million in share-based compensation. The change in our operating assets and liabilities was primarily due to a $2.9 million increase in accounts payable and accrued expenses as we grew our operations, offset in part by a $0.3 million increase in other current assets due to the timing of payments.

Net CashUsed in InvestingActivities

During the nine monthsended September 30, 2020, net cash used in investing activities was $77.8 million, which consistedof $78.7 million in purchasesof available-for-sale securities and $0.1 million of purchases of property and equipment, offset in part by $1.0 million of proceeds from maturities of available-for-sale securities.

During the nine monthsended September 30, 2019, net cash used in investing activitiesconsistedof purchasesof fixedassets.

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Net Cash Provided by Financing Activities

During the nine monthsended September 30, 2020 net cash used in financingactivities was $158.2 million, whichconsisted of $158.3 million net proceeds from the issuance of common stock from our public offerings and $0.1 million proceeds from the issuance of common stock upon exercise of stock options and ESPP purchases, offset in part by a $0.2 million of payment of debt issuance costs.

During the nine months ended September 30, 2019 net cash provided by financing activities was $19.3 million, which consisted of net proceeds of $20.0 million from the issuance and sale of our convertible preferred stock, offset by payments of deferred offering costs of $0.7 million.

Contractual ObligationsandOtherCommitments

We are a smaller reporting company, as defined by Rule 12b-2 under the Securities and Exchange Act of 1934 and in Item 10(f)(1) of Regulation S-K, and are not required to provide the information under this item.

Off-BalanceSheet Arrangements

We have not enteredinto any off-balancesheetarrangements,as definedin the rulesand regulationsof the SEC,and do not have any holdingsin variableinterestentities.

CriticalAccounting PolicesandEstimates

There have been no significant changes in our critical accounting policies and estimates as compared to the critical accounting policies and estimates disclosed our Annual Report on Form 10-K for the year ended December 31, 2019, other than as provided in Note 2 to our condensed consolidated financial statements “Summary of Significant Accounting Policies.”

Recent Accounting Pronouncements

See Note 2 to our condensed consolidatedfinancialstatementsfor more information.

JOBSAct Accounting Election

We are an “emerginggrowth company,”as definedin the JOBSAct. Under the JOBSAct, emerging growth companiescan delay adoptingnewor revisedaccountingstandardsissuedsubsequentto the enactmentof the JOBSAct untilsuch timeas those standardsapply to privatecompanies.

We have electedto use thisextendedtransitionperiodto enableus to complywith newor revised accountingstandardsthathave differenteffectivedatesfor publicand privatecompaniesuntilthe earlierof the date we(i)are no longeran emerginggrowth company or (ii)affirmativelyand irrevocablyopt out of the extendedtransitionperiodprovidedin the JOBSAct. Asa result,our consolidatedfinancialstatementsand our interimcondensed consolidatedfinancialstatementsmay not be comparableto companiesthatcomplywith new or revisedaccountingpronouncements.

Item 3. QuantitativeandQualitativeDisclosuresAboutMarket Risk

We are a smaller reporting company, as defined by Rule 12b-2 under the Securities and Exchange Act of 1934 and in Item 10(f)(1) of Regulation S-K, and are not required to provide the information under this item.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of September 30, 2020, our management, with the participation and supervision of our principal executive officer and our principal financial officer, evaluated our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). 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 officers, 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 this evaluation, our principal executive officer and our principal financial officer concluded that solely as a result of the material weaknesses in our internal control over financial reporting described below, our disclosure controls and procedures were not effective as of September 30, 2020 to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Remediation Efforts on Previously Reported Material Weaknesses

During the audit of our consolidated financial statements for the period from January 18, 2018 (inception) to December 31, 2018, material weaknesses were identified in our internal control over financial reporting. A material weakness is a deficiency or combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis by the company’s internal controls. The material weaknesses that were identified related to the following:

• We did not have an internal finance department. Consequently, we lacked sufficient personnel with an appropriate level of knowledge and requisite U.S. generally accepted accounting principles expertise to identify, evaluate and account for complex and non-routine transactions and an adequate supervisory review structure that is needed to comply with financial reporting requirements.

• We did not have an adequate assessment of risks that could significantly impact internal controls over financial reporting and did not effectively design and monitor controls in response to the risks of material misstatement.

In 2019, we implemented plans to remedy these material weaknesses and as of September 30, 2020 our remediation efforts were ongoing. While we believe that these efforts have improved and will continue to improve our internal control over financial reporting, remediation of the material weaknesses will require validation and testing of the design and operating effectiveness of internal controls over a sustained period of financial reporting cycles resulting in the reporting of these material weaknesses as of September 30, 2020. We have implemented and are in the process of implementing additional measures and risk assessment procedures designed to improve our disclosure controls and procedures and internal control over financial reporting to address the underlying causes of these material weaknesses, including the implementation of appropriate segregation of duties, formalization of accounting policies and controls, and implementation of accounting systems to automate manual processes. In 2019, we also hired our Chief Financial Officer, principal accounting officer and additional qualified accounting and finance personnel, formalized our hiring practices and engaged financial consultants to enable the implementation of internal controls over financial reporting. In April 2020, we added a financial expert to the audit committee of the board of directors and in June 2020, we appointed a new board member, who also serves as audit committee chair.

We cannot assure you that we have identified all, or that we will not in the future have additional, material weaknesses. Material weaknesses may still exist when we report on the effectiveness of our internal control over financial reporting as required by reporting requirements under Section404 (“Section404”) of the Sarbanes-OxleyAct of 2002, as amended(the“Sarbanes-OxleyAct”).

Changes in Internal Control over Financial Reporting

Other than the changes intended to remediate the material weaknesses noted above, no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the quarter ended September 30, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

We are currently not a party to any material legal proceedings. From time to time, we may become involved in legal proceedings arising in the ordinary course of our business. Regardless of outcome, litigation can have an adverse impact on us due to defense and settlement costs, diversion of management resources, negative publicity, reputational harm and other factors, and there can be no assurances that favorable outcomes will be obtained.

Item 1A. Risk Factors.

Aninvestmentin our commonstockinvolvesa high degree of risk.Youshould carefullyconsiderthe risksand uncertaintiesdescribedbelow beforedecidingwhether to make an investment decision with respect to shares of our commonstock.You should also referto the other informationcontainedin thisQuarterly Report on Form 10-Q,including“Management’sDiscussionand Analysisof FinancialCondition and Resultsof Operations” and our unaudited condensed consolidated financialstatementsand relatednotes. Ourbusiness,financialcondition,resultsof operationsand prospectscould be materiallyand adverselyaffectedby any of theserisksor uncertainties.In any such case, the tradingpriceof our commonstockcould decline,and you could lose all or part of your investment. We caution you that the risks, uncertainties and other factors referred to below and elsewhere in this Quarterly Report on Form 10-Q may not contain all of the risks, uncertainties and other factors that may affect our future results and operations. Moreover, new risks will emerge from time to time. It is not possible for our management to predict all risks.

Risk Factor Summary

Investing in our common stock involves significant risks. You should carefully consider the risks described below before making a decision to invest in our common stock. If we are unable to successfully address these risks and challenges, our business, financial condition, results of operations, or prospects could be materially adversely affected. In such case, the trading price of our common stock would likely decline, and you may lose all or part of your investment. Below is a summary of some of the risks we face.

• We are a clinical-stage biopharmaceutical company with a limited operating history and no products approved for commercial sale. We have incurred net losses since our inception, we expect to incur significant and increasing operating losses and we may never be profitable. Our stock is a highly speculative investment.

• We currently have no source of product revenue and may never become profitable.

• The ongoing COVID-19 pandemic has and may in the future result in significant disruptions to our clinical trials or other business operations, which could have a material adverse effect on our business.

• Unstable market and economic conditions may have serious adverse consequences on our business and financial condition.

• Our Loan and Security Agreement with Silicon Valley Bank contains certain covenants that could adversely affect our operations and, if an event of default were to occur, we could be forced to repay any outstanding indebtedness sooner than planned and possibly at a time when we do not have sufficient capital to meet this obligation. The occurrence of any of these events could cause a significant adverse impact on our business, prospects and share price.

• We will require substantial additional capital to finance our operations, which may not be available to us on acceptable terms, or at all. As a result, we may not complete the development and commercialization of BIO89-100 or develop new product candidates.

• Our business depends on the success of BIO89-100, our only product candidate under clinical development, which is in the early stages of clinical development and has not completed a pivotal trial. If we are unable to obtain regulatory approval for and successfully commercialize BIO89-100 or other future product candidates, or we experience significant delays in doing so, our business will be materially harmed.

• Clinical drug development involves a lengthy and expensive process with uncertain timelines and uncertain outcomes, and the results of prior preclinical or clinical trials are not necessarily predictive of our future results. Our clinical trials may fail to adequately demonstrate the safety and efficacy of BIO89-100 or any future product candidates.

• If we experience delays in clinical testing, our commercial prospects will be adversely affected, our costs may increase and our business may be harmed.

• If we encounter difficulties in enrolling patients in our clinical trials, our clinical development activities could be delayed or otherwise adversely affected.

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• We are developing BIO89-100 for the treatment of NASH, an indication for which there are no approved products. This makes it difficult to predict the timing and costs of the clinical development of BIO89-100 for the treatment of NASH.

• BIO89-100 and any future product candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval or limit the commercial profile of an approved label.

• We face substantial competition, which may result in others discovering, developing or commercializing competing products before or more successfully than us.

• Lack of efficacy, adverse events or undesirable side effects may emerge in clinical trials conducted by third parties developing FGF product candidates, which could adversely affect our stock price, our ability to attract additional capital and our development program.

• We have relied on, and expect to continue to rely on, third-party manufacturers to produce BIO89-100 or any future product candidates. Any failure by a third-party manufacturer to produce acceptable product candidates for us pursuant to our specifications and regulatory standards may delay or impair our ability to initiate or complete our clinical trials, obtain and maintain regulatory approvals or commercialize approved products.

• We rely on third parties to conduct our clinical trials and some aspects of our research and preclinical testing, and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such trials, research or testing.

• Our success depends upon our ability to obtain and maintain intellectual property protection for our products and technologies.

• We rely on a license from Teva and a sublicense from ratiopharm to patents and know-how related to glycoPEGylation technology that are used in the development, manufacture and commercialization of BIO89-100. Any termination or loss of significant rights, including the right to glycoPEGylation technology, or breach, under these agreements or any future license agreement related to our product candidates, would materially and adversely affect our ability to continue the development and commercialization of the related product candidates.

Risks Related to Our Business andIndustry

We are a clinical-stage biopharmaceuticalcompany with a limitedoperatinghistoryandnoproducts approvedfor commercialsale. We have incurred net lossessince our inception,weexpectto incur significantand increasingoperatinglossesandwemay never be profitable.Ourstock is a highly speculativeinvestment.

We are a clinical-stagebiopharmaceuticalcompany with a limitedoperatinghistorythatmay make itdifficultto evaluatethe successof our businessto date and to assessour futureviability.We commenced operationsin 2018, and to date, our operationshave been limitedto organizingand staffingour company, businessplanning,raisingcapital,acquiringour initialproductcandidate,BIO89-100 and licensingcertain relatedtechnology, conductingresearchand developmentactivities,includingpreclinicalstudiesand earlyclinicaltrials,and providinggeneraland administrativesupportfor theseoperations.Investmentin biopharmaceuticalproductdevelopmentis highly speculativebecauseit entailssubstantialupfrontcapital expendituresand significantriskthatany potentialproductcandidatewill failto demonstrateadequateeffectand/ or an acceptablesafetyprofile,gain regulatoryapprovaland becomecommerciallyviable.We have no products approved for commercialsale,wehave not generatedany revenuefromproductsalesto date and wecontinueto incursignificantresearchand developmentand otherexpensesrelatedto our ongoing operations.We have limitedexperienceas a company conductingclinicaltrialsand no experienceas a company commercializingany products.

We are not profitableand have incurrednet lossessinceour inception.Asof September 30, 2020, wehad an accumulateddeficitof $110.5 million.Consequently,predictionsabout our futuresuccessor viabilitymay not be as accurateas they would be if wehad a longeroperatinghistoryor a historyof successfullydevelopingand commercializingpharmaceuticalproducts.We have spent, and expectto continueto spend, significantresources to fund researchand developmentof, and seek regulatoryapprovalsfor, BIO89-100 and any futureproduct candidates.We expectto incursubstantialand increasingoperatinglossesover the next severalyearsas our research,development,preclinicaltestingand clinicaltrialactivitiesincrease.Asa result,our accumulated deficitwill also increasesignificantly.We may encounterunforeseenexpenses,difficulties,complications, delays, including delays resulting from the ongoing COVID-19 pandemic,and otherunknownfactorsthatmay adverselyaffectour business.The sizeof our futurenet losseswill depend, in part,on the rateof futuregrowth of our expensesand our abilityto generaterevenue.Our priorlosses and expectedfuturelosseshave had and will continueto have an adverseeffecton our stockholders’ equityand working capital.The net lossesweincurmay fluctuatesignificantlyfromquarter-to-quartersuch that a period-to-periodcomparisonof our resultsof operationsmay not be a good indicationof our future performance.Even if weeventuallygenerateproductrevenue,wemay never be profitableand, if wedo achieve profitability,wemay not be able to sustainor increaseprofitabilityon a quarterlyor annual basis.

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We currentlyhave nosource of product revenue andmay never becomeprofitable.

BIO89-100 is in the earlystagesof development.Todate, wehave not generatedany revenuefromthe licensingor commercializationof BIO89-100. We will not be able to generateproductrevenueunlessand until BIO89-100 or any futureproductcandidate,alone or with futurepartners,successfullycompletesclinicaltrials, receivesregulatoryapprovaland is successfullycommercialized.AsBIO89-100 is in the earlystagesof development,wedo not expectto receiverevenuefromit for a numberof years,if ever. Although we may seek to obtainrevenuefromcollaborationor licensingagreementswith thirdparties, we currentlyhave no suchagreementsthatcould provideus with material,ongoing futurerevenueand wemay never enterinto any such agreements.Our abilityto generatefutureproductrevenuefromBIO89-100 or any futureproductcandidatesalso depends on a numberof additionalfactors,includingour or our futurepartners’abilityto:

• successfully complete research and clinical development of BIO89-100 and any future product candidates;

• establish and maintain supply and manufacturing relationships with third parties, and ensure adequate and legally compliant manufacturing of bulk drug substances and drug products to maintain that supply;

• launch and commercialize future product candidates for which we obtain marketing approval, if any, and, if launched independently, successfully establish a sales force, marketing and distribution infrastructure;

• demonstrate the necessary safety data post-approval to ensure continued regulatory approval;

• obtain coverage and adequate product reimbursement from third-party payors, including government payors;

• achieve market acceptance for our or our future partners’ products, if any;

• establish, maintain, protect and enforce our intellectual property rights; and

• attract, hire and retain qualified personnel.

In addition,becauseof the numerousrisksand uncertaintiesassociatedwith pharmaceuticalproduct development,includingthatour productcandidatesmay not advance through developmentor achievethe endpointsof applicableclinicaltrials,weare unable to predictthe timingor amountof increasedexpenses,or if or whenwewill achieveor maintainprofitability.In addition,our expensescould increasebeyond expectationsif wedecide,or are requiredby the FDAor comparableforeign regulatoryauthorities,to performstudiesor trialsin additionto those thatwecurrentlyanticipate.Even if we completethe developmentand regulatoryprocessesdescribedabove, weanticipateincurringsignificantcosts associatedwith launchingand commercializingtheseproducts.

Even if wegeneraterevenuefromthe saleof any of our productcandidatesthatmay be approved, we may not becomeprofitableand may need to obtainadditionalfunding to continueoperations.If wefailto becomeprofitableor do not sustainprofitabilityon a continuingbasis,then wemay be unable to continueour operationsat planned levelsand be forcedto reduceour operations.

The ongoing COVID-19 pandemic has and may in the future result in significant disruptions to our clinical trials or other business operations, which could have a material adverse effect on our business.

Our business and its operations, including but not limited to our research and development activities, could be adversely affected by health epidemics in regions where we have business operations, and such health epidemics could cause significant disruption in the operations of third parties upon whom we rely. In December 2019, a novel strain of coronavirus, SARS-CoV-2, causing a disease referred to as COVID-19, was reported to have surfaced in Wuhan, China. Since then, COVID-19 has spread throughout the world, including to the United States and has been declared a pandemic by the World Health Organization. In response to public health directives and orders related to COVID-19 and based on guidance from public health officials, we have been and continue to implement work-from-home policies for our employees on an office-by-office basis. We currently have work-from-home policies in place for our employees in California and have reopened our offices in Israel. The effects of executive and similar government orders, shelter-in-place orders and our work-from-home policies may negatively impact our growth, including our ability to recruit and onboard new employees, and productivity, disrupt our business and delay our preclinical and clinical programs and timelines, the magnitude of which will depend, in part, on the length and severity of the restrictions and other limitations on our ability to conduct our business in the ordinary course. These and similar, and perhaps more severe, disruptions in our operations could negatively impact our business, operating results and financial condition.

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Quarantines, shelter-in-place, executive 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, have impacted and may continue to impact personnel at third-party manufacturing facilities in the United States, Europe and other countries, or the availability or cost of materials we use or require to conduct our business, including product development, which would disrupt our supply chain. Furthermore, some of our manufacturers and suppliers are in Europe and may be impacted by port closures and other restrictions resulting from the COVID-19 pandemic, which may disrupt our supply chain or limit our ability to obtain sufficient materials for our drug products. In particular, Northway Biotechpharma(“BTPH”), our sole source supplier for BIO89-100, has missed certain project deadlines for our manufacturing scale-up due to quarantine orders and has forecasted other delays due to COVID-19-related impacts on their suppliers; however, we do not expect delays to the overall timeline for the delivery of clinical supplies.

In addition, our clinical trials have been and may continue to be affected by the COVID-19 pandemic. For example, while we initiated the Phase 2 trial of BIO89-100 for the treatment of SHTG in September 2020, and expect to report topline data in the second half of 2021, our successful completion of the trial will depend on the external environment with respect to COVID-19 remaining conducive to executing the trial safely and effectively. Similarly, while we expect to initiate a Phase 2b trial of BIO89-100 as part of a potential Phase 2b/3 trail in NASH patients in the first half of 2021, as well as a new paired-biopsy histology cohort as part of the Phase 1b/2a trial, we may be delayed in the initiation of such trials due to COVID-19 or the related government restrictions.

If COVID-19 continues to spread in the United States and elsewhere, we may experience additional disruptions that could severely impact our business, preclinical studies and clinical trials, including:

• delays in receiving authorization from local regulatory authorities to initiate our planned clinical trials;

• delays or difficulties in enrolling patients in our clinical trials;

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

• delays in clinical sites receiving the supplies and materials needed to conduct our clinical trials, including interruption in global shipping that may affect the transport of clinical trial materials;

• changes in local regulations as part of a response to the COVID-19 pandemic which may require us to change the ways in which our clinical trials are conducted, which may result in unexpected costs, or to discontinue the clinical trials altogether;

• diversion of healthcare resources away from the conduct of clinical trials, including the diversion of hospitals serving as our clinical trial sites and hospital staff supporting the conduct of our clinical trials;

• interruption of key clinical trial activities, such as clinical trial site monitoring and data entry and verification, due to limitations on travel imposed or recommended by federal or state governments, employers and others, or interruption of clinical trial subject visits and study procedures, the occurrence of which could affect the completeness and integrity of clinical trial data and, as a result, determine the outcomes of the trial;

• risk that participants enrolled in our clinical trials will acquire COVID-19 while the clinical trial is ongoing, which could impact the results of the clinical trial, including by increasing the number of observed adverse events;

• risk that participants enrolled in our clinical trials will not be able to travel to our clinical trial sites as a result of quarantines or other restrictions resulting from COVID-19;

• risk that participants enrolled in our clinical trials will not be able to comply with clinical trial protocols if quarantines impede patient movement or interrupt healthcare services;

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

• 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;

• limitations in employee resources that would otherwise be focused on the conduct of 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;

• refusal of the FDA to accept data from clinical trials in affected geographies; and

• interruption or delays to our clinical activities.

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The spread of COVID-19, which has caused a broad impact globally, may materially affect us economically. While the potential economic impact brought by COVID-19, and the duration of such impact, may be difficult to assess or predict, the widespread pandemic has resulted in significant disruption of global financial markets, which could reduce our ability to access capital and negatively affect our future liquidity. In addition, a recession or market correction resulting from the spread of COVID-19 and related government orders and restrictions could materially affect our business and the value of our common stock.

The COVID-19 pandemic continues to evolve rapidly. The ultimate impact of the COVID-19 pandemic or a similar public health emergency is highly uncertain and subject to change. We do not yet know the full extent of potential delays or impacts on our business, our clinical trials, healthcare systems, or the global economy as a whole. However, any one or a combination of these events could have an adverse effect on the operation of and results from our clinical trials and on our other business operations, which could prevent or delay us from obtaining approval for BIO89-100.

Unstable marketandeconomicconditionsmay have seriousadverseconsequences onour business and financialcondition.

Global creditand financialmarketshave experiencedextremedisruptionsat variouspointsover the last few decades,characterizedby diminishedliquidityand creditavailability,declinesin consumerconfidence, declinesin economicgrowth, increasesin unemploymentratesand uncertaintyabout economicstability.If anothersuch disruptionin creditand financialmarketsand deteriorationof confidencein economicconditions occurs,our businessmay be adverselyaffected.If the equityand creditmarketswere to deterioratesignificantly in the future,it may make any necessarydebt or equityfinancingmoredifficultto complete,morecostly,and moredilutive.Failureto secureany necessaryfinancingin a timelymannerand on favorabletermscould have a materialadverseeffecton our growth strategy,financialperformanceand sharepriceand could requireus to delay or abandon developmentor commercializationplans. In addition,thereis a riskthatone or moreof our serviceproviders,manufacturersor otherpartnerswould not surviveor be able to meettheircommitmentsto us under such circumstances,which could directlyaffectour abilityto attainour operatinggoals on scheduleand on budget.

Our Loan and Security Agreement with Silicon Valley Bank (the “Loan Agreement”) contains certain covenants that could adversely affect our operations and, if an event of default were to occur, we could be forced to repay any outstanding indebtedness sooner than planned and possibly at a time when we do not have sufficient capital to meet this obligation. The occurrence of any of these events could cause a significant adverse impact on our business, prospects and share price.

Pursuant to the Loan Agreement, we have pledged substantially all of our assets, other than our intellectual property rights, and have agreed that we may not sell or assign rights to our patents and other intellectual property without the prior consent of Silicon Valley Bank. Additionally, the Loan Agreement contains affirmative and negative covenants that, among other things, restrict our ability to:

• incur additional indebtedness;

• grant liens;

• make distributions, including dividends;

• enter into a merger or consolidation;

• alter the business of the Company;

• sell all or a portion of the Company’s property, business or assets; or

• in the case of the Company’s wholly-owned subsidiaries, 89Bio Ltd. and UAB 89bio Lithuania, to hold certain assets.

These terms of the Loan Agreement could prevent us from taking certain actions without the consent of our lenders, which may limit our flexibility in operating our business and our ability to take actions that might be advantageous to us and our stockholders, placing us at a competitive disadvantage compared to our competitors who have less leverage and who therefore may be able to take advantage of opportunities that our leverage prevents us from exploiting.

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The Loan Agreement also includes customary events of default, including, among other things, a change of control. Upon the occurrence and continuation of an event of default, all amounts due under the Loan Agreement become (in the case of a bankruptcy event), or may become (in the case of all other events of default and at the option of Silicon Valley Bank), immediately due and payable.

If an event of default under the Loan Agreement should occur, we could be required to immediately repay any outstanding indebtedness. If we are unable to repay such debt, the lenders would be able to foreclose on the secured collateral, including our cash accounts, and take other remedies permitted under the Loan Agreement. Even if we are able to repay any indebtedness on an event of default, the repayment of these sums may significantly reduce our working capital and impair our ability to operate as planned. The occurrence of any of these events could cause a significant adverse impact on our business and financial condition.

Wewill requiresubstantialadditionalcapitalto finance our operations, whichmay not be availableto us onacceptableterms,or at all. Asa result,wemay not completethe developmentandcommercializationof BIO89-100or developnewproduct candidates.

Asa clinical-stagebiopharmaceuticalcompany, our operationshave consumedsignificantamountsofcash sinceour inception.We expectour researchand developmentexpensesto increasesubstantiallyin connectionwith our ongoing activities,particularlyas weconduct clinical trials of BIO89-100 and seek regulatoryapprovalsfor BIO89-100.

Webelievethat our existing cash, cash equivalents and short-term investments, including thenetproceedsfromour IPO, the net proceeds from our underwritten public offering of common stock in July 2020 and the net proceeds from our underwritten public offering of common stock in September 2020, together with the proceeds available from our line of credit pursuant to our Loan Agreement (as defined below), willfundourprojectedoperatingrequirementsinto the second quarter of 2023.Ourforecastoftheperiod oftimethroughwhichourfinancialresourceswilladequatelysupportouroperationsisaforward-lookingstatement andinvolvesrisksanduncertainties,andactualresultscouldvaryasaresultofanumberoffactors,includingthe factorsdiscussedelsewhereinthis“RiskFactors”section.Wehavebasedthisestimateonassumptionsthatmay provetobewrong,andwecouldutilizeouravailablecapitalresourcessoonerthanwecurrentlyexpect.Ourfuture fundingrequirements,bothshortandlong-term,willdependonmanyfactors,including:

• the initiation, progress, timing, costs and results of preclinical and clinical studies for BIO89-100 and any future product candidates we may develop;

• the outcome, timing and cost of seeking and obtaining regulatory approvals from the FDA and comparable foreign regulatory authorities, including the potential for such authorities to require that we perform more studies than those that we currently expect or change their requirements on studies that had previously been agreed to;

• the cost to establish, maintain, expand, enforce and defend the scope of our intellectual property portfolio, including the amount and timing of any payments we may be required to make, or that we may receive, in connection with licensing, preparing, filing, prosecuting, defending and enforcing of any patents or other intellectual property rights;

• the effect of competing technological and market developments;

• market acceptance of any approved product candidates, including product pricing and product coverage and adequate reimbursement by third-party payors;

• the cost of acquiring, licensing or investing in additional businesses, products, product candidates and technologies;

• the cost and timing of selecting, auditing and potentially validating a manufacturing site for commercial-scale manufacturing of BIO89-100; and

• the cost of establishing sales, marketing and distribution capabilities for BIO89-100 and any future product candidates for which we may receive regulatory approval and that we determine to commercialize ourselves or in collaboration with our future partners.

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We will requireadditionalcapitalto discover,develop, obtainregulatoryapprovalfor and commercializeBIO89-100 and any futureproductcandidates. We do not have any committedexternalsourceof funds other than the unused portion of the line of credit available to us pursuant to the Loan Agreement.We expectto financefuturecash needs through publicor privateequityor debt offeringsor product collaborations.Additionalcapitalmay not be availablein sufficientamountsor on reasonableterms,if at all.If wedo not raiseadditionalcapital,wemay not be able to expand our operationsor otherwisecapitalizeon our businessopportunities,our businessand financialconditionwill be negativelyimpactedand wemay need to:

• significantly delay, scale back or discontinue research and discovery efforts and the development or commercialization of any product candidates or cease operations altogether;

• seek strategic alliances for research and development programs when we otherwise would not, or at an earlier stage than we would otherwise desire or on terms less favorable than might otherwise be available; or

• relinquish, or license on unfavorable terms, our rights to technologies or any product candidates that we otherwise would seek to develop or commercialize ourselves.

In addition, if BIO89-100 receives approval and is commercialized, we will be required to make milestone and royalty payments to Teva Pharmaceutical Industries Ltd (“Teva”), from whom we acquired certain patents and intellectual property relating to BIO89-100, and from whom we licensed patents and know-how related to glycoPEGylation technology that is used in the manufacture of BIO89-100. For additional information regarding this license agreement, please see Note 5 to of our accompanying unaudited condensed consolidated financial statements.

We will need to raise additional funds to operate our business, but additional funds may not be available on acceptable terms, or at all. Any inability to raise required capital when needed could harm our liquidity, financial condition, business, operating results and prospects.

As of September 30, 2020, we had no revenue, an accumulated deficit of $110.5 million and cash, cash equivalents and short-term investments of $219.2 million. Based on our current operating plan, we believe that our existing cash, cash equivalents and short-term investments, including the net proceeds from our IPO, the net proceeds from our underwritten public offering of common stock in July 2020 and the net proceeds from our underwritten public offering of common stock in September 2020, together with the proceeds available from our line of credit pursuant to our Loan Agreement, will be sufficient to meet our anticipated cash requirements into the second quarter of 2023. However, to date, we have not generated revenues from our activities and have incurred substantial operating losses. We expect that we will continue to generate substantial operating losses for the foreseeable future until we complete development of BIO89-100 or our other product candidates and seek regulatory approvals to market such product candidates. We plan to continue to fund our operations primarily through utilization of our current financial resources and additional raises of capital. We may raise funds from our current investors as well as potential outside investors. We expectto financefuturecash needs through publicor privateequityor debt offerings, the Loan Agreementor product collaborations. However, there is no assurance that such funding will be available to us or that it will be obtained on terms favorable to us or will provide us with sufficient funds to meet our objectives. Any failure to raise capital as and when needed could have a negative impact on our financial condition and on our ability to pursue our business plans and strategies.

Ourbusiness depends onthe successof BIO89-100,our only product candidateunder clinicaldevelopment, whichis in the earlystagesof clinicaldevelopmentandhas not completeda pivotaltrial.If weare unable to obtain regulatoryapproval for andsuccessfullycommercializeBIO89-100or other future product candidates, or weexperiencesignificantdelaysin doing so, our business will be materiallyharmed.

Todate, the primaryfocus of our productdevelopmenthas been BIO89-100 for the treatmentof patients with NASH.Currently,BIO89-100 is our only productcandidateunder clinicaldevelopment.This may make an investmentin our company riskierthan similarcompaniesthathave multipleproductcandidatesin active developmentand thatthereforemay be able to bettersustaina failureof a lead candidate.Successfulcontinued developmentand ultimateregulatoryapprovalof BIO89-100 for the treatmentof NASHor otherindications, includingSHTG,is criticalto the futuresuccessof our business.We have invested,and will continueto invest,a significantportionof our timeand financialresourcesin the clinicaldevelopmentof BIO89-100. If wecannot successfullydevelop, obtainregulatoryapprovalfor and commercializeBIO89-100, wemay not be able to continueour operations.The futureregulatoryand commercialsuccessof BIO89-100 is subjectto a numberof risks,includingthe following:

• we may not have sufficient financial and other resources to complete the necessary clinical trials for BIO89-100, including, but not limited to, the clinical trials needed to obtain drug approval;

• the mechanism of action of BIO89-100 is complex, and we do not know the degree to which it will translate into a therapeutic benefit, if any, in NASH or any other indication, and we do not know the degree to which the complex mechanism of action may contribute to long-term safety issues or adverse events, if any, when BIO89-100 is taken for prolonged periods such as in the treatment of NASH or any other indication;

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• we may not be able to obtain adequate evidence from clinical trials of efficacy and safety for BIO89-100 for the treatment of NASH or other indications;

• in our clinical trials for BIO89-100, we may need to adjust our clinical trial procedures and may need additional clinical trial sites, which could delay our clinical trial progress;

• the results of our clinical trials may not meet the level of statistical or clinical significance required by the FDA or comparable foreign regulatory authorities for marketing approval;

• patients in our clinical trials may suffer serious adverse effects for reasons that may or may not be related to BIO89-100, which could delay or prevent further clinical development;

• the standards implemented by clinical or regulatory agencies may change at any time and we cannot be certain what efficacy endpoints the FDA or foreign clinical or regulatory agencies may require in pivotal clinical trials with respect to NASH or any other indication for the approval of BIO89-100;

• the results of later stage clinical trials may not be as favorable as the results we have observed to date in our preclinical studies, Phase 1a clinical trial and Phase 1b/2a clinical trial;

• if we obtain accelerated approval of BIO89-100 or any other product candidate based on a surrogate endpoint, we may be required to conduct a post-approval clinical outcomes trial to confirm the clinical benefit of the product candidate; if any such post-approval trial is not successful we may not be able to continue marketing the product;

• we cannot be certain of the number and type of clinical trials and non-clinical studies that the FDA or other regulatory agencies will require in order to approve BIO89-100 for the treatment of NASH or any other indication, including SHTG;

• if approved for NASH or SHTG, BIO89-100 will likely compete with products that may reach approval for the treatment of NASH prior to BIO89-100, products that are currently approved for the treatment of SHTG and the off-label use of currently marketed products for NASH and SHTG;

• positive results from the clinical trials of our competitors developing other FGF product candidates may not be indicative of similar or superior results from our clinical trials for BIO89-100; and

• we may not be able to obtain, maintain or enforceour patentsand otherintellectualpropertyrights.

Of the largenumberof drugs in developmentin the pharmaceuticalindustry,only a smallpercentage resultsin the submissionof a newdrug applicationor a newbiologics license application (“BLA”)to the FDAand even fewer are approved for commercialization.Furthermore,even if wedo receiveregulatoryapprovalto marketBIO89-100, any such approvalmay be subjectto limitationson the indicateduses or patientpopulationsfor which wemay marketthe products.Accordingly,even if weare able to obtainthe requisitefinancingto continueto fund our development programs,wemay be unable to successfullydevelop or commercializeBIO89-100. If weor any of our future developmentcollaboratorsare unable to develop, or obtainregulatoryapprovalfor, or, if approved, successfully commercializeBIO89-100, wemay not be able to generatesufficientrevenueto continueour business.

Clinicaldrug developmentinvolvesa lengthy andexpensiveprocesswith uncertain timelinesanduncertain outcomes,andthe resultsof prior preclinicalor clinicaltrialsare not necessarilypredictiveof our future results.Ourclinicaltrialsmay failto adequatelydemonstratethe safetyandefficacyof BIO89-100or any future product candidates.

BIO89-100 and any futureproductcandidateswill be subjectto rigorousand extensiveclinicaltrialsand extensiveregulatoryapprovalprocessesimplementedby the FDAand comparableforeignregulatoryauthorities beforeobtainingmarketingapprovalfromtheseregulatoryauthorities.The drug developmentand approval processis lengthyand expensive,and approvalis never certain.Investigationalnewdrugs, such as BIO89-100, may not prove to be safeand effectivein clinicaltrials.We have no directexperienceas a company in conductinglaterstageclinicaltrialsrequiredto obtainregulatoryapproval.We may be unable to conduct clinical trialsat preferredsites,enlistclinicalinvestigators,enrollsufficientnumbersof participantsor begin or successfullycompleteclinicaltrialsin a timelyfashion,if at all.In addition,the design of a clinicaltrialcan determinewhether itsresultswill supportapprovalof a product,and flaws in the design of a clinicaltrialmay not becomeapparentuntilthe clinicaltrialis well advanced. Because wehave limitedexperienceas a company designingclinicaltrials,wemay be unable to design and executea clinicaltrialto supportregulatoryapproval. Even if a currentclinicaltrialis successful,it may be insufficientto demonstratethatBIO89-100 is safeor effectivefor registrationpurposes.

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There is a high failureratefor drugs and biologicproductsproceedingthrough clinicaltrials.Failurecan occur at any timeduring the clinicaltrialprocess.The resultsof preclinicalstudiesand earlyclinicaltrialsof BIO89-100 or any futureproductcandidatemay not be predictiveof the resultsof later-stageclinicalstudiesor trialsand the resultsof studiesor trialsin one set of patientsor lineof treatmentmay not be predictiveof those obtainedin another.In fact,many companiesin the pharmaceuticaland biotechnologyindustrieshave suffered significantsetbacksin latestageclinicaltrialseven afterachievingpromisingresultsin preclinicalstudiesand earlierstageclinicaltrials.In addition,data obtainedfrompreclinicaland clinicalactivitiesis subjectto varying interpretations,which may delay, limitor preventregulatoryapproval.It is impossibleto predictwhenor if BIO89-100 or any futureproductcandidatewill prove effectiveor safein humans or will receiveregulatory approval.Owingin partto the complexityof biologicalpathways, BIO89-100 or any futureproductcandidate may not demonstratein patientsthe biochemicaland pharmacologicalpropertiesweanticipatebased on laboratorystudiesor earlierstageclinicaltrials,and they may interactwith human biologicalsystemsor other drugs in unforeseen,ineffectiveor harmfulways. The numberof patientsexposed to productcandidatesand the averageexposuretimein the clinicaldevelopmentprogramsmay be inadequateto detectrareadverseeventsor findingsthatmay only be detectedonce a productcandidateis administeredto morepatientsand for greater periodsof time.Todate, our Phase 1a and Phase 1b/2a clinicaltrialshave involvedsmallpatientpopulationsand, becauseof the smallsamplesizein such trials,the resultsof theseclinicaltrialsmay be subjectto substantial variabilityand may not be indicativeof eitherfutureinterimresultsor finalresultsin future trials of patientswith liveror cardio-metabolicdiseases.If weare unable to successfullydemonstratethe safetyand efficacyof BIO89-100 or otherfutureproductcandidatesand receivethe necessaryregulatoryapprovals,our businesswill be materially harmed.

If weexperiencedelaysin clinicaltesting,our commercialprospectswill be adverselyaffected,our costsmay increaseandour business may be harmed.

Conducting clinicalstudiesfor any productcandidatesfor approvalin the United Statesrequiresfiling an investigational new drug (“IND”) applicationand reachingagreementwith the FDAon clinicalprotocols, findingappropriateclinicalsitesand clinicalinvestigators,securingapprovalsfor such studiesfromthe institutionalreview board at each such site,manufacturingclinicalquantitiesof productcandidatesand supplying drug productto clinicalsites.Currently,wehave two activeINDswith the FDAin the United Statesfor BIO89-100, one with the Division of Hepatology & Nutrition and one with the Division of Diabetes, Lipid Disorders, and Obesity. In the future,wemay filean additionalINDwith anotherdivisionfor any futureindications.If any such futureINDis not approved by the FDA,our clinicaldevelopmenttimelinemay be negativelyimpactedand any futureclinical programsmay be delayedor terminated.

We cannot guaranteethatwewill be able to successfullyaccomplishrequiredregulatoryactivitiesor all of the otheractivitiesnecessaryto initiateand completeclinicaltrials.Asa result,our preclinicalstudiesand clinicaltrialsmay be extended,delayedor terminated,and wemay be unable to obtainregulatoryapprovalsor successfullycommercializeour products.We do not knowwhether any otherclinicaltrialswill begin as planned, will need to be restructuredor will be completedon schedule,or at all.Our productdevelopmentcostswill increaseif weexperiencedelaysin clinicaltesting.Significantclinicaltrialdelaysalso could shortenany periods during which wemay have the exclusiverightto commercializeBIO89-100 and any futureproductcandidatesor allow our competitorsto bring productsto marketbeforewedo, which would impairour abilityto successfully commercializeBIO89-100 or any futureproductcandidatesand may harmour business,resultsof operationsand prospects.Events thatmay resultin a delay or unsuccessfulcompletionof clinicaldevelopmentinclude:

• delays relating to the ongoing COVID-19 pandemic;

• delays in reaching agreement on acceptable terms with prospective contract research organizations (“CROs”) and clinical trial sites;

• ongoing discussions with the FDA or comparable foreign authorities regarding the scope or design of our clinical trials;

• deviations from the trial protocol by clinical trial sites and investigators, or failures to conduct the trial in accordance with regulatory requirements;

• the need to repeat clinical trials as a result of inconclusive or negative results or poorly executed testing or changes in required endpoints or requests for additional information by the FDA or comparable foreign authorities;

• unfavorable FDA inspection and review of a clinical trial site or records of any clinical or preclinical investigation;

• the placement of a clinical hold on a clinical trial by the FDA or comparable foreign authorities;

• delays in obtaining, or the inability to obtain, required approvals from institutional review boards or other governing entities at clinical sites selected for participation in our clinical trials;

• failure of third parties, such as CROs, to satisfy their contractual duties to us or meet expected deadlines;

• delays in the testing, validation, manufacturing and delivery of the product candidates to the clinical sites;

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• insufficient supply or deficient quality of product candidate materials or other materials necessary to conduct our clinical trials;

• for clinical trials in selected patient populations, delays in identification and auditing of central or other laboratories and the transfer and validation of assays or tests to be used to identify selected patients;

• delays in enrolling participants into our clinical trials;

• delays in patients completing a trial or returning for post-treatment follow-up;

• delays caused by patients dropping out of a trial due to side effects, disease progression or otherwise;

• serious and unexpected drug-related adverse effects experienced by participants in our clinical trials;

• implementation of new, or changes to, guidance or interpretations from the FDA or comparable foreign authorities with respect to approval pathways for any product candidates we are pursuing, such as the draft guidance documents from the FDA and the European Medicines Agency for the development of NASH that were issued in 2018 and 2019;

• withdrawal of clinical trial sites from our clinical trials as a result of changing standards of care or the ineligibility of a site to participatein our clinicaltrials;or

• changes in governmentregulationsor administrativeactionsor lack of adequatefunding to continue the clinicaltrials.

Our or our futurecollaborators’inabilityto timelycompleteclinicaldevelopmentcould resultin additionalcoststo us as well as impairour abilityto generateproductrevenue,continuedevelopment, commercializeBIO89-100 and any futureproductcandidates,reachsalesmilestonepaymentsand receive royaltieson productsales.In addition,if wemake changes to a productcandidate,wemay need to conduct additionalnonclinicalstudiesor clinicaltrialsto bridgeor demonstratethe comparabilityof our modifiedproduct candidateto earlierversions,which could delay our clinicaldevelopmentplan or marketingapprovalfor our currentproductcandidateand any futureproductcandidates.

If weencounter difficultiesin enrollingpatientsin our clinicaltrials,our clinicaldevelopmentactivitiescould be delayedor otherwiseadverselyaffected.

The timelycompletionof clinicaltrialslargelydepends on patientenrollment.We may encounterdelays in enrolling,or be unable to enroll,a sufficientnumberof patientsto completeany of our future clinicaltrials,and even once enrolled,wemay be unable to retaina sufficientnumberof patientsto completeany of our trials.

Many factorsaffectpatientenrollment,including:

• the size and nature of the patient population, which may be limited due to diagnostic requirements and enrollment prerequisites;

• the number and location of clinical sites;

• competition with other companies for clinical sites or patients;

• the availability and amount of any patient stipend;

• the eligibility and exclusion criteria for the trial, including any potential requirement for a biopsy;

• the design of the clinical trial;

• inability to obtain and maintain patient consents;

• regulatory requirements, if any;

• significant adverse events or other side effects observed, if any;

• risk that enrolled participants will drop out before completion; and

• competing clinical trials and clinicians’ and patients’ perceptions as to the potential advantages of the drug being studied in relationto otheravailabletherapies(oralversusinjectables,like BIO89-100), includingany newdrugs thatmay be approved for the indicationsweare investigating.

Furthermore,as a resultof the inherentdifficultiesin diagnosingNASH, which can currentlyonly be definitivelydiagnosedthrough a liverbiopsy, and the significantcompetitionfor recruitingNASHpatientsin clinicaltrials, weor our futurecollaboratorsmay be unable to enrollthe patientsweneed to completeclinicaltrialson a timely basis,or at all.

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In addition,our competitors,some of whom have significantlygreaterresourcesthan wedo, are conductingclinicaltrialsfor the sameindicationsand seek to enrollpatientsin theirstudiesthatmay otherwise be eligiblefor our clinicalstudiesor trials,which could lead to slow recruitmentand delaysin our clinical programs.Further,sincethe numberof qualifiedclinicalinvestigatorsis limited,weexpectto conduct some of our clinicaltrialsat the sameclinicaltrialsitesthatsome of our competitorsuse, which could furtherreducethe numberof patientswhoare availablefor our clinicaltrialsin thesesites.

Our inabilityto enrolla sufficientnumberof patientsfor our clinicaltrialswould resultin significant delaysor may requireus to abandon one or moreclinicaltrialsaltogether.If weare unable to enrolla sufficient numberof patientsthatwill completeclinicaltesting,wewill be unable to seek or gain marketingapprovalfor BIO89-100 and any futureproductcandidatesand our businesswill be harmed.Even if weare able to enrolla sufficientnumberof patientsin our clinicalstudiesor trials,delaysin patientenrollmentmay resultin increased costsor may affectthe timingor outcomeof our clinicaltrials,which could preventcompletionof thesetrials and adverselyaffectour abilityto advance the developmentof BIO89-100 and any futureproductcandidates.

We are developingBIO89-100for the treatmentof NASH, an indication for which there are no approved products. This makes it difficultto predictthe timingandcostsof the clinicaldevelopmentof BIO89-100for the treatmentof NASH.

Our currentresearchand developmenteffortsare focusedon developingBIO89-100 for the treatmentof NASH,an indication for which there are no approved products. The regulatoryapprovalprocessfor novelproductcandidatessuch as BIO89-100 can be moreexpensiveand take longerthan for other,betterknownor extensivelystudiedproductcandidates.Asothercompaniesare in laterstagesof clinicaltrialsfor theirpotential NASHtherapies,weexpectthatthe path for regulatoryapprovalfor NASHtherapiesmay continueto evolve in the near termas theseothercompaniesrefinetheirregulatoryapprovalstrategiesand interactwith regulatory authorities.Such evolutionmay impactour futureclinicaltrialdesigns,includingtrialsizeand endpoints,in ways thatwecannot predicttoday. Certain of our competitors have recently experienced regulatory setbacks for NASH therapies following communications from the FDA. We currently do not know the impact, if any, that these setbacks could have on the path for regulatory approval for NASH therapies generally or for BIO89-100. Our anticipateddevelopmentcostswould likelyincreaseif developmentof BIO89-100 or any futureproductcandidateis delayedbecauseweare requiredby the FDAto performstudiesor trialsin additionto, or differentfrom,those thatwecurrentlyanticipate.Because of the numerousrisksand uncertaintiesassociatedwith pharmaceuticalproductdevelopment,weare unable to predictthe timingor amount of any increasein our anticipateddevelopmentcosts.

BIO89-100andany future product candidatesmay cause undesirableside effectsor have other propertiesthat could delay or preventtheirregulatoryapproval or limitthe commercialprofileof anapproved label.

Undesirableside effectscaused by BIO89-100 or any futureproductcandidatescould cause us or regulatoryauthoritiesto interrupt,delay or haltclinicaltrialsand could resultin a morerestrictivelabelor the delay or denialof regulatoryapprovalby the FDAor othercomparableforeignregulatoryauthorities.Additional clinicalstudiesmay be requiredto evaluatethe safetyprofileof BIO89-100 or any futureproductcandidates.

As with other drugs, we have seen evidence of adverse effects in animal and human studies and it is possible that other adverse effects will become apparent in ongoing or future animal or human safety studies. As with any animal or human safety finding, to the extent that these adverse effects are determined to be clinically relevant, they could have a negative impact on our clinical program.

Future resultsof our trialscould reveala high and unacceptableseverityand prevalenceof side effects or unexpectedcharacteristics.In such an event, wecould suspend or terminateour trialsor the FDAor comparableforeignregulatoryauthoritiescould orderus to ceaseclinicaltrialsor deny approvalof BIO89-100 or any futureproductcandidatesfor any or alltargetedindications.Drug-relatedside effectscould affectpatient recruitmentor the abilityof enrolledsubjectsto completethe trialor resultin potentialproductliabilityclaims.

Anyof theseoccurrencescould materiallyand adverselyaffectour business,financialcondition,resultsof operationsand prospects.

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It may be difficultto discernwhether certaineventsor symptomsobservedduring our clinicaltrialsor by patientsusing our approved productsare relatedto BIO89-100 or any futureproductcandidatesor approved productsor some otherfactor.Asa result,weand our developmentprogramsmay be negativelyaffectedeven if such eventsor symptomsare ultimatelydeterminedto be unlikelyrelatedto BIO89-100 or any futureproduct candidatesor approved products.We cannot assureyou thatadditionalor moresevereadverseside effects relatedto BIO89-100 or any futureproductcandidateswill not be observedin our clinicaltrialsor in the commercialsetting.Further,weexpectthatBIO89-100 will requiremultipleadministrationsvia subcutaneous injectionin the courseof a clinicaltrial,and thischronicadministrationincreasesthe riskthatour clinicaldrug developmentprogramsmay not uncover allpossibleadverseeventsthatmay eventuallybe experiencedby patientstreatedwith BIO89-100, such as rareadverseeventsor chance findingsthatmay only be detectedonce productcandidatesare administeredto more patientsor for greaterperiodsof time.If observed,such adverseside effectscould delay or precluderegulatoryapprovalof BIO89-100 or any futureproductcandidates,limit commercialuse or resultin the withdrawalof previouslygrantedmarketingapprovals.If weor othersidentify undesirableor unacceptableside effectscaused by BIO89-100 or any futureproductcandidatesor products:

• we may be required to modify, suspend or terminate our clinical trials;

• we may be required to modify or include additional dosage and administration instructions, warnings and precautions, contraindications, boxed warnings, limitations, restrictions or other statements in the product label for our approved products, or issue field alerts to physicians and pharmacies;

• we may be required to conduct costly additional clinical trials;

• we may be subject to limitations on how we may promote our approved products;

• sales of our approved products may decrease significantly;

• regulatory authorities may require us to take our approved products off the market;

• we may be subject to regulatory investigations, government enforcement actions, litigation or product liability claims; and

• our products may becomelesscompetitiveor our reputationmay suffer.

Anyof theseresultscould decreaseor preventany salesof our approved productor substantially increasethe costsand expensesof commercializingand marketingour product.

We face substantialcompetition,whichmay resultin others discovering,developingor commercializing competingproducts beforeor more successfullythan us.

The biopharmaceuticalindustryis intenselycompetitiveand subjectto rapidinnovationand significant technologicaladvancements.We believethe key competitivefactorsthatwill affectthe developmentand commercialsuccessof BIO89-100 and any futureproductcandidatesare efficacy,safetyand tolerabilityprofile, reliability,convenienceof dosing, price,the levelof genericcompetitionand reimbursement.Our competitors includemultinationalpharmaceuticalcompanies,specializedbiotechnologycompanies,universitiesand other researchinstitutions.Anumberof biotechnologyand pharmaceuticalcompaniesare pursuingthe developmentor marketingof pharmaceuticalsthattargetthe samediseasesthatweare targeting. Certain of these companies have recently published positive data regarding their clinical trials, which may further increase the competition we face. Smalleror earlier-stage companiesmay also prove to be significantcompetitors,particularlythrough collaborativearrangementswith large,establishedcompanies.Given the high incidenceof NASHand SHTG, it is likelythatthe numberofcompaniesseekingto develop productsand therapiesfor the treatmentof liverand cardio-metabolicdiseases, such as NASHand SHTG, will increase.

There are no currentlyapproved therapiesfor the treatmentof NASH.Although thereare no approved therapiesthatspecificallytargetthe signalingpathways thatBIO89-100 is designedto affect, thereare numerouscurrentlyapproved therapiesfor treatingdiseasesotherthan NASHand some of thesecurrentlyapproved therapiesmay exerteffectsthatcould be similarto BIO89-100. Many of theseapproved drugs are well-establishedtherapiesor productsand are widely acceptedby physicians,patientsand third-partypayors. Some of thesedrugs are branded and subjectto patentprotection,and othersare availableon a genericbasis.Insurersand otherthird-partypayors may also encouragethe use of genericproductsor specificbranded products.We expect thatif BIO89-100 or any futureproductcandidatesare approved, they will be pricedat a significantpremium over competitivegenericproducts,includingbranded genericproducts.This may make it difficultfor us to differentiateour productsfromcurrentlyapproved therapies,which may adverselyimpactour businessstrategy. In addition,many companiesare developingnewtherapeutics,and wecannot predictwhat the standardof care will be as BIO89-100 or any futureproductcandidatesprogressthrough clinicaldevelopment.In addition,to the extentBIO89-100 or any futureproductcandidatesare approved for cardio-metabolicindications,such as SHTG, the commercialsuccessof our productswill also depend on our abilityto demonstratebenefitsover the then-prevailingstandardof care,includingdiet,exerciseand lifestylemodifications.

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Further,if BIO89-100 or any futureproductcandidatesare approved for the treatmentof SHTG,wewill competewith currentlyapproved therapiesand therapiesfurtheralong in development.Our competitorsboth in the United Statesand abroad includelarge,well-establishedpharmaceuticaland genericcompanieswith significantlygreatername recognition.Our competitorsmay be able to chargelower pricesthan wecan, which may adverselyaffectour marketacceptance.Many of thesecompetitorshave greaterresourcesthan wedo, includingfinancial,productdevelopment,marketing,personneland otherresources.Clinicaltrialsfor the treatmentof SHTGmay be relativelycostlyand timeconsuming. The requirementsfor approvalby the FDAandcomparableforeignregulatoryauthoritiesmay change over timeand thismay requirechanges to ongoing or futureclinicaltrialdesignsthatcould impacttimelinesand cost.

If our competitorsmarketproductsthatare moreeffective,saferor cheaperthan our productsor that reachthe marketsooner than our products,wemay not achievecommercialsuccess.In addition,the biopharmaceuticalindustryis characterizedby rapidtechnologicalchange. Because our researchapproach integratesmany technologies,it may be difficultfor us to stay abreastof the rapidchanges in othertechnologies. If wefailto stay at the forefrontof technologicalchange, wemay be unable to competeeffectively.

Technologicaladvancesor productsdevelopedby our competitorsmay renderour technologies,productsor productcandidatesobsolete,lesscompetitiveor not economical.

Many of our competitorshave substantiallygreaterfinancial,technical,human and otherresourcesthan wedo and may be betterequipped to develop, manufactureand markettechnologicallysuperiorproducts.In addition,many of thesecompetitorshave significantlylongeroperatinghistoriesand greaterexperiencethan we have in undertakingnonclinicalstudiesand human clinicaltrialsof newpharmaceuticalproductsand in obtainingregulatoryapprovalsof human therapeuticproducts.Many of our competitorshave established distributionchannelsfor the commercializationof theirproducts,whereas wehave no such channelor capabilities.In addition,many competitorshave greatername recognitionand moreextensivecollaborative relationships.

Asa result,our competitorsmay obtainregulatoryapprovalof theirproductsmorerapidlythan wedo or may obtainpatentprotectionor otherintellectualpropertyrightsthatlimitour abilityto develop or commercializeour productcandidateor any futureproductcandidates.Our competitorsmay also develop and succeedin obtainingapprovalfor drugs thatare moreeffective,moreconvenient,morewidely used and less costlyor have a bettersafetyprofilethan our productsand thesecompetitorsmay also be moresuccessfulthan weare in manufacturingand marketingtheirproducts.If weare unable to competeeffectivelyagainstthese companies,then wemay not be able to commercializeour productcandidateor any futureproductcandidatesor achievea competitivepositionin the market.This would adverselyaffectour abilityto generaterevenue.Our competitorsalso competewith us in recruitingand retainingqualifiedscientific,managementand commercial personnel,establishingclinicaltrialsitesand enrollingpatientsfor clinicaltrials,as well as in acquiring technologiescomplementaryto, or necessaryfor, our programs.Our inabilityto competeeffectivelyin any of theseaspectsof our businesscould harmour business,financialcondition,resultsof operationsand prospects.

Lack of efficacy,adverseeventsor undesirableside effectsmay emergein clinicaltrialsconducted by third partiesdevelopingFGFproduct candidates,whichcould adverselyaffectour stock price,our abilityto attract additionalcapitalandour developmentprogram.

Lack of efficacy,adverseeventsor undesirableside effectsmay emergein clinicaltrialsconductedby thirdpartiesdevelopingFGFproductcandidateslikeours. For example,Bristol-MyersSquibb Company and Akero Therapeutics,Inc. are also developingFGF21productcandidatesfor the treatmentof NASH.We have no controlover theirclinicaltrialsor developmentprogram,and lack of efficacy,adverseeventsor undesirableside effectsexperiencedby subjectsin theirclinicaltrialscould adverselyaffectour stock price,our abilityto attract additionalcapitaland our developmentof BIO89-100 or even the viabilityof BIO89-100 as a productcandidate, includingby creatinga negativeperceptionof FGFtherapeuticsby healthcareprovidersor patients.

Interim,toplineandpreliminarydata fromour clinicaltrialsthat weannounceor publish fromtimeto time may change as more patientdata becomeavailableandare subjectto audit andverificationproceduresthat could resultin materialchanges in the finaldata.

From timeto time,wemay publiclydisclosepreliminaryor toplinedata fromour clinicaltrials,which are based on a preliminaryanalysisof then-availabledata, and the resultsand relatedfindingsand conclusions are subjectto change followinga morecomprehensivereview of the data relatedto the particularstudy or trial. We also make assumptions,estimations,calculationsand conclusionsas partof our analysesof data, and wemay not have receivedor had the opportunityto fullyand carefullyevaluatealldata. Asa result,the toplineresults thatwereportmay differfromfutureresultsof the samestudies,or differentconclusionsor considerationsmay qualifysuch results,once additionaldata have been receivedand fullyevaluated.Topline data also remain subjectto auditand verificationproceduresthatmay resultin the finaldata being materiallydifferentfromthe preliminarydata wepreviouslypublished.Asa result,toplinedata should be viewed with cautionuntilthe final data are available.From timeto time,wemay also discloseinterimdata fromour clinicaltrials.In addition,we may reportinterimanalysesof only certainendpointsratherthan allendpoints.Interimdata fromclinicaltrials thatwemay completeare subjectto the riskthatone or moreof the clinicaloutcomesmay materiallychange as patientenrollmentcontinuesand morepatientdata becomeavailable.

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In addition,adversechanges between interimdata and finaldata could significantlyharmour business and prospects.Additionaldisclosureof interimdata by us or by our competitorsin the futurecould also resultin volatilityin the priceof our commonstock.Further,others,includingregulatoryagencies,may not acceptor agreewith our assumptions,estimates,calculations,conclusionsor analysesor may interpretor weigh the importanceof data differently,which could impactthe value of the particularprogram,the approvabilityor commercializationof the particularproductcandidateor productand our company in general.In addition,the informationwechoose to publiclydiscloseregardinga particularstudy or clinicaltrialis based on what is typicallyextensiveinformation,and you or othersmay not agreewith what wedetermineis the material or otherwiseappropriateinformationto includein our disclosure,and any informationwedeterminenot to disclosemay ultimatelybe deemedsignificantwith respectto futuredecisions,conclusions,views, activitiesor otherwiseregardinga particulardrug, drug candidateor our business.If the toplinedata thatwereportdiffer fromactualresults,or if others,includingregulatoryauthorities,disagreewith the conclusionsreached,our abilityto obtainapprovalfor, and commercialize,BIO89-100 or any futureproductcandidatesmay be harmed, which could harmour business,financialcondition,resultsof operationsand prospects.

We may encounter difficultiesin managing our growth, whichcould adverselyaffectour operations.

We are in the earlystagesof buildingthe fullmanagementteamand employeebase thatweanticipate wewill need to completethe developmentBIO89-100 and otherfutureproductcandidates.Asof September 30, 2020, wehad 25 employees,some of whom are based in the United Statesand some of whom are based in Israel.As weadvance our preclinicaland clinicaldevelopmentprogramsfor productcandidates,seek regulatoryapproval in the United Statesand elsewhereand increasethe numberof ongoing productdevelopmentprograms,we anticipatethatwewill need to increaseour productdevelopment,scientificand administrativeheadcount.We will also need to establishcommercialcapabilitiesin orderto commercializeany productcandidatesthatmay be approved. Such an evolutionmay impactour strategicfocus and our deploymentand allocationof resources.Our management,personneland systemsmay experiencedifficultyin adjustingto our growth and strategicfocus.

Our abilityto manageour operationsand growth effectivelydepends upon the continualimprovement of our procedures,reportingsystemsand operational,financialand managementcontrols.We may not be able to implementadministrativeand operationalimprovementsin an efficientor timelymannerand may discover deficienciesin existingsystemsand controls.If wedo not meetthesechallenges,wemay be unable to execute our businessstrategiesand may be forcedto expend moreresourcesthan anticipatedaddressingtheseissues.

We may acquireadditionaltechnologyand complementarybusinessesin the future.Acquisitions involvemany risks,any of which could materiallyharmour business,includingthe diversionof management’s attentionfromcore businessconcerns,failureto effectivelyexploitacquiredtechnologies,failureto successfully integratethe acquiredbusinessor realizeexpectedsynergiesor the loss of key employeesfromeitherour businessor the acquiredbusinesses.

In addition,in orderto continueto meetour obligationsas a publiccompany and to supportour anticipatedlong-termgrowth, wewill need to increaseour generaland administrativecapabilities.Our management,personneland systemsmay not be adequateto supportthisfuturegrowth.

If weare unable to successfullymanageour growth and the increasedcomplexityof our operations,our business,financialposition,resultsof operationsand prospectsmay be materiallyand adverselyaffected.

We must attractandretainhighly skilledemployeesin order to succeed. If weare not able to retainour current senior managementteamandour scientificadvisorsor continue to attractandretainqualified scientific,technicalandbusiness personnel, our business will suffer.

We may not be able to attractor retainqualifiedpersonneland consultantsdue to the intense competitionfor such individuals in the biotechnologyand pharmaceuticalindustries.If weare not able to attractand retainnecessarypersonneland consultantsto accomplishour businessobjectives,wemay experience constraintsthatwill significantlyimpedethe achievementof our developmentand commercialobjectives,our abilityto raiseadditionalcapitaland our abilityto implementour businessstrategy.

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Our industryhas experienceda high rateof turnoverof managementpersonnelin recentyears.We are highly dependenton the development,regulatory,commercializationand businessdevelopmentexpertiseof the membersof our executiveteam,as well as otherkey employeesand consultants.If welose one or moreof our executiveofficersor otherkey employeesor consultants,our abilityto implementour businessstrategy successfullycould be seriouslyharmed.Anyof our executiveofficersor otherkey employeesor consultantsmay terminatetheiremploymentat any timeand replacingsuch individualsmay be difficultand time-consuming becauseof the limitednumberof individualsin our industrywith the necessarybreadthof skillsand experience. Competitionto hireand retainemployeesand consultantsfromthislimitedpool is intense,and wemay be unable to hire,train,retainor motivatesuch individuals.Additionally,wedo not currentlymaintain“key person”life insuranceon the livesof our executivesor any of our employees.This lack of insurancemeansthatwemay not receiveadequatecompensationfor the loss of the servicesof theseindividuals.If weare unable to continueto attractand retainhigh-qualitypersonnel,the rateand successwith which wecan discoverand develop product candidatesand our businesswill be limited.

We have reliedon,andexpectto continue to relyon,third-partymanufacturersto produce BIO89-100or any future product candidates.Anyfailureby a third-partymanufacturerto produce acceptableproduct candidatesfor us pursuant to our specificationsandregulatorystandards may delay or impairour abilityto initiateor completeour clinicaltrials,obtain andmaintainregulatoryapprovalsor commercializeapproved products.

The manufacturingof biologicdrugs such as BIO89-100 is complexand the processof identifyingthe qualifyingsupplierstakesa significantinvestmentof timeand money. We do not ownor operatemanufacturing facilitiesfor the productionof clinicalor commercialquantitiesof our productcandidates,and welack the resourcesand the capabilitiesto do so. Asa result,wecurrentlyrely,and expectto relyfor the foreseeablefuture, on third-partymanufacturersto supply us with BIO89-100 and any futureproductcandidates.

We currentlyhave a sole sourcerelationshipwith BTPH pursuantto which they supply us with BIO89-100. If thereshould be any disruptionin our supply arrangementwith BTPH, includingany adverseeventsaffectingBTPH,it could have a negativeeffecton the clinicaldevelopmentof BIO89-100 and otheroperationswhile wework to identifyand qualifyan alternatesupply source.

We do not have a long-termsupply agreementwith any third-partymanufacturer.Relianceon third-partymanufacturersentailsrisksto which wewould not be subjectif wemanufactureproductcandidatesor productsourselves.For example,if wedo not maintainour key manufacturingrelationships,wemay failto find replacementmanufacturersor develop our ownmanufacturingcapabilitiesin a timelymanneror at all,which could delay or impairour abilityto obtainregulatoryapprovalfor our productsand substantiallyincreaseour costsor depleteprofitmargins,if any. If wedo find replacementmanufacturers,wemay not be able to enterinto agreementswith themon termsand conditionsfavorableto us, and therecould be a substantialdelay beforenew facilitiescould be qualifiedand registeredwith the FDAand othercomparableforeignregulatoryauthorities.

Even if weare able to establishagreementswith third-partymanufacturers,relianceon third-partymanufacturers entailsadditionalrisks,including:

• the possible failure of the third party to manufacture 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 product candidates or otherwise do not satisfactorily perform according to the terms of the agreements between us and them;

• the possible breach of the manufacturing agreement by the third party because of factors beyond our control (including a failure to manufacture product candidates in accordance with our product specifications);

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

• the possibility of 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;

• the possible misappropriation of our proprietary information, including our trade secrets and know-how;

• the possible termination or nonrenewal of the agreement by the third party at a time that is costly or inconvenient for us; and

• reliance on the third partyfor regulatorycompliance,qualityassuranceand safetyand pharmacovigilancereporting.

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Certainraw materialsnecessaryfor the manufactureof BIO89-100 under our currentmanufacturing process,such as reagentsthatare needed for the glycoPEGylation,are availableonly froma singlesupplier.In April 2018, weenteredinto a Reagent Supply and Technology TransferAgreementwith Teva under which Teva agreedto supply us severalreagentsrequiredfor the glycoPEGylationprocessuntilDecember31, 2022 and transferthe know-howrequiredfor our productionof thesereagents.We expectthe manufactureof these reagentswill be transferredto a newsupplierpriorto expirationof the agreementwith Teva. Anycomplications arisingunder our agreementwith Teva, with the subsequenttransferof know-howto us, or any difficulties securinga newsuppliercould considerablydelay the manufactureof BIO89-100. Anysignificantdelay in the acquisitionor decreasein the availabilityof theseraw materialsfromTeva or any newsuppliercould considerablydelay the manufactureof BIO89-100, which could adverselyimpactthe timingof any planned trials or the regulatoryapprovalsof BIO89-100.

The FDAand othercomparableforeignregulatoryauthoritiesrequiremanufacturersto register manufacturingfacilities.The FDAand othercomparableforeignregulatoryauthoritiesalso inspectthese facilitiesto confirmcompliancewith currentgood manufacturingpractices(“cGMP”).Contractmanufacturers may facemanufacturingor qualitycontrolproblemscausingdrug substanceproductionand shipmentdelaysor a situationwhere the contractormay not be able to maintaincompliancewith the applicablecGMPrequirements. We may have littleto no controlregardingthe occurrenceof third-partymanufacturerincidents.Anyfailureto complywith cGMPrequirementsor otherFDAor comparableforeignregulatoryrequirementscould adversely affectour clinicalresearchactivitiesand our abilityto develop BIO89-100 or any futureproductcandidatesand marketour productsfollowingapproval.Our sole sourcesupplier,BTPH,has not yet manufactureda commercial product,and as a result,has not been subjectto inspectionby the FDAand othercomparableforeignregulatory authorities.

If BIO89-100 or any futureproductcandidatesare approved by the FDAor othercomparableforeign regulatoryauthoritiesfor commercialsale,wemay need to manufacturesuch productcandidatein larger quantities.We intendto use third-partymanufacturersfor commercialquantitiesof BIO89-100 to the extentwe advance thisproductcandidateand otherproductcandidates.Our manufacturersmay not be able to successfully increasethe manufacturingcapacityfor any of our productcandidatesin a timelyor efficientmanner,or at all.If weare unable to successfullyincreasethe manufacturingcapacityfor a productcandidate,the regulatory approvalor commerciallaunch of thatproductcandidatemay be delayedor theremay be a shortagein the supply of the productcandidate.

In addition,the operationsof our third-partymanufacturersmay be subjectto earthquakes,power shortages,telecommunicationsfailures,failuresor breachesof informationtechnologysystems,water shortages, floods,hurricanes,typhoons, fires,extremeweatherconditions,actual and threatened public health emergencies, including the ongoing COVID-19 pandemic,and othernaturalor man-madedisastersor businessinterruptions.Damage or extendedperiodsof interruptionto our facilitiesdue to fire,naturaldisaster,power loss, communicationsfailure,unauthorizedentryor othereventscould cause us to ceaseor delay developmentof some or allof our productcandidates.Our abilityto obtainclinicalsuppliesof our productcandidatescould be disruptedif the operationsof thesesuppliersare affectedby a man-madeor natural disasteror otherbusinessinterruption.

Our currentand anticipatedfuturedependenceupon othersfor the manufactureof our product candidatesmay adverselyaffectour futureprofitmarginsand our abilityto develop our productcandidatesand commercializeany productsthatreceiveregulatoryapprovalon a timelybasis.

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In some cases,the technicalskillsor technologyrequiredto manufactureour productcandidatesmay be unique or proprietaryto the originalmanufacturer,wemay have difficultytransferringsuch skillsor technology to anotherthirdpartyand a feasiblealternativemany not exist.These factorswould increaseour relianceon such manufactureror requireus to obtaina licensefromsuch manufacturerin orderto have anotherthirdparty manufactureour productcandidates.If weare requiredto change manufacturersfor any reason,wewill be requiredto verifythatthe newmanufacturermaintainsfacilitiesand proceduresthatcomplywith quality standardsand with allapplicableregulationsand guidelines.For example,in the event thatweneed to switch our third-partymanufacturerof BIO89-100 fromBTPH,which is our sole manufacturingsourcefor BIO89-100, we anticipatethatthe complexityof the glycoPEGylationmanufacturingprocessmay materiallyimpactthe amount of timeit may take to securea replacementmanufacturer.The delaysassociatedwith the verificationof a new manufacturer, if weare able to identifyan alternativesource,could negativelyaffectour abilityto developproductcandidatesin a timelymanneror within budget.

Themanufactureof biologicproducts is complexandweare subjectto many manufacturingrisks,any of whichcould substantiallyincreaseour costsandlimitsupply of our products.

Todate, BIO89-100 has been manufacturedby a singlethird-partymanufacturer,BTPH,solelyfor preclinicalstudiesand clinicaltrials.This manufacturermay not be able to scaleproductionto the larger quantitiesrequiredfor largeclinicaltrialsand to commercializeBIO89-100. The processof manufacturing BIO89-100 is complex,highly regulatedand subjectto severalrisks,including:

• the process of manufacturing biologics is susceptible to product loss due to contamination, equipment failure, improper installation or operation of equipment, vendor or operator error and improper storage conditions. Even minor deviations from normal manufacturing processes could result in reduced production yields, product defects and other supply disruptions. If microbial, viral or other contaminations are discovered in our products or in the manufacturing facilities in which our products are made, the manufacturing facilities may need to be closed for an extended period of time to investigate and eliminate the contamination;

• the manufacturing facilities in which our products are made could be adversely affected by equipment failures, labor and raw material shortages, financial difficulties of our contract manufacturers, natural disasters, actual or threatened public health emergencies, including the ongoing COVID-19 pandemic, power failures, local political unrest and numerous other factors; and

• any adverse developments affecting manufacturing operations for our products may result in shipment delays, inventory shortages, lot failures, product withdrawals or recalls or other interruptions in the supply of our products. We may also have to record inventory write-offs and incur other charges and expenses for products that fail to meet specifications, undertake costly remediation efforts or seek costlier manufacturing alternatives.

The manufactureof biologicproducts,and in particular,the glycoPEGylationprocess,is complexand requiressignificantexpertiseand capitalinvestment,includingthe developmentof advanced manufacturing techniquesand processcontrols.Manufacturersof biologicproductsoftenencounterdifficultiesin production, particularlyin scalingup and validatinginitialproductionand ensuringthe avoidanceof contamination.These problemsincludedifficultieswith productioncostsand yields,qualitycontrol,includingstabilityof the product, qualityassurancetesting,operatorerrorand shortagesof qualifiedpersonnel,as well as compliancewith strictly enforcedfederal,stateand foreignregulations.We cannot assureyou thatany stabilityor otherissuesrelatingto the manufactureof BIO89-100 will not occur in the future.

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We have limitedprocessdevelopmentcapabilitiesand have accessonly to externalmanufacturing capabilities.We do not have and wedo not currentlyplan to acquireor develop the facilitiesor capabilitiesto manufacturebulk drug substanceor filleddrug productfor use in human clinicaltrialsor commercialization. Anydelay or interruptionin the supply of clinicaltrialmaterials, includingas a resultof breachby us or BTPHof our agreementwith BTPH,or our inabilityto agreeto the termsof supply or relatedservicesin any statement of work, could delay the completionof clinicaltrials,increasethe costsassociatedwith maintainingclinicaltrial programsand, depending upon the periodof delay, requireus to commencenewclinicaltrialsat additional expense or terminateclinicaltrialscompletely.

We plan to developa newdrug product formulationfor BIO89-100andwemay be unsuccessful.Anychanges in methodsof product candidatemanufacturingor formulationmay resultin the need to performnewclinical trials or obtain new drug product,whichwouldrequireadditionalcostsandcause delay.

We plan to develop a newdrug productformulationof BIO89-100 for latestageclinicaltrialsand commercialization.Our currentdrug productis storedas a frozenliquidand is thereforenot well-suitedto larger clinicaltrialsor commercialization.We have engaged a formulationdevelopmentcompany to exploreboth a new refrigeratedliquidformulationand a freeze-dried,or lyophilized,formulation. We have commenced development of a pre-filled syringe for the newdrug productformulation and we also plan to begin development of a pen-typeautoinjector.There is no assurancethatwewill be successful in developinga newdrug productformulation, a pre-filled syringeor an autoinjectoron a timelybasisor at all,which could impede our developmentand commercializationstrategyfor BIO89-100. The FDAor othercomparableforeign regulatoryauthoritiescould requirenonclinicalstudiesor clinicaltrialsto supportintroductionof any new formulation, pre-filled syringeand autoinjector,which could delay completionof clinicaltrials,requirethe conduct of bridging clinicaltrialsor the repetitionof one or moreclinicaltrials,increaseour clinicaltrialcosts,delay approvalof BIO89-100 and jeopardizeour abilityto commenceproductsalesand generaterevenuefromBIO89-100, if approved. The FDAor othercomparableforeign regulatoryauthoritiesmay in the future require us to use a drug product formulation that is different than the formulation being used, which would render our current supply unusable, require additional costs and cause delay.

We relyonthird partiesto conduct our clinicaltrialsandsome aspectsof our researchandpreclinicaltesting, andthose third partiesmay not performsatisfactorily,including failingto meetdeadlinesfor the completion of such trials,researchor testing.

We currentlyrelyon, and expectto continueto relyon, thirdparties,such as CROs,clinicaldata managementorganizations,medicalinstitutions,consultantsand clinicalinvestigators,to conduct our clinical trialsand certainaspectsof our researchand preclinicaltesting.Anyof thesethirdpartiesmay terminatetheir engagementswith us at any time.If weneed to enterinto alternativearrangements,it would delay our product developmentactivitiesand such alternativearrangementsmay not be availableon termsacceptableto us.

Our relianceon thesethirdpartiesfor researchand developmentactivitieswill reduceour controlover theseactivities,but will not relieveus of our responsibilities.For example,wewill remainresponsiblefor ensuringthateach of our clinicaltrialsis conductedin accordancewith the generalinvestigationalplan and protocolsfor the trial.Moreover,the FDArequiresus to complywith standards,commonlyreferredto as current GoodClinicalPractices,for conducting,recordingand reportingthe resultsof clinicaltrialsto assurethatdata and reportedresultsare credibleand accurateand thatthe rights,integrityand confidentialityof trialparticipants are protected.We also are requiredto registerongoing clinicaltrialsand post the resultsof completedclinical trialson a government-sponsoreddatabase,ClinicalTrials.gov,within certaintimeframes.Failureto do so can resultin fines,adversepublicityand civiland criminalsanctions.

Furthermore,thesethirdpartiesmay also have relationshipswith otherentities,some of which may be our competitors.If thesethirdpartiesdo not successfullycarryout theircontractualduties,meetexpected deadlinesor conduct our clinicaltrialsin accordancewith regulatoryrequirementsor our statedprotocols,we will not be able to obtain,or may be delayedin obtaining,marketingapprovalsfor BIO89-100 or any future productcandidatesand will not be able to, or may be delayedin our effortsto, successfullycommercializeour medicines.

We also expectto relyon otherthirdpartiesto storeand distributedrug suppliesfor our clinicaltrials. Anyperformancefailureon the partof our distributorscould delay clinicaldevelopment,marketingapproval and/orcommercializationof BIO89-100 or any futureproductcandidates,producingadditionallossesand deprivingus of potentialrevenue.

In addition,while wehave receivedthe majorityof the knowledge with regardto our currentproduct candidatefromTeva, wemay stilldepend on Teva to provideinformationand documentationregardingcertain aspectsof BIO89-100 or any futureproductcandidates.If Teva delaysprovidingor failsto providesuch informationor documentation,wemay also be delayedin our effortsto successfullycommercializeBIO89-100 or any futureproductcandidates.We also depend on Teva to supportour effortsto transferthe manufacturing processto a contractmanufacturer.If Teva is unable to or otherwisefailsto supportsuch transfer,wemay incur significantdelay and increasedcostsin commercializingBIO89-100 or any futureproductcandidates.

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We may not be able to obtain andmaintainthe third-partyrelationshipsthat are necessaryto develop, commercializeandmanufacturesome or all of our product candidates.

We expectto depend on collaborators,partners,licensees,clinicalinvestigators,CROs,manufacturers and otherthirdpartiesto supportour discoveryefforts,to formulateproductcandidates,to conduct clinicaltrials for some or allof our productcandidates,to manufactureclinicaland commercialscalequantitiesof our drug substanceand drug productand to market,selland distributeany productswesuccessfullydevelop. Any problemsweexperiencewith any of thesethirdpartiescould delay the development,commercializationand manufacturingof our productcandidates,which could harmour resultsof operations.

We cannot guaranteethatwewill be able to successfullynegotiateagreementsfor, or maintain relationshipswith, collaborators,partners,licensees,clinicalinvestigators,CROs,manufacturersand otherthird partieson favorableterms,if at all.If weare unable to obtainor maintaintheseagreements,wemay not be able to clinicallydevelop, formulate,manufacture,obtainregulatoryapprovalsfor or commercializeBIO89-100 and any futureproductcandidates,which will in turn adverselyaffectour business.

We expectto expend substantialmanagementtimeand effortto enterinto relationshipswith third partiesand, if wesuccessfullyenterinto such relationships,to managetheserelationships.In addition,substantial amountswill be paid to thirdpartiesin theserelationships.However, wecannot controlthe amountor timingof resourcesour futurecontractpartnerswill devote to our researchand developmentprograms,productcandidates or potentialproductcandidates,and wecannot guaranteethatthesepartieswill fulfilltheirobligationsto us under thesearrangementsin a timelyfashion,if at all.In addition,while wemanagethe relationshipswith third parties,wecannot controlallof the operationsof and any outsourcingused by such thirdparties.We relyon thirdparties’knowledge regardingspecificlocallaws and regulatoryrequirementsin foreignjurisdictions,where applicable.

If wefailto developandcommercializeadditionalproduct candidates,wemay be unable to growour business.

Although the developmentand commercializationof BIO89-100 is currentlyour primaryfocus, as part of our longer-termgrowth strategy,weplan to evaluatethe developmentand commercializationof other therapiesrelatedto NASHand otherliverand cardio-metabolicdiseases.The successof thisstrategydepends primarilyupon our abilityto identifyand validatenewtherapeuticcandidates,and to identify,develop and commercializenewdrugs and biologics.Our researcheffortsmay initiallyshowpromisein discoveringpotential newdrugs and biologics,yet failto yieldproductcandidatesfor clinicaldevelopmentfor a numberof reasons, including:

• wemay need to relyon thirdpartiesto generatepipeline candidatesfor our portfolio;

• wemay encounterproductmanufacturingdifficultiesthatlimityieldor produce undesirable characteristicsthatincreasethe cost of manufacturingour productcandidates,cause delaysor make our productcandidatesunmarketable;

• productcandidatesmay cause adverseeffectsin patientsor subjects,even aftersuccessfulinitial toxicologystudies,which may make the productcandidatesunmarketable;

• productcandidatesmay not demonstratea meaningfulbenefitto patientsor subjects;and

• our futurecollaborationpartnersmay change theirdevelopmentprofilesor plans for potential productcandidatesor abandon a therapeuticareaor the developmentof a partneredproduct.

If any of theseeventsoccur, wemay be forcedto abandon our developmenteffortsfor one or more programs,which could have a materialadverseeffecton our business,operatingresultsand prospectsand could potentiallycause us to ceaseoperations.Future researchprogramsto identifynewproductcandidatesmay requiresubstantialtechnical,financialand human resources.We may focus our effortsand resourceson potential programsor productcandidatesthatultimatelyprove to be unsuccessful.

Product candidatesmay requireadditional,time-consumingdevelopmenteffortspriorto commercial sale,includingpreclinicalstudies,clinicaltrialsand approvalby the FDAand/orcomparableforeignregulatory authorities.All productcandidatesare prone to the risksof failurethatare inherentin pharmaceuticalproduct development,includingthe possibilitythatthe productcandidatewill not be shownto be sufficientlysafeand effectivefor approvalby regulatoryauthorities.In addition,wecannot assureyou thatany such productsthatare approved will be manufacturedor produced economically,be successfullycommercialized,be widely accepted in the marketplace,or be moreeffectivethan othercommerciallyavailablealternatives.

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We may use our limitedfinancialandhumanresourcesto pursue a particularresearchprogram or product candidatethat is ultimatelyunsuccessfulor lesssuccessfulthan other programsor product candidatesthat we may have forgone or delayed.

Because wehave limitedpersonneland financialresources,wemay foregoor delay the developmentof certainprogramsor productcandidatesthatlaterprove to have greatercommercialpotentialthan the programsor productcandidatesthatwedo pursue. Our resourceallocationdecisionsmay cause us to failto capitalizeon viablecommercialproductsor profitablemarketopportunities.Our spending on currentand futureresearchand developmentprogramsfor productcandidatesmay not yieldany commerciallyviableproducts.Similarly,our decisionsto delay or terminatedrug developmentprogramsmay also be incorrectand could cause us to miss valuableopportunities.If wefailto accuratelyevaluatethe commercialpotentialor targetmarketfor a particular productcandidate,wemay relinquishvaluablerightsto thatproductcandidatethrough strategiccollaboration, licensingor otherarrangementsor wemay allocateour limitedinternalresourcesto thatproductcandidatewhen it would have been moreadvantageousto enterinto such an arrangement.Anysuch failurecould have a material adverseeffecton our business,financialcondition,resultsof operationsor prospects.

Asweevolvefroma company that is primarilyinvolvedin clinicaldevelopmentto a company that is also involvedin commercialization,wemay encounter difficultiesin expanding our operationssuccessfully.

Asweadvance our productcandidatesthrough clinicaltrials,wewill need to expand our development, regulatory,manufacturing,and marketingand salescapabilitiesand may need to furthercontractwith third partiesto providethesecapabilities,such as collaborators,distributors,marketersand additionalsuppliers.We currentlyhave no experienceas a company in or infrastructurefor sales,marketingand distribution,and our operationsare currentlylimitedto clinicaldevelopmentactivitiesand as our operationsexpand, welikelywill need to manageadditionalrelationshipswith such thirdparties.

If BIO89-100 or any futureproductcandidateis approved, weintendeitherto establisha salesorganizationwith technicalexpertiseand supportingdistributioncapabilitiesto commercializeBIO89-100 or any futureproductcandidateor to outsourcesuch functionsto one or morethirdparties.Eitherof theseoptions would be expensiveand time-consuming.Some or allof thesecostsmay be incurredin advance of any approval of BIO89-100 or any futureproductcandidate.In addition,wemay not be able to hirea salesforcethatis sufficientin sizeor has adequateexpertisein the medicalmarketsthatweintendto target.Anyfailureor delay in the developmentof our internalsales,marketingand distributioncapabilitieswould adverselyaffectthe commercializationof BIO89-100 and otherfutureproductcandidates.

Maintainingthird-partyrelationshipsfor thesepurposeswill imposesignificantadded responsibilitieson membersof our managementand otherpersonnel.We mustbe able to effectivelymanageour development efforts,recruitand trainsalesand marketingpersonnel,effectivelymanageour participationin the clinicaltrials in which our productcandidatesare involvedand improveour managerial,development,operationaland finance systems,allof which may imposea strainon our administrativeand operationalinfrastructure.

If weenterinto arrangementswith thirdpartiesto performsales,marketingor distributionservices,any productrevenuesthatwereceive,or the profitabilityof theseproductrevenuesto us, are likelyto be lower than if wewere to marketand sellany productsthatwedevelop without the involvementof thesethirdparties.In addition,wemay not be successfulin enteringinto arrangementswith thirdpartiesto selland marketour productsor in doing so on termsthatare favorableto us. We likelywill have littlecontrolover such thirdparties, and any of themmay failto devote the necessaryresourcesand attentionto selland marketour products effectively.If wedo not establishsalesand marketingcapabilitiessuccessfully,eitheron our ownor in collaborationwith thirdparties,wewill not be successfulin commercializingour products.

We may seek to establishcommercialcollaborationsfor our product candidates,and,if weare not able to establishthem oncommerciallyreasonableterms,wemay have to alterour developmentand commercializationplans.

Our drug developmentprogramsand the potentialcommercializationof our productcandidateswill requiresubstantialadditionalcash to fund expenses.We may decideto collaboratewith otherpharmaceuticaland biotechnologycompaniesfor the developmentand potentialcommercializationof our productcandidates.

We facesignificantcompetitionin seekingappropriatecollaborators.Whetherwereacha definitive agreementfor a collaborationwill depend, among otherthings,upon our assessmentof the collaborator’s resourcesand expertise,the termsand conditionsof the proposed collaborationand the proposed collaborator’s evaluationof a numberof factors.Those factorsmay includethe design or resultsof clinicaltrials,the likelihood of approvalby the FDAor comparableforeignregulatoryauthorities,the potentialmarketfor the subjectproduct candidate,the costsand complexitiesof manufacturingand deliveringsuch productcandidateto patients,the potentialof competingproductsand the existenceof uncertaintywith respectto our ownership of technology, which can existif thereis a challengeto such ownership without regardto the meritsof the challengeand industryand marketconditionsgenerally.The collaboratorsmay also consideralternativeproductcandidatesor technologiesfor similarindicationsthatmay be availableto collaborateon and whether such a collaboration could be moreattractivethan the one with us for our productcandidate.

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Collaborationsare complexand time-consumingto negotiateand document.In addition,therehave been a significantnumberof businesscombinationsamong largepharmaceuticalcompaniesthathave resultedin a reducednumberof potentialfuturecollaborators.

We may not be able to negotiatecollaborationson a timelybasis,on acceptableterms,or at all.If weare unable to do so, wemay have to curtailthe developmentof the productcandidatefor which weare seekingto collaborate,reduceor delay itsdevelopmentprogramor one or moreof our otherdevelopmentprograms,delay itspotentialcommercializationor reducethe scope of any salesor marketingactivitiesor increaseour expendituresand undertakedevelopmentor commercializationactivitiesat our ownexpense. If weelectto increaseour expendituresto fund developmentor commercializationactivitieson our own,wemay need to obtainadditionalcapital,which may not be availableto us on acceptableterms,or at all.If wedo not have sufficientfunds, wemay not be able to furtherdevelop our productcandidatesor bring themto marketand generateproductrevenue.

We may not be successful in our efforts to identify, in-license or acquire, discover, develop or commercialize additional product candidates.

Although a substantial amount of our effort will focus on the development and potential commercialization of BIO89-100, we also may seek to identify, in-license or acquire, discover, develop and commercialize additional product candidates. We cannot assure you that our effort to in-license or acquire additional product candidates will be successful. Even if we are successful in in-licensing or acquiring additional product candidates, their requisite development activities may require substantial resources, and we cannot assure you that these development activities will result in regulatory approvals.

BIO89-100andany future product candidatesmay not achieveadequate marketacceptanceamong physicians,patients,healthcarepayors andothers in the medicalcommunitynecessaryfor commercial success.

Even if our productcandidatesreceiveregulatoryapproval,they may not gain adequatemarket acceptanceamong physicians,patients,healthcarepayors and othersin the medicalcommunity.Given the numberof drugs in developmentfor the treatmentof NASH,if weare unsuccessfulin achievinga differentiated profilewith BIO89-100 based on efficacy,safetyand tolerability,dosing and administration,marketacceptance will be limited.Effortsto educatethe medicalcommunityand third-partypayors on the benefitsof our product candidatesmay requiresignificantresourcesand may not be successful.Demonstratingthe safetyand efficacyof our productcandidatesand obtainingregulatoryapprovalswill not guaranteefuturerevenue.Our commercial successalso depends on coverageand adequatereimbursementof our productcandidatesby third-partypayors, includinggovernmentpayors, which may be difficultor time-consumingto obtain,may be limitedin scope and may not be obtainedin alljurisdictionsin which wemay seek to marketour products.Governmentsand private insurerscloselyexaminemedicalproductsto determinewhether they should be coveredby reimbursementand, if so, the levelof reimbursementthatwill apply. We cannot be certainthatthird-partypayors will sufficiently reimbursesalesof our products,or otherwiseenableus to sellour productsat profitableprices.Similarconcerns could also limitthe reimbursementamountsthathealthinsurersor governmentagenciesin othercountriesare preparedto pay for our products.In many countriesor regionswhere wemay marketour products,eitherdirectly or with collaborators,the pricingof prescriptiondrugs is controlledby the governmentor regulatoryagencies.

Regulatoryagenciesin thesecountriescould determinethatthe pricingfor our productsshould be based on pricesof othercommerciallyavailabledrugs for the samedisease,ratherthan allowingus to marketour products at a premiumas newdrugs. This may be particularlytruefor drugs thattreatNASHor SHTG,which some healthcareprovidersand payors may deem to be a “lifestyle”diseasethatcould be amelioratedby changes in diet and exercise.The degreeof marketacceptanceof any of our approved productcandidateswill depend on a numberof factors,including:

• the efficacy,safetyand dosing profileof the productcandidateas demonstratedin clinicaltrials;

• the timingof marketintroductionof the productcandidateas well as competitiveproducts;

• the clinicalindicationsfor which the productcandidateis approved;

• acceptanceof the productcandidateas a safeand effectivetreatmentby physiciansand patients;

• the potentialand perceivedadvantagesof the productcandidateover alternativetreatments, includingany similargenerictreatments;

• the cost of treatmentin relationto alternativetreatments;

• the availabilityof coverageand adequatereimbursementand pricingby thirdpartiesand governmentauthorities, includingany requirementsfor biopsy-provenNASHpriorto beingapproved for reimbursement;

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• patients’willingnessto pay out-of-pocketin the absenceof coverageand/oradequate reimbursementfromthird-partypayors;

• the relativeconvenienceand ease of administration;

• the frequencyand severityof adverseevents;

• the effectivenessof salesand marketingefforts;and

• unfavorablepublicityrelatingto the productcandidate.

Sales of medicalproductsalso depend on the willingnessof physiciansto prescribethe treatment,which is likelyto be based on a determinationby thesephysiciansthatthe productsare safe,therapeuticallyeffective and cost effective.In addition,the inclusionor exclusionof productsfromtreatmentguidelinesestablishedby variousphysiciangroups and the viewpointsof influentialphysicianscan affectthe willingnessof other physiciansto prescribethe treatment.We cannot predictwhether physicians,physicians’organizations,hospitals, otherhealthcareproviders,governmentagenciesor privateinsurerswill determinethatour productsare safe, therapeuticallyeffectiveand cost effectiveas comparedwith competingtreatments.If any productcandidateis approved but does not achievean adequatelevelof acceptanceby such parties,wemay not generateor derive sufficientrevenuefromthatproductcandidateand may not becomeor remainprofitable.

Evenif wecommercializeBIO89-100or any future product candidate,wemay face challengesto achieving profitabilitysuch as our products becomingsubjectto unfavorablepricingregulations,third-party reimbursementpracticesor healthcarereforminitiatives,whichcould harm our business.

The regulationsthatgovern marketingapprovals,pricingand reimbursementfor newdrug productsvary widely fromcountryto country.Currentand futurelegislationmay significantlychange the approval requirementsin ways thatcould involveadditionalcostsand cause delaysin obtainingapprovals.Some countries requireapprovalof the salepriceof a drug beforeit can be marketed.In many countries,the pricingreview periodbegins aftermarketingor productlicensingapprovalis granted.In some foreignmarkets,prescription pharmaceuticalpricingremainssubjectto continuinggovernmentalcontroleven afterinitialapprovalis granted. Asa result,wemightobtainmarketingapprovalfor a productin a particularcountry,but then be subjectto price regulationsthatdelay or limitour commerciallaunch of the product,possiblyfor lengthytimeperiods,which could negativelyimpactthe revenuewegeneratefromthe saleof the productin thatparticularcountry.Adverse pricinglimitationsmay hinderour abilityto recoup our investmentin one or moreproductcandidates,even if our productcandidatesobtainmarketingapproval.

Our abilityto commercializeany productssuccessfullyalso will depend in parton the extentto which coverageand adequatereimbursementfor theseproductsand relatedtreatmentswill be availablefromthird-party payors, includinggovernmenthealthcareprogramsand privatehealthinsurers.Such third-partypayors determinewhich medicationsthey will cover and establishreimbursementlevels.Governmentauthoritiesand otherthird-partypayors have attemptedto controlcostsby limitingcoverageand the amountof reimbursement for particularmedications.Increasingly,third-partypayors are requiringthatdrug companiesprovidethemwith predetermineddiscountsfromlistpricesand are challengingthe priceschargedfor medicalproducts.We cannot be sure thatcoverageand reimbursementwill be availablefor any productthatweor our futurecollaborators commercializeand, if reimbursementis available,what the levelof reimbursementwill be. Coverage and reimbursementmay impactthe demand for, or the priceof, any productcandidatefor which weor our future collaboratorsobtainmarketingapproval.If coverageand reimbursementare not availableor reimbursementis availableonly to limitedlevels,weand our futurecollaboratorsmay not be able to successfullycommercialize any productcandidatefor which marketingapprovalis obtained.

There may be significantdelaysin obtainingcoverageand reimbursementfor newly approved drugs, and coveragemay be morelimitedthan the purposesfor which the drug is approved by the FDAor comparable foreignregulatoryauthorities.Moreover,eligibilityfor coverageand reimbursementdoes not implythata drug will be paid for in allcasesor at a ratethatcoversour costs,includingresearch,development,manufacture,sale and distribution.Interimreimbursementlevelsfor newdrugs, if applicable,may also not be sufficientto cover our costsand may only be temporary.Reimbursementratesmay vary accordingto the use of the drug and the clinicalsettingin which it is used, may be based on reimbursementlevelsalreadyset for lower cost drugs and may be incorporatedinto existingpaymentsfor otherservices.Net pricesfor drugs may be reducedby mandatorydiscountsor rebatesrequiredby governmenthealthcareprogramsor privatepayors and by any future relaxationof laws thatpresentlyrestrictimportsof drugs fromcountrieswhere they may be sold at lower prices than in the United States.Our inabilityto promptlyobtaincoverageand profitablereimbursementratesfromboth government-fundedand privatepayors for any approved productsthatwedevelop could have a materialadverse effecton our operatingresults,our abilityto raisecapitalneeded to commercializeproductsand our overall financialcondition.

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Tobecomeand remainprofitable,weor any potentialfuturecollaboratormustdevelop and eventually commercializeBIO89-100 or any futureproductcandidateswith significantmarketpotentialat an adequate profitmarginaftercost of goods sold and otherexpenses.Commercializationof BIO89-100 or any futureproduct candidatesmay entaila substantialcost of goods sold and therecan be no assurancethatwewill be able to achievea suitablegross marginwith respectto salesof BIO89-100 or any futureproductcandidates.

Healthcarereformin the United Statesmay negativelyimpactour abilityto profitablysellour product candidates,if approved, andto recoup the upfront investmentneeded to obtain regulatoryapproval of our product candidates.

Third-partypayors, whether domesticor foreign,or governmentalor commercial,are continually developingand advancingnewmethodsof controllinghealthcarecosts.The United Statesand many foreign jurisdictionshave enactedor proposed legislativeand regulatorychanges affectingthe healthcaresystemthat could preventor delay marketingapprovalof our productcandidates,restrictor regulatepost-approvalactivities and affectour abilityto profitablysellany productfor which weobtainmarketingapproval.

In March2010, the PatientProtectionand AffordableCare Act, as amendedby the Health Care and EducationReconciliationAct of 2010 (collectively,the “AffordableCare Act”) was enacted,which includes measuresthathave significantlychanged the wayhealthcareis financedby both governmentaland private insurers.Among the provisionsof the AffordableCare Act of particularimportanceinclude:

• an annual, nondeductiblefee on any entitythatmanufacturesor importsspecifiedbranded prescriptiondrugs and biologicagents,which is apportionedamong theseentitiesaccordingto their marketsharein certaingovernmenthealthcareprograms;

• a MedicarePart Dcoveragegap discountprogram,in which manufacturersmustagreeto offer point-of-salediscountsoff negotiatedpricesof applicablebrand drugs to eligiblebeneficiaries during theircoveragegap period,as a conditionfor the manufacturer’soutpatientdrugs to be coveredunder MedicarePart D;

• an increasein the statutoryminimumrebatesa manufacturermustpay under the MedicaidDrug Rebate Programto 23.1% and 13.0% of the averagemanufacturerpricefor branded and generic drugs, respectively;

• a methodologyby which rebatesowedby manufacturersunder the MedicaidDrug Rebate Program are calculatedfor drugs thatare inhaled,infused,instilled,implantedor injected;

• a licensureframeworkfor follow-on biologicproducts;

• an extensionof a manufacturers’Medicaidrebateliabilityto covereddrugs dispensedto individuals whoare enrolledin Medicaidmanagedcareorganizations;

• a newPatient-CenteredOutcomesResearchInstituteto oversee,identifyprioritiesin and conduct comparativeclinicaleffectivenessresearch,along with funding for such research;and

• establishmentof a Center for MedicareInnovationat the Centersfor Medicare& MedicaidServices (“CMS”) to testinnovativepaymentand servicedeliverymodelsto lower Medicareand Medicaid spending, potentiallyincludingprescriptiondrug spending.

Thereremain judicial, executive,and congressionalchallengesto certainaspectsof the AffordableCare Act which could potentiallyvoid or significantlymodifythe AffordableCare Act in partor in whole. For example,sinceJanuary2017, President Trump signed ExecutiveOrders and otherdirectivesdesignedto delay, circumvent,or loosen certain requirementsmandatedby the AffordableCare Act. OnDecember22, 2017, PresidentTrump signed into law theTax Act, which includesa provisionrepealingthe individualmandate to maintainhealthinsurancecoverageunder the AffordableCare Act effectiveJanuary1, 2019. Additionally,the 2020 federal spending package permanently eliminated, effective January 1, 2020, the Affordable Care Act’s mandated “Cadillac” tax on high-cost employer-sponsored health coverage and medical device tax and, effective January 1, 2021, also eliminates the health insurer tax.OnDecember14, 2018, a U.S.DistrictCourt Judge in the NorthernDistrictof Texas ruledthatthe individualmandateis a criticaland inseverablefeatureof the Affordable Care Act, and becauseit was repealedas partof the Tax Act, the remainingprovisionsof the AffordableCare Act are invalidas well. The decision was been appealed to the United States Court of Appeals for the Fifth Circuit and on December 18, 2019, the United States Court of Appeals for the Fifth Circuit upheld the District Court’s ruling that the individual mandate was unconstitutional, but remanded the case back to the District Court to determine whether the remaining provisions of the Affordable Care Act were nonetheless valid. On March 2, 2020, the United States Supreme Court granted the petitions for writs of certiorari to review this case, although it is unclear when a decision will be made or how the Supreme Court will rule. It is unclearhowsuch litigation and othereffortswill impactthe AffordableCare Act.

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At the sametime,therehas been increasinglegislativeand enforcementinterestin the United States with respectto specialtydrug pricingpractices.Specifically,therehave been severalrecentU.S.congressional inquiriesand proposed billsdesignedto, among otherthings,bring moretransparencyto drug pricing,reducethe cost of prescriptiondrugs under Medicare,review the relationshipbetween pricingand manufacturerpatient programsand reformgovernmentprogramreimbursementmethodologiesfor drugs. At the federallevel,the Trump administration’sbudget proposal for the government’s fiscalyear2021 includes a $135 billion allowance to support legislative proposals seeking to reduce drug prices, increase competition, lower out-of-pocket drug costs for patients, and increase patient access to lower-cost generic and biosimilar drugs.The Trump administration previouslyreleaseda “Blueprint,” or plan, to lower drug pricesand reduceout of pocket costsof drugs that containedproposalsto increasedrug manufacturercompetition,increasethe negotiatingpower of certainfederalhealthcareprograms,incentivizemanufacturersto lower the listpriceof theirproducts,and reduce the out of pocket costsof drug productspaid by consumers.We expectthatthe healthcarereformmeasuresthat have been adopted and may be adopted in the futuremay resultin morerigorouscoveragecriteriaand in additionaldownwardpressureon the pricethatwereceivefor any approved productand could seriouslyharm our futurerevenues.Anyreductionin reimbursementfromMedicareor othergovernmentprogramsmay resultin a similarreductionin paymentsfromprivatepayors. The implementationof cost containmentmeasuresor other healthcarereformsmay preventus frombeing able to generateproductrevenue,attainprofitabilityor commercializeour products.

There have been, and likelywill continueto be, legislativeand regulatoryproposalsat the foreign, federaland statelevelsdirectedat broadeningthe availabilityof healthcareand containingor loweringthe cost of healthcare.The implementationof cost containmentmeasuresor otherhealthcarereformsmay preventus from being able to generateproductrevenue,attainprofitability,or commercializeour products.Such reformscould have an adverseeffecton anticipatedrevenuefromproductcandidatesthatwemay successfullydevelop and for which wemay obtainregulatoryapprovaland may affectour overallfinancialcondition,includingour abilityto recoup the upfrontinvestmentneeded to obtainregulatoryapprovalfor our productcandidates.

Ourinternationaloperationsmay expose us to business, regulatory,political,operational,financial,pricing andreimbursementrisksassociatedwith doing business outsideof the United States.

Our use of our internationalfacilitiessubjectus to U.S.and foreigngovernmentaltrade,importand export,and customsregulationsand laws. Compliancewith theseregulationsand laws is costlyand exposes us to penaltiesfor non-compliance.Furthermore,if wesucceedin developingany products,weintendto marketthem in otherjurisdictionsin additionto the United States.If approved, wemay hiresalesrepresentativesand conduct physicianand patientassociationoutreachactivitiesoutsideof the United States.

Doing businessinternationallypotentiallyinvolvesa numberof risks,includingbut not limitedto:

• multiple,conflictingand changing laws and regulationssuch as privacyregulations,tax laws, exportand importrestrictions,employmentlaws, regulatoryrequirements,and othergovernmental approvals,permitsand licenses;

• failureby us to obtainand maintainregulatoryapprovalsfor the use of our productsin various countries;

• rejectionor qualificationof foreignclinicaltrialdata by the competentauthoritiesof other countries;

• additionalpotentiallyrelevantthird-partypatentrights;

• complexitiesand difficultiesin obtaining,maintaining,protectingand enforcingour intellectual property;

• difficultiesin staffingand managingforeignoperations;

• a shortageof high-qualityemployees;

• laws and businesspracticesfavoringlocalcompanies;

• complexitiesassociatedwith managingmultiplepayor reimbursementregimes,governmentpayors or patientself-paysystems;

• limitsin our abilityto penetrateinternationalmarkets;

• financialrisks,such as longerpaymentcycles,difficultycollectingaccountsreceivable,the impact of localand regionalfinancialcriseson demand and paymentfor our productsand exposureto foreigncurrencyexchange ratefluctuations;

• naturaldisasters,politicaland economicinstability,includingwars, terrorismand politicalunrest, actual or potential public health emergencies, including the ongoing COVID-19 pandemic,boycotts,curtailmentof tradeand otherbusinessrestrictions;

• the impositionof restrictionson the activitiesof foreignagentsand representatives;

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• certainexpensesincluding,among others,expensesfor travel,translationand insurance;and

• regulatoryand compliancerisksthatrelateto anti-corruptioncomplianceand record-keepingthat may fallwithin the purview of the U.S.Foreign Corrupt PracticesAct, itsaccountingprovisionsor itsanti-briberyprovisionsor provisionsof anti-corruptionor anti-briberylaws in othercountries.

Anyof thesefactorscould harmour ongoing internationalclinicaloperationsand supply chain, as well as any futureinternationalexpansionand operationsand, consequently,our business,financialcondition, prospectsand resultsof operations.

If wefailto complywith foreignregulatoryrequirementsgoverning humanclinicaltrialsandmarketing approval for drugs, wecould be preventedfromsellingour product candidatesin foreignmarkets,whichmay adverselyaffectour operatingresultsandfinancialcondition.

The requirementsgoverningthe conduct of clinicaltrials,productlicensing,pricing,and reimbursement for marketingour productcandidatesoutsidethe United Statesvary greatlyfromcountryto countryand may requireadditionaltesting.We expectthatour futureclinicaldevelopmentof our productcandidateswill involve a numberof clinicaltrialsin foreignjurisdictions.We have no directexperienceas a company in obtaining foreignregulatoryapprovals.The timerequiredto obtainapprovalsoutsidethe United Statesmay differfrom thatrequiredto obtainFDAapproval.We may not obtainforeignregulatoryapprovalson a timelybasis,if at all. Approval by the FDAdoes not guaranteeapprovalby comparableforeignregulatoryauthorities,and approvalby one foreignregulatoryauthoritydoes not ensureapprovalby regulatoryauthoritiesin othercountriesor by the FDA.Failureto complywith theseregulatoryrequirementsor obtainrequiredapprovalscould impairour ability to develop foreignmarketsfor our productcandidatesand may have a materialadverseeffecton our resultsof operationsand financialcondition.

Product liabilitylawsuitsagainst us could cause us to incur substantialliabilitiesandto limit commercializationof any products that wemay develop.

We facean inherentriskof productliabilityexposurerelatedto the testingof our productcandidatesin human clinicaltrialsand will facean even greaterriskif wecommercializeany resultingproducts.Product liabilityclaimsmay be brought againstus by subjectsenrolledin our clinicaltrials,patients,or othersusing our products.If wecannot successfullydefend ourselvesagainstclaimsthatour productcandidatesor productsthat wemay develop caused injuries,wecould incursubstantialliabilities.Regardlessof meritor eventualoutcome, liabilityclaimsmay resultin:

• decreaseddemand for any productcandidatesor productsthatwemay develop;

• productrecallsor a change in the indicationsfor which productsmay be used;

• terminationof clinicaltrialsitesor entiretrialprograms;

• injuryto our reputationand significantnegativemediaattention;

• withdrawalof clinicaltrialparticipants;

• significantcoststo defend the relatedlitigation;

• substantialmonetaryawards to trialsubjectsor patients;

• loss of revenue;

• diversionof managementand scientificresourcesfromour businessoperations;and

• the inabilityto commercializeany productsthatwemay develop.

Our clinicaltrialliabilityinsurancecoveragemay not adequatelycover allliabilitiesthatwemay incur. We may not be able to maintaininsurancecoverageat a reasonablecost or in an amountadequateto satisfyany liabilitythatmay arise.Our inabilityto obtainproductliabilityinsuranceat an acceptablecost or to otherwise protectagainstpotentialproductliabilityclaimscould preventor delay the commercializationof any productsor productcandidatesthatwedevelop. We intendto expand our insurancecoveragefor productsto includethe sale of commercialproductsif weobtainmarketingapprovalfor our productcandidatesin development,but wemay be unable to obtaincommerciallyreasonableproductliabilityinsurancefor any productsapproved for marketing. Large judgmentshave been awarded in classactionlawsuitsbased on drugs thathad unanticipatedside effects.If weare sued for any injurycaused by our products,productcandidatesor processes,our liabilitycould exceed our productliabilityinsurancecoverageand our totalassets.Claimsagainstus, regardlessof theirmeritor potential outcome,may also generatenegativepublicityor hurt our abilityto obtainphysicianendorsementof our productsor expand our business.

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Ouremployees,contractors,vendors, principalinvestigators,consultantsandfuture partnersmay engage in misconductor other improperactivities,including noncompliancewith regulatorystandards andrequirements andinsidertrading.

We are exposed to the riskof fraudor othermisconductby our employees,contractors,vendors, principalinvestigators,consultantsor futurepartners.Misconductby thesepartiescould includefailuresto complywith FDAregulations,to provideaccurateinformationto the FDA,to complywith federaland state healthcarefraudand abuse laws and regulations,to reportfinancialinformationor data timely,completelyor accurately,or to discloseunauthorizedactivitiesto us. In particular,sales,marketingand businessarrangements in the healthcareindustryare subjectto extensivelaws and regulationsintendedto preventfraud,misconduct, kickbacks,self-dealingand otherabusivepractices.These laws and regulationsmay restrictor prohibita wide range of pricing,discounting,marketingand promotion,salescommission,customerincentiveprogramsand otherbusinessarrangements.Third-partymisconductcould also involvethe improperuse of information obtainedin the courseof clinicaltrials,which could resultin regulatorysanctionsand seriousharmto our reputation.Although we have adopted a Codeof Business Conduct and Ethics,it is not always possibleto identifyand determisconduct,and the precautions wetake to detectand preventthisactivitymay not be effectivein controllingunknownor unmanagedrisksor lossesor in protectingus fromgovernmentalinvestigationsor otheractionsor lawsuitsstemmingfroma failure to complywith theselaws or regulations.If any such actionsare institutedagainstus resultingfromthis misconductand weare not successfulin defendingourselvesor assertingour rights,those actionscould have a significantimpacton our business,includingthe impositionof significantfinesor othersanctions.If weor our futurepartnersmarketproductsin a mannerthatviolatesfraudand abuse and otherhealthcarelaws, or if weor our futurepartnersviolategovernmentpricereportinglaws, weor our futurepartnersmay be subjectto administrativeciviland/orcriminalpenalties,among othersanctions.

Most statesalso have statutesor regulationssimilarto thesefederallaws, which may apply to items such as pharmaceuticalproductsand servicesreimbursedby privateinsurers.We and/orour futurepartnersmay be subjectto administrative,civiland criminalsanctionsfor violationsof any of thesefederaland statelaws.

Pharmaceuticaland otherhealthcarecompanieshave been prosecutedunder theselaws for a varietyof promotionaland marketingactivities,such as: providingfreetrips,freegoods, sham consultingfeesand grants and othermonetarybenefitsto prescribers;reportingto pricingservicesinflatedaveragewholesalepricesthat were then used by federalprogramsto set reimbursementrates;engaging in off-labelpromotion;and submitting inflatedbest priceinformationto the MedicaidRebate Programto reduceliabilityfor Medicaidrebates.Ensuring thatour internaloperationsand futurebusinessarrangementswith thirdpartiescomplywith applicablehealthcare laws and regulationswill involvesubstantialcosts.It is possiblethatgovernmentalauthoritieswill concludethat our businesspracticesdo not complywith currentor futurestatutes,regulations,agency guidanceor case law involvingapplicablefraudand abuse or otherhealthcarelaws and regulations.

Ourbusiness operationsandrelationshipswith investigators,healthcareprofessionals,consultants,third-party payors, patientorganizationsandcustomersare subjectto broadly applicablehealthcareregulatory laws, whichcould expose us to penalties.

Healthcareproviders,physiciansand third-partypayors will play a primaryrolein the recommendation and prescriptionof any productcandidatefor which weobtainregulatoryapproval.Our currentand future arrangementsmay expose us to broadlyapplicablefraudand abuse and otherhealthcarelaws thatmay constrain the businessor financialarrangementsand relationshipsthrough which wewould research, market,selland distributeour products.Even though wewill not controlreferralsof healthcareservicesor billdirectlyto Medicare,Medicaid or otherthird-partypayors, federaland statehealthcarelaws pertainingto fraudand abuse are and will be applicableto our business.Such laws include,but are not limitedto, the following:

• Federalfalseclaims laws,includingthe federalcivil False ClaimsAct (“FCA”), which can be enforcedthrough civilwhistlebloweror qui tamactions, andfalsestatementsand civilmonetarypenaltieslaw prohibit,among others,any person fromknowingly presenting,or causingto be presented,a false claimfor paymentto the federalgovernmentor knowingly making,or causingto be made, a false statementto get a falseclaimpaid.

• The federalAnti-KickbackStatuteprohibits,among otherthings,knowingly and willfullyoffering, paying, solicitingor receivingremunerationto induce, or in returnfor, purchasing,leasing,ordering or arrangingfor the purchase,leaseor orderof any healthcareitemor servicereimbursableunder Medicare,Medicaidor otherfederallyfinancedhealthcareprograms.This statutehas been interpretedto apply to arrangementsbetween pharmaceuticalmanufacturers,on the one hand, and prescribers,purchasersand formularymanagers,on the other.Although thereare severalstatutory exceptionsand regulatorysafeharborsprotectingcertaincommonactivitiesfromprosecution,the exceptionsand safeharborsare drawn narrowly,and practicesthatinvolveremunerationintended to induce prescribing,purchasingor recommendingmay be subjectto scrutinyif they do not qualify for an exceptionor safeharbor.In addition,the intentstandardunder the federalAnti-Kickback Statutewas amendedby the AffordableCare Act to a stricterstandardsuch thata person or entity no longerneeds to have actualknowledge of the statuteor specificintentto violateit in orderto have committeda violation.Moreover,the governmentmay assertthata claimincludingitemsor servicesresultingfroma violationof the federalAnti-KickbackStatuteconstitutesa falseor fraudulentclaimfor purposesof the FCA.

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• The federalHealth InsurancePortabilityand AccountabilityAct of 1996 (“HIPAA”), which prohibits,among otherthings,knowingly and willfullyexecuting,or attemptingto execute,a schemeor artificeto defraudany healthcarebenefitprogramor obtain,by meansof falseor fraudulentpretenses,representations,or promises,any of the money or propertyownedby, or under the custody or controlof, any healthcarebenefitprogram,regardlessof the payor (e.g., publicor private),willfullyobstructinga criminalinvestigationof a healthcareoffense,and knowingly and willfullyfalsifying,concealingor coveringup by any trickor devicea materialfactor makingany materiallyfalse,fictitiousor fraudulentstatementsin connectionwith the deliveryof, or payment for, healthcarebenefits,itemsor servicesrelatingto healthcarematters.Similarto the federalAnti-Kickback Statute,a person or entitydoes not need to have actualknowledge of the statuteor specificintentto violateit in orderto have committeda violation.

• Patientdata privacyand securityregulation,including,in the United States,HIPAA,as amendedby the Health InformationTechnology for ClinicalHealth Act of 2009 (“HITECH”), and their respectiveimplementingregulations,which imposespecifiedrequirementson “coveredentities,” includinghealthcareproviders,healthplans, and healthcareclearinghouses,as well as their respective“businessassociates”thatperformservicesfor themthatinvolvethe use, or disclosure of, individuallyidentifiablehealthinformationrelatingto the privacy,securityand transmissionof individuallyidentifiablehealthinformation.

• The federaltransparencyrequirementsunder the PhysicianPaymentsSunshine Act, enactedas part of the AffordableCare Act, thatrequireapplicablemanufacturersof covereddrugs, devices, biologicsand medicalsuppliesfor which paymentis availableunder Medicare,Medicaidor the Children’sHealth InsuranceProgram,with specificexceptions,to trackand annuallyreportto CMS paymentsand othertransfersof value providedto physicians, as defined by such law, and teachinghospitalsand certain ownership and investmentinterestsheld by physiciansor theirimmediatefamilymembersin the applicablemanufacturer,and disclosureof such informationwill be made by CMSon a publicly availablewebsite.

• Analogous state,localor foreignlaws, such as stateanti-kickbackand falseclaimslaws, which may apply to itemsor servicesreimbursedby any third-partypayor, includingcommercialinsurers;state and localmarketingand/ortransparencylaws applicableto manufacturersthatmay be broaderin scope than the federalrequirements;statelaws thatrequirebiopharmaceuticalcompaniesto comply with the biopharmaceuticalindustry’svoluntarycomplianceguidelinesand the relevantcompliance guidancepromulgatedby the federalgovernment;stateand locallaws thatrequirelicensureor registrationby salesand marketingagentsof a pharmaceuticalcompany;statelaws thatrequire disclosureof informationrelatedto drug pricing;and stateand foreignlaws governingthe privacy and securityof healthinformationin certaincircumstances,many of which differfromeach otherin significantways and may not have the sameeffectas HIPAA.

Pharmaceuticaland otherhealthcarecompanieshave been prosecutedunder theselaws for a varietyof promotionaland marketingactivities,such as: providingfreetrips,freegoods, sham consultingfeesand grants and othermonetarybenefitsto prescribers;reportingto pricingservicesinflatedaveragewholesalepricesthat were then used by federalprogramsto set reimbursementrates;engaging in off-labelpromotion;and submitting inflatedbest priceinformationto the MedicaidRebate Programto reduceliabilityfor Medicaidrebates.Ensuring thatour internaloperationsand futurebusinessarrangementswith thirdpartiescomplywith applicablehealthcare laws and regulationswill involvesubstantialcosts.It is possiblethatgovernmentalauthoritieswill concludethat our businesspracticesdo not complywith currentor futurestatutes,regulations,agency guidanceor case law involvingapplicablefraudand abuse or otherhealthcarelaws and regulations.

The globaldata protectionlandscapeis rapidlyevolving,and wemay be affectedby or subjectto new, amendedor existinglaws and regulationsin the future,includingas our operationscontinueto expand or if we operatein foreignjurisdictions.For example,in June 2018, Californiaenactedthe CaliforniaConsumer Privacy Act of 2018 (the“CCPA”),which tookeffecton January1, 2020. The CCPAgives Californiaresidentsthe right to accessand requiredeletionof theirpersonalinformation,the rightto opt out of certainpersonalinformation sharing,and the rightto detailedinformationabout howtheirpersonalinformationis collected,used and shared. The CCPAprovidescivilpenaltiesfor violations,as well as a privaterightof actionfor data breachesthatis expectedto increasedata breachlitigation.Although the CCPAincludesexemptionsfor certainclinicaltrials data, the law may increaseour compliancecostsand potentialliabilitywith respectto otherpersonalinformation wecollectabout Californiaresidents.The CCPAhas prompteda wave of proposalsfor newfederaland state privacylegislationthat,if passed, could increaseour potentialliability,increaseour compliancecostsand adverselyaffectour business.Severalforeignjurisdictions,includingthe European Union (EU), itsmember states,the United Kingdom, Japan and Australia,among others,have adopted legislationand regulationsthat increaseor change the requirementsgoverningthe collection,use, disclosureand transferof the personal informationof individualsin thesejurisdictions.Additionally,certaincountrieshave passed or are considering passinglaws thatrequirelocaldata residencyand/orrestrictthe internationaltransferof data. These laws have the potentialto increasecostsof compliance,risksof noncomplianceand penaltiesfor noncompliance.

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If our operationsare found to be in violationof any of theselaws or any othergovernmentalregulations thatmay apply to us, wemay be subjectto significantcivil,criminaland administrativepenalties,damages, disgorgement,fines,imprisonment,exclusionfromgovernmentfunded healthcareprograms,such as Medicare and Medicaid,additionaloversightand reportingobligations,contractualdamages,reputationalharm,diminished profitsand futureearnings,and the curtailmentor restructuringof our operations.If any of the physiciansor otherhealthcareprovidersor entitieswith whom weexpectto do businessis found not to be in compliancewith applicablelaws, thatperson or entitymay be subjectto significantcriminal,civilor administrativesanctions, includingexclusionsfromgovernmentfunded healthcareprograms.

We depend onour informationtechnologysystemsandthose of our third-partycollaborators,service providers,contractorsor consultants.Ourinternalcomputersystems,or those of our third-partycollaborators, serviceproviders,contractorsor consultants,may failor suffersecuritybreaches, disruptions,or incidents, whichcould resultin a materialdisruptionof our developmentprogramsor loss of data or compromisethe privacy,security,integrityor confidentialityof sensitiveinformationrelatedto our business andhave a materialadverseeffectonour reputation,business, financialconditionor resultsof operations.

In the ordinarycourseof our business,wecollect,storeand transmitlargeamountsof confidential information,includingintellectualproperty,proprietarybusinessinformationand personalinformation.Our internaltechnologysystemsand infrastructure,and those of our currentor futurethird-partycollaborators, serviceproviders,contractorsand consultantsare vulnerableto damagefromcomputerviruses,unauthorized accessor use resultingfrommalware,naturaldisasters,terrorism,war and telecommunicationand electrical failures,denial-of-serviceattacks,cyber-attacksor cyber-intrusionsover the Internet,hacking, phishingand other socialengineeringattacks,personsinsideour organizations(includingemployeesor contractors),loss or theft,or personswith accessto systemsinsideour organization.Attackson informationtechnologysystemsare increasingin theirfrequency,levelsof persistence,sophisticationand intensity,and they are being conductedby increasinglysophisticatedand organizedforeigngovernments,groups and individualswith a wide range of motivesand expertise.In additionto extractingor accessingsensitiveinformation,such attackscould includethe deploymentof harmfulmalware,ransomware,denial-of-serviceattacks,socialengineeringand othermeansto affectservicereliabilityand threatenthe security,confidentiality,integrityand availabilityof information.The prevalentuse of mobiledevicesthataccesssensitiveinformationalso increasesthe riskof data securityincidents which could lead to the loss of confidentialinformationor otherintellectualproperty.Whileto our knowledge wehave not experiencedany materialsystemfailure,accidentor securitybreachto date, if such an event were to occur and cause interruptionsin our operationsor the operationsof third-partycollaborators,serviceproviders, contractorsand consultants,it could resultin a materialdisruptionof our developmentprogramsand significant reputational,financial,legal,regulatory,businessor operationalharm.The coststo us to mitigate,investigateand respond to potentialsecurityincidents,breaches,disruptions,network securityproblems,bugs, viruses,worms, malicioussoftwareprogramsand securityvulnerabilitiescould be significant,and while wehave implemented securitymeasuresto protectour data securityand informationtechnologysystems,our effortsto addressthese problemsmay not be successful,and theseproblemscould resultin unexpectedinterruptions,delays,cessationof serviceand otherharmto our businessand our competitiveposition.

For example,the loss of clinicaltrialdata fromcompleted,ongoing or planned clinicaltrialsfor our productcandidatescould resultin delaysin our regulatoryapprovaleffortsand significantlyincreaseour coststo recoveror reproducethe data. Tothe extentthatany realor perceivedsecuritybreachaffectsour systems(or those of our third-partycollaborators,serviceproviders,contractorsor consultants),or resultsin the loss of or accidental,unlawfulor unauthorizedaccessto, use of, releaseof, or otherprocessingof personallyidentifiable informationor damageto our data or applicationsor otherdata or applicationsrelatingto our technologyor productcandidates,or inappropriatedisclosureof confidentialor proprietaryinformation,wecould incur liabilitiesand the furtherdevelopmentof our productcandidatescould be delayed.Such a breachmay require notificationto governmentalagencies,the mediaor individualspursuantto variousforeign,domestic(federaland state)privacyand securitylaws, if applicable,includingHIPAA,as amendedby HITECH,and itsimplementing rulesand regulations,as well as regulationspromulgatedby the FederalTrade Commissionand statebreach notificationlaws. In addition,our liabilityinsurancemay not be sufficientin type or amountto cover us against claimsrelatedto securitybreaches,cyberattacksand otherrelatedincidents.

Anyfailureor perceivedfailureby us or any third-partycollaborators,serviceproviders,contractorsor consultantsto complywith our privacy,confidentiality,data securityor similarobligations,or any data security incidentsor othersecuritybreachesthatresultin the accidental,unlawfulor unauthorizedaccessto, use of, releaseof, processingof, or transferof sensitiveinformation,includingpersonallyidentifiableinformation,may resultin negativepublicity,harmto our reputation,governmentalinvestigations,enforcementactions,regulatory fines,litigationor publicstatementsagainstus, could cause thirdpartiesto lose trustin us or could resultin claimsby thirdparties,includingthose thatassertthatwehave breachedour privacy,confidentiality,data securityor similarobligations,any of which could have a materialadverseeffecton our reputation,business, financialconditionor resultsof operations.Tothe extentwemaintainindividuallyidentifiablehealth information,wecould be subjectto finesand penalties(includingciviland criminal)under HIPAAfor any failureby us or our businessassociatesto complywith HIPAA’srequirements.Moreover,data securityincidents and othersecuritybreachescan be difficultto detect,and any delay in identifyingthemmay lead to increased harm.Whilewehave implementeddata securitymeasuresintendedto protectour information,data, information technologysystems,applicationsand infrastructure,therecan be no assurancethatsuch measureswill successfullypreventserviceinterruptionsor data securityincidents.

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Europeandata collectionis governed by restrictiveregulationsgoverning the collection,use, processingand cross-bordertransferof personal information.

We may collect,process,use or transferpersonalinformationfromindividualslocatedin the European EconomicArea in connectionwith our business,includingin connectionwith conductingclinicaltrialsin the European EconomicArea (the “EEA”). Additionally,if any of our productcandidatesare approved, wemay seek to commercializethose productsin the European EconomicArea. The collectionand use of personalhealthdata in the European EconomicArea is governed by the provisionsof the GeneralData ProtectionRegulation((EU) 2016/679) (the“GDPR”),along with otherEuropean Union and country-specificlaws and regulations.The United Kingdom and Switzerlandhave also adopted data protectionlaws and regulations.These legislativeacts (togetherwith regulationsand guidelines)imposerequirementsrelatingto having legalbases for processing personaldata relatingto identifiableindividualsand transferringsuch data outsideof the European Economic Area, includingto the United States,providingdetailsto those individualsregardingthe processingof their personaldata, keeping personaldata secure,having data processingagreementswith thirdpartieswhoprocess personaldata, respondingto individuals’requeststo exercisetheirrightsin respectof theirpersonaldata, reportingsecuritybreachesinvolvingpersonaldata to the competentnationaldata protectionauthorityand affectedindividuals,appointingdata protectionofficersor corporaterepresentatives,conductingdata protection impactassessmentsand record-keeping.The GDPRimposesadditionalresponsibilitiesand liabilitiesin relation to personaldata thatweprocessand wemay be requiredto put in placeadditionalmechanismsensuring compliancewith the newdata protectionrules.Failureto complywith the requirementsof the GDPRand related nationaldata protectionlaws of the memberstatesof the European EconomicArea and otherstatesin the European EconomicArea may resultin substantialfines,otheradministrativepenaltiesand civilclaimsbeing brought againstus, which could have a materialadverseeffecton our business,financialconditionand resultsof operations.European data protectionauthoritiesmay interpretthe GDPRand nationallaws differentlyand may imposeadditionalrequirements,which adds to the complexityof processingpersonaldata in or fromthe EEAor United Kingdom. Guidance on implementationand compliancepracticesare oftenupdated or otherwiserevised.

Ourinsurance policiesare expensiveandonly protectus fromsome business risks,leavingus exposed to significantuninsured liabilities.

We do not carryinsurancefor allcategoriesof riskthatour businessmay encounter.We believethatwe maintaininsurancecustomaryfor businessesof our sizeand type, includingclinicaltrialliabilityinsurance.

However, thereare types of losseswemay incurthatcannot be insuredagainstor thatwebelieveare not economicallyreasonableto insure.Moreover,any loss incurredcould exceed policylimitsand policypayments made to us may not be made on a timelybasis.Such lossescould adverselyaffectour businessprospects,results of operations,cash flows and financialcondition.We do not knowif our currentlevelsof coverageare adequate or if wewill be able to obtaininsurancewith adequatelevelsof coveragein the future,if at all.Anysignificant uninsuredliabilitymay requireus to pay substantialamounts,which could materiallyand adverselyaffectour financialpositionand resultsof operations.

Disputes under key agreementsor conflictsof interestwith our scientificadvisorsor clinicalinvestigators could delay or preventdevelopmentor commercializationof our product candidates.

Anyagreementswehave or may enterinto with thirdparties,such as collaboration,license,formulation supplier,manufacturing,clinicalresearchorganizationor clinicaltrialagreements,may give riseto disputes regardingthe rightsand obligationsof the parties.Disagreementscould develop over contractinterpretation, rightsto ownership or use of intellectualproperty,the scope and directionof researchand development,the approachfor regulatoryapprovalsor commercializationstrategy.We intendto conduct researchprogramsin a range of therapeuticareas,but our pursuitof theseopportunitiescould resultin conflictswith the otherpartiesto theseagreementsthatmay be developingor sellingpharmaceuticalsor conductingotheractivitiesin thesesame therapeuticareas.Anydisputesor commercialconflictscould lead to the terminationof our agreements,delay progressof our productdevelopmentprograms,compromiseour abilityto renew agreementsor obtainfuture agreements,lead to the loss of intellectualpropertyrights,resultin increasedfinancialobligationsfor us or result in costlylitigation.

We work with outsidescientificadvisorsand collaboratorsat academicand otherinstitutionsthatassist us in our researchand developmentefforts.Our scientificadvisorsare not our employeesand may have other commitmentsthatlimittheiravailabilityto us. If a conflictof interestbetween theirwork for us and theirwork for anotherentityarises,wemay lose theirservices.

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If the marketopportunitiesfor any product that weor our strategiccollaboratorsdevelopare smallerthan we believethey are, our revenue may be adverselyaffectedandour business may suffer.

We intendto initiallyfocus our productcandidatedevelopmenton therapiesfor the treatmentof liver and cardio-metabolicdiseases.Our projectionsof addressablepatientpopulationsthathave the potentialto benefitfromtreatmentwith our productcandidatesare based on estimates.These estimateshave been derived froma varietyof sources,includingthe scientificliterature,surveysof clinics,patientfoundationsor market research,and may prove to be incorrect.Further,newstudiesmay change the estimatedincidenceor prevalence of thesediseases.The numberof patientsmay turn out to be lower than expected.Additionally,the potentially addressablepatientpopulationfor our productcandidatesmay not ultimatelybe amenableto treatmentwith our productcandidates.Our marketopportunitymay also be limitedby futurecompetitortreatmentsthatenterthe market.If any of our estimatesare inaccurate,the marketopportunitiesfor any of our productcandidatescould be significantlydiminishedand have an adversematerialimpacton our business.

Monitoringsafetyof patientsreceivingour product candidatesis challenging,whichcould adverselyaffect our abilityto obtain regulatoryapproval andcommercialize.

For our ongoing clinicaltrialand planned clinicaltrials,wehave and expectto contractwith CROsand clinicaltrialsitesexperiencedin the assessmentand managementof toxicitiesarisingduring clinicaltrials.

Nonetheless,theseCROsand clinicaltrialsitesmay have difficultyobservingpatientsand treatingtoxicities, which may be morechallengingdue to personnelchanges, inexperience,shiftchanges, house staffcoverageor relatedissues.This could lead to moresevereor prolongedtoxicitiesor even patientdeaths,which could resultin us or the FDAdelaying,suspendingor terminatingone or moreof our clinicaltrials,and which could jeopardize regulatoryapproval.We also expectthe health care centersusing our productcandidates,if approved, on a commercialbasis could similarlyhave difficultyin managingadverseevents.Medicinesused at these centersto help manageadverse side effectsof our productcandidatesmay not adequatelycontrolthe side effectsand/ormay have a detrimental impacton the efficacyof the treatment.Use of thesemedicinesmay increasewith newphysiciansand health care centers administeringour productcandidates.

We are subjectto U.S.andcertainforeignexport andimportcontrols,sanctions,embargoes,anti-corruption laws, andanti-moneylaundering laws andregulations.Compliancewith these legalstandards could impair our abilityto competein domesticandinternationalmarkets.We can face criminalliabilityandother serious consequences for violations,whichcan harm our business.

We are subjectto exportcontroland importlaws and regulations,includingthe U.S.Export AdministrationRegulations,U.S.Customs regulations,variouseconomicand tradesanctionsregulations administeredby the U.S.TreasuryDepartment’sOfficeof Foreign Assets Controls,the U.S.Foreign Corrupt PracticesAct of 1977, as amended,the U.S.domesticbriberystatutecontainedin 18 U.S.C.§ 201, the U.S. TravelAct, the USAPATRIOTAct, and otherstateand nationalanti-briberyand anti-moneylaunderinglaws in the countriesin which weconduct activities.Anti-corruptionlaws are interpretedbroadlyand prohibitcompanies and theiremployees,agents,contractors,and othercollaboratorsfromauthorizing,promising,offering,or providing,directlyor indirectly,improperpaymentsor anythingelseof value to recipientsin the publicor privatesector.We may engage thirdpartiesto sellour productssellour productsoutsidethe United States,to conduct clinicaltrials,and/orto obtainnecessarypermits,licenses,patentregistrations,and otherregulatory approvals.We have director indirectinteractionswith officialsand employeesof governmentagenciesor government-affiliatedhospitals,universities,and otherorganizations.We can be held liablefor the corruptor otherillegalactivitiesof our employees,agents,contractors,and othercollaborators,even if wedo not explicitly authorizeor have actualknowledge of such activities.Anyviolationsof the laws and regulationsdescribedabove may resultin substantialciviland criminalfinesand penalties,imprisonment,the loss of exportor import privileges,debarment,tax reassessments,breachof contractand fraudlitigation,reputationalharm,and other consequences.

Changesin our effectiveincometax rate could adverselyaffectour resultsof operations.

As an international company, we are subject to taxation in numerous countries, states and other jurisdictions. Our effective tax rate is derived from a combination of statutory tax rates in the various jurisdictions in which we operate. In preparing our financial statements, our effective tax rate is based on estimates of the amount of tax that will become payable in each of these jurisdictions. Our effective tax rate may, however, differ from estimates due to numerous factors, including a change in the mix of our profitability from country to country and changes in tax laws. The fluctuations in our effective tax rate could have an adverse effect on our business, financial condition and results of operations and cash flows.

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Risks Related to Regulatory Approvals

BIO89-100has not receivedregulatoryapproval. If weare unable to obtain regulatoryapprovalsto market BIO89-100or any future product candidates,our business will be adverselyaffected.

We do not expectBIO89-100 or any futureproductcandidateto be commerciallyavailablefor several years,if at all.BIO89-100 is and any futureproductcandidatewill be subjectto strictregulationby regulatory authoritiesin the United Statesand in othercountries.We cannot marketany productcandidateuntilwehave completedallnecessarypreclinicalstudiesand clinicaltrialsand have obtainedthe necessaryregulatory approvals.We do not knowwhether regulatoryagencieswill grantapprovalfor BIO89-100 or any futureproduct candidate.Even if wecompletepreclinicalstudiesand clinicaltrialssuccessfully,wemay not be able to obtain regulatoryapprovalsor wemay not receiveapprovalsto make claimsabout our productsthatwebelieveto be necessaryto effectivelymarketour products.Data obtainedfrompreclinicalstudiesand clinicaltrialsis subject to varyinginterpretationsthatcould delay, limitor preventregulatoryapproval,and failureto complywith regulatoryrequirementsor inadequatemanufacturingprocessesare examplesof otherproblemsthatcould preventapproval.The regulatoryauthoritiesin the United Statesand the EUhave not approved any productsfor the treatmentof NASH,and while thereare recentguidelinesissuedby the FDAfor the developmentof drugs for the treatmentof NASHand a FDAsurrogateendpointtablefor drug approvalthatincludesSHTG, it is unclearwhether the requirementsfor approvalwill change in the future.Anysuch changes may requireus to conduct newtrialsthatcould delay our timeframeand increasethe costsof our programsrelatedto BIO89-100 or any futureproductcandidatefor the treatmentof NASHor SHTG. Whilethe FDAhas approved reductionintriglycerideslevelsas a surrogateendpointfor the fullapprovalof drugs for the treatmentof SHTG,it is unclear whether thisendpointwill apply to any productcandidatesthatwedevelop. If such endpointis not deemedto apply to our productcandidates,it would delay our developmenttimelineand increasethe costsof our programs for the treatmentof SHTG. We have not had any discussions with the FDAregardinga surrogateendpointoracceleratedapprovalregulations.However, wecurrentlyexpectthatour SHTGprogramwould be subjectto smallerclinicaltrialsand thatwemay expecta relativelyquick overalldevelopmenttimelinefor thisindication. These expectationsare based on a publishedFDAsurrogateendpointtablefor drug approvalthatincludes SHTG, as well as the developmentpath followedby othercompaniesthatdevelopedan SHTGtherapy.

However, wedo not have a SpecialProtocolAssessmentor otheragreementwith the FDAon the required clinicaltrialsneeded to supportan applicationfor approvalof BIO89-100 in SHTG,and the overallclinical requirementsand developmenttimelinemay be greaterthan expected.In addition,wemay encounterdelaysor rejectionsdue to additionalgovernmentregulationfromfuturelegislation,administrativeactionor changes in the policiesof the FDAor comparableforeignregulatoryauthorities.Even if the FDAor a comparableforeign regulatoryauthorityapprovesa product,the approvalwill be limitedto those indicationscoveredin the approval.

Evenif weare able to obtain regulatoryapprovalsfor BIO89-100or any future product candidate,if they exhibitharmfulside effectsafterapproval, our regulatoryapprovalscould be revoked or otherwisenegatively impacted,andwecould be subjectto costlyanddamaging product liabilityclaims.

Even if we receiveregulatoryapprovalforBIO89-100 or any futureproductcandidates, we willhavetestedthem in onlyasmallnumber of patientsduringourclinicaltrials. If ourapplicationsformarketingareapprovedandmorepatientsbegin to useourproduct,new risksandsideeffectsassociatedwithourproductsmaybe discovered. As aresult,regulatoryauthoritiesmayrevoketheirapprovals. We havenothadanydiscussionswiththeFDA regardingasurrogateendpoint or acceleratedapprovalregulations.However,based on recentguidelinesissued by theFDA forthedevelopment of drugsforthetreatment of NASH, if BIO89-100 is approved by theFDAbased on asurrogateendpointpursuant to section506(c) of theFederalFood,Drug,andCosmeticActandtheacceleratedapprovalregulations(21C.F.R.part314,subpart H; 21 C.F.R.part601,subpartE),consistentwithFDA guidance, we will be required to conductadditionalclinicaltrialsestablishingclinicalbenefit on theultimateoutcome of NASH. If BIO89-100 is approved by theFDA forthetreatment of SHTG based on an endpoint of thereduction of triglycerides,theFDA maystillrequireacardiovascularoutcomesstudy as part of apost-marketingauthorizationcommitment.Suchastudywould be timeconsumingandcostlyandwecannotguaranteethat we willseepositiveresults, which could result in therevocation of theapproval. Additionally, wemay be required toconductadditionalclinicaltrials, makechanges in labeling of ourproduct, reformulateourproduct or makechangesandobtainnew approvalsforourandoursuppliers’manufacturingfacilitiesforBIO89-100andanyfutureproductcandidates. We mighthave to withdraw or recallourproductsfromthemarketplace. We may alsoexperienceasignificantdrop in thepotentialsales of ourproduct if andwhenregulatoryapprovalsforsuchproductarerevoked. As aresult, we mayexperienceharm to ourreputation in themarketplace or becomesubjectto lawsuits,includingclassactions.Any of theseresultscoulddecrease or preventanysales of ourapprovedproductor substantiallyincreasethecostsandexpenses of commercializingandmarketingourproduct.

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Theregulatoryapproval processesof the FDAandcomparableforeignregulatoryauthoritiesare lengthy, time-consumingandinherentlyunpredictable.Ourinabilityto obtain regulatoryapproval for BIO89-100or any future product candidateswouldsubstantiallyharm our business.

Currently,wedo not have any productcandidatesthathave receivedregulatoryapproval.The time requiredto obtainapprovalfromthe FDAand comparableforeignregulatoryauthoritiesis unpredictablebut typicallytakesmany yearsfollowingthe commencementof preclinicalstudiesand clinicaltrialsand depends upon numerousfactors,includingthe substantialdiscretionof the regulatoryauthorities.In addition,approval policies,regulationsor the type and amountof clinicaldata necessaryto gain approvalmay change during the courseof a productcandidate’sdevelopmentand may vary among jurisdictions.It is possiblethatnone of BIO89-100 or any futureproductcandidateswill ever obtainregulatoryapproval.

BIO89-100 or any futureproductcandidatecould failto receiveregulatoryapprovalfromthe FDAor comparableforeignregulatoryauthoritiesfor many reasons,including:

• disagreementwith the design or implementationof our clinicaltrials;

• failureto demonstratethata productcandidateis safeand effectivefor itsproposed indication;

• failureof clinicaltrialsto meetthe levelof statisticalsignificancerequiredfor approval;

• failureto demonstratethata productcandidate’sclinicaland otherbenefitsoutweigh itssafety risks;

• disagreementwith our interpretationof data frompreclinicalstudiesor clinicaltrials;

• the insufficiencyof data collectedfromclinicaltrialsof a productcandidateto supportthe submissionand filingof a BLAor othersubmissionor to obtainregulatoryapproval;

• failureto obtainapprovalof the manufacturingprocessesor facilitiesof third-partymanufacturers with whom wecontractfor clinicaland commercialsupplies;or

• changes in the approvalpoliciesor regulationsthatrenderour preclinicaland clinicaldata insufficientfor approval.

The FDAor comparableforeignregulatoryauthoritiesmay requiremoreinformation,including additionalpreclinicalor clinicaldata to supportapproval,which may delay or preventapprovaland our commercializationplans, or wemay decideto abandon the developmentprogramfor otherreasons.If wewere to obtainapproval,regulatoryauthoritiesmay approve any of our productcandidatesfor fewer or morelimited indicationsthan werequest,may grantapprovalcontingenton the performanceof costlypost-marketingclinical trialsor may approve a productcandidatewith a labelthatdoes not includethe labelingclaimsnecessaryor desirablefor the successfulcommercializationof thatproductcandidate.

Ourfailureto obtain regulatoryapproval in internationaljurisdictionswouldpreventus frommarketingour product candidatesoutsidethe United States.

If wesucceedin developingany products,weintendto marketthemin foreignjurisdictionsin addition to the United States.In orderto marketand sellour productsin otherjurisdictions,wemustobtainseparate marketingapprovalsand complywith numerousand varyingregulatoryrequirements.We may not obtainforeign regulatoryapprovalson a timelybasis,if at all.Approval by the FDAdoes not ensureapprovalby regulatory authoritiesin othercountriesor jurisdictions.Approval by one regulatoryauthorityoutsidethe United Statesdoes not ensureapprovalby regulatoryauthoritiesin othercountriesor jurisdictionsor by the FDA.If wefailto obtain approvalof any of our productcandidatesby regulatoryauthoritiesin anothercountrywewill be unable to commercializeour productin thatcountry,and the commercialprospectsof thatproductcandidateand our businessprospectscould decline.The approvalprocedurevariesamong countriesand can involveadditional testing.The timerequiredto obtainapprovalmay differsubstantiallyfromthatrequiredto obtainFDAapproval. The regulatoryapprovalprocessoutsidethe United Statesgenerallyincludesallof the risksassociatedwith obtainingFDAapproval.In addition,in many countriesoutsidethe United States,wemustsecureproduct reimbursementapprovalsbeforeregulatoryauthoritieswill approve the productfor salein thatcountry.

Obtainingforeignregulatoryapprovalsand compliancewith foreignregulatoryrequirementscould resultin significantdelays,difficultiesand costsfor us and could delay or preventthe introductionof our productsin certaincountries.Further,clinicaltrialsconductedin one countrymay not be acceptedby regulatoryauthorities in othercountriesand regulatoryapprovalin one countrydoes not ensureapprovalin any othercountry,while a failureor delay in obtainingregulatoryapprovalin one countrymay have a negativeeffecton the regulatory approvalprocessin others.Also, regulatoryapprovalfor any of our productcandidatesmay be withdrawn if we failto complywith regulatoryrequirements,if problemsoccur afterthe productcandidatereachesthe marketor for otherreasons.If wefailto complywith the regulatoryrequirementsin internationalmarketsand failto receiveapplicablemarketingapprovals,our targetmarketwill be reducedand our abilityto realizethe full marketpotentialof our productcandidateswill be harmedand our businesswill be adverselyaffected.

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Evenif BIO89-100or any future product candidatereceivesregulatoryapproval, it may stillface future developmentandregulatorydifficulties.

Even if weobtainedregulatoryapprovalfor a productcandidate,it would be subjectto ongoing requirementsby the FDAand comparableforeignregulatoryauthoritiesgoverningthe manufacture,quality control,furtherdevelopment,labeling,packaging,storage,distribution,safetysurveillance,import,export, advertising,promotion,recordkeepingand reportingof safetyand otherpost-marketinformation.The FDAand comparableforeignregulatoryauthoritieswill continueto closelymonitorthe safetyprofileof any producteven afterapproval.If the FDA,or comparableforeignregulatoryauthorities,becomeaware of newsafety informationafterapprovalof any of our productcandidates,it may requirelabelingchanges or establishmentof a riskevaluationand mitigationstrategyor similarstrategy,imposesignificantrestrictionson a product’sindicated uses or marketingor imposeongoing requirementsfor potentiallycostlypost-approvalstudiesor post-market surveillance.

In addition,manufacturersof drug productsand theirfacilitiesare subjectto continualreview and periodicinspectionsby the FDAand otherregulatoryauthoritiesfor compliancewith cGMP,regulationsand standards.If weor a regulatoryagency discoverpreviouslyunknownproblemswith a product,such as adverse eventsof unanticipatedseverityor frequency,or problemswith the facilitywhere the productis manufactured,a regulatoryagency may imposerestrictionson thatproduct,the manufacturingfacilityor us, includingrequiring recallor withdrawalof the productfromthe marketor suspensionof manufacturing.If we,our product candidatesor the manufacturingfacilitiesfor our productcandidatesfailto complywith applicableregulatory requirements,or undesirableside effectscaused by such productsare identified,a regulatoryagency may:

• issuesafetyalerts,Dear HealthcareProviderletters,pressreleasesor othercommunications containingwarnings about such product;

• mandatemodificationsto promotionalmaterialsor requireus to providecorrectiveinformationto healthcarepractitioners;

• requirethatweconduct post-marketingstudies;

• requireus to enterinto a consentdecree,which can includeimpositionof variousfines, reimbursementsfor inspectioncosts,requireddue datesfor specificactionsand penaltiesfor noncompliance;

• seek an injunctionor imposecivilor criminalpenaltiesor monetaryfines;

• suspend marketingof, withdraw regulatoryapprovalof or recallsuch product;

• suspend any ongoing clinicalstudies;

• refuseto approve pending applicationsor supplementsto applicationsfiledby us;

• suspend or imposerestrictionson operations,includingcostlynewmanufacturingrequirements;or

• seizeor detainproducts,refuseto permitthe importor exportof productsor requireus to initiatea productrecall.

The occurrenceof any event or penaltydescribedabove may inhibitour abilityto commercializeour productsand generateproductrevenue.

Advertisingand promotionof any productcandidatethatobtainsapprovalin the United Stateswill be heavilyscrutinizedby the FDA,the Departmentof Justice,the Departmentof Health and Human Services’ Officeof InspectorGeneral,stateattorneysgeneral,membersof Congress and the public.Violations,including promotionof our productsfor unapproved (or off-label)uses, are subjectto enforcementletters,inquiriesand investigations,and significantciviland criminalsanctionsby the government.In the United States,engaging in the impermissiblepromotionof our productsfor off-labeluses can also subjectus to falseclaimslitigationunder federaland statestatutes,which can lead to significantciviland criminalpenalties.Additionally,comparable foreignregulatoryauthoritieswill heavilyscrutinizeadvertisingand promotionof any productcandidatethat obtainsapprovaloutsideof the United States.

The FDA’spoliciesmay change and additionalgovernmentregulationsmay be enactedthatcould prevent,limitor delay regulatoryapprovalof our productcandidates.If weare slow or unable to adapt to changes in existingrequirementsor the adoptionof newrequirementsor policies,or if weare not able to maintainregulatorycompliance,wemay lose any marketingapprovalthatwemay have obtained,which would adverselyaffectour business,prospectsand abilityto achieveor sustainprofitability.

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Risks Relating to IntellectualProperty

Oursuccessdepends uponour abilityto obtain andmaintainintellectualpropertyprotectionfor our products andtechnologies.

Our successwill depend in significantparton our currentor futurelicensors’,licensees’or collaborators’abilityto establishand maintainadequateprotectionof our ownedand licensedintellectual propertycoveringthe productcandidatesweplan to develop, and the abilityto develop theseproductcandidates and commercializethe productsresultingtherefrom,without infringingthe intellectualpropertyrightsof others. In additionto takingotherstepsto protectour intellectualproperty,wehold issuedpatents,wehave appliedfor patents,and weintendto continueto apply for, patentswith claimscoveringour technologies,processesand productcandidateswhenand where wedeem it appropriateto do so. We have filednumerouspatentapplications both in the United Statesand in certainforeignjurisdictionsto obtainpatentrightsto inventionswehave discovered,with claimsdirectedto compositionsof matter,methodsof use and othertechnologiesrelatingto our programs.There can be no assurancethatany of thesepatentapplicationswill issueas patentsor, for those applicationsthatdo matureinto patents,thatthe claimsof the patentswill excludeothersfrommaking,using or sellingour productcandidatesor productsthatcompetewith or are similarto our productcandidates.In countries where wehave not sought and do not seek patentprotection,thirdpartiesmay be able to manufactureand sellour productcandidateswithout our permission,and wemay not be able to stop themfromdoing so.

Withrespectto patentrights,wedo not knowwhether any of the pending patentapplicationsfor any of our productcandidateswill resultin the issuanceof patentsthateffectivelyprotectour technologies,processes and productcandidates,or if any of our issuedpatentsor our currentor futurelicensors’,licensees’or collaborators’issuedpatentswill effectivelypreventothersfromcommercializingcompetitivetechnologies, processesand products.Publicationsof discoveriesin the scientificliteratureoftenlag behind the actual discoveries,and patentapplicationsin the United Statesand otherjurisdictionsare typicallynot publisheduntil 18 monthsafterfilingor in some casesnot at all,untilthey are issuedas a patent.Therefore,wecannot be certain thatweor our currentor futurelicensors,licenseesor collaboratorswere the firstto make the inventionsclaimed in our ownedor licensedpatentsor pending patentapplications,or thatweor our currentor futurelicensors, licenseesor collaboratorswere the firstto filefor patentprotectionof such inventions.

Anychanges wemake to our BIO89-100 or any futureproductcandidatesto cause themto have what weview as moreadvantageouspropertiesmay not be coveredby our existingpatentsand patentapplications, and wemay be requiredto filenewapplicationsand/orseek otherformsof protectionfor any such altered productcandidates.The patentlandscapesurroundingthe technologyunderlyingour productcandidatesis crowded, and therecan be no assurancethatwewould be able to securepatentprotectionthatwould adequately cover an alternativeto BIO89-100 or any futureproductcandidates.

The patentprosecutionprocessis expensiveand time-consuming,and weand our currentor future licensors,licenseesor collaboratorsmay not be able to prepare,fileand prosecuteallnecessaryor desirable patentapplicationsat a reasonablecost or in a timelymanner.It is also possiblethatweor our currentor future licensors,licenseesor collaboratorswill failto identifypatentableaspectsof inventionsmade in the courseof developmentand commercializationactivitiesbeforeit is too lateto obtainpatentprotectionfor them.Moreover, in some circumstances,wemay not have the rightto controlthe preparation,filingand prosecutionof patent applications,or to maintainor enforcethe patents,coveringtechnologythatwelicensefromor licenseto third partiesand may be relianton our currentor futurelicensors,licenseesor collaboratorsto performtheseactivities, which meansthatthesepatentapplicationsmay not be prosecuted,and thesepatentsenforced,in a manner consistentwith the best interestsof our business.If our currentor futurelicensors,licenseesor collaboratorsfail to establish,maintain,protector enforcesuch patentsand otherintellectualpropertyrights,such rightsmay be reducedor eliminated.If our currentor futurelicensors,licenseesor collaboratorsare not fullycooperativeor disagreewith us as to the prosecution,maintenanceor enforcementof any patentrights,such patentrightscould be compromised.

Similarto the patentrightsof otherbiotechnologycompanies,the scope, validityand enforceabilityof our ownedand licensedpatentrightsgenerallyare highly uncertainand involvecomplexlegaland factual questions.The issuanceof a patentis not conclusiveas to itsinventorship,scope, validityor enforceability,and our patentsmay be challengedin the courtsor patentofficesin the United Statesand abroad. In recentyears, theseareashave been the subjectof much litigationin the industry.Asa result,the issuance,scope, validity, enforceabilityand commercialvalue of our and our currentor futurelicensors’,licensees’or collaborators’ patentrightsare highly uncertain.Our and our currentor futurelicensors’,licensees’or collaborators’pending and futurepatentapplicationsmay not resultin patentsbeing issuedthatprotectour technologyor product candidates,or productsresultingtherefrom,in whole or in part,or thateffectivelypreventothersfrom commercializingcompetitivetechnologiesand products.The patentexaminationprocessmay requireus or our currentor futurelicensors,licenseesor collaboratorsto narrow the scope of the claimsof pending and future patentapplications,which would limitthe scope of patentprotectionthatis obtained,if any. Our and our current or futurelicensors’,licensees’or collaborators’patentapplicationscannot be enforcedagainstthirdparties practicingthe technologythatis currentlyclaimedin such applicationsunlessand untila patentissuesfromsuch applications,and then only to the extentthe claimsthatissueare broad enough to cover the technologybeing practicedby those thirdparties.

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Furthermore,given the amountof timerequiredfor the development,testingand regulatoryreview of newproductcandidates,patentsprotectingsuch candidatesmightexpirebeforeor shortlyafterthe resulting productsare commercialized.Asa result,our ownedand in-licensedpatentsmay not provideus with sufficient rightsto excludeothersfromcommercializingproductssimilaror identicalto ours. We expectto seek extensions of patenttermsfor our issuedpatents,where available.This includesin the United Statesunder the Hatch-WaxmanAct, which permitsa patenttermextensionof up to fiveyearsbeyond the originalexpirationdate of the patentas compensationfor regulatorydelays.However, such a patenttermextensioncannot lengthenthe remainingtermof a patentbeyond a totalof 14 yearsfromthe product’sapprovaldate. Only one patent applicableto an approved drug is eligiblefor the extensionand the applicationfor the extensionmustbe submittedpriorto the expirationof the patent.During the periodof patenttermextension,the claimsof a patent are not enforceablefor theirfullscope, but are insteadlimitedto the scope of the approved product.In addition, the applicableauthorities,includingthe FDAin the United States,and any comparableforeignregulatory authorities,may not agreewith our assessmentof whether such extensionsare available,and may refuseto grant extensionsto our patents,or may grantmorelimitedextensionsthan werequest.In addition,wemay not be grantedan extensionbecauseof, for example,failingto apply within applicabledeadlines,failingto apply prior to the expirationof relevantpatentsor otherwisefailingto satisfyapplicablerequirements.If thisoccurs,any periodduring which wehave the rightto exclusivelymarketour productwill be shorterthan wewould otherwise expect,and our competitorsmay obtainapprovalof and launch productsearlierthan mightotherwisebe the case.

We may not be able to protectour intellectualpropertyrightsthroughout the world.

The legalprotectionaffordedto inventorsand owners of intellectualpropertyin countriesoutsideof the United Statesmay not be as protectiveor effectiveas thatin the United Statesand wemay, therefore,be unable to acquireand enforceintellectualpropertyrightsoutsidethe United Statesto the sameextentas in the United States.Whetherfiledin the United Statesor abroad, our patentapplicationsmay be challengedor may failto resultin issuedpatents.

In addition,our existingpatentsand any futurepatentsweobtainmay not be sufficientlybroad to preventothersfrompracticingour technologiesor fromdevelopingor commercializingcompetingproducts. Furthermore,othersmay independentlydevelop or commercializesimilaror alternativetechnologiesor drugs, or design around our patents.Our patentsmay be challenged,invalidated,circumventedor narrowed, or failto provideus with any competitiveadvantages.In many foreigncountries,patentapplicationsand/orissuedpatents, or partsthereof,mustbe translatedinto the nativelanguage.If our patentapplicationsor issuedpatentsare translatedincorrectly,they may not adequatelycover our technologies;in some countries,it may not be possible to rectifyan incorrecttranslation,which may resultin patentprotectionthatdoes not adequatelycover our technologiesin those countries.

Filing,prosecuting,enforcingand defendingpatentson productcandidatesin allcountriesthroughout the world would be prohibitivelyexpensive,and our intellectualpropertyrightsin some countriesoutsidethe United Statesare lessextensivethan those in the United States.In addition,the laws of some foreigncountriesdo not protectintellectualpropertyrightsto the sameextentas federaland certainstatelaws in the United States.

Consequently,wemay not be able to preventthirdpartiesfrompracticingour inventionsin allcountriesoutside the United States,or fromsellingor importingproductsmade using our inventionsin and into the United States or otherjurisdictions.Competitorsmay use technologiesin jurisdictionswhere wehave not obtainedpatent protectionto develop theirownproductsand, further,may exportotherwiseinfringingproductsto territories where wehave patentprotection,but enforcementis not as strongas thatin the United States.These products may competewith BIO89-100 or any futureproductcandidatesand our patentsor otherintellectualproperty rightsmay not be effectiveor sufficientto preventthemfromcompeting.

Many companieshave encounteredsignificantproblemsin protectingand defendingintellectual propertyrightsin foreignjurisdictions.The legalsystemsof certaincountries,particularlycertaindeveloping countries,do not favorthe enforcementof patentsand otherintellectualpropertyprotection,particularlythose relatingto biopharmaceuticals.This could make it difficultfor us to stop the infringementof our patentsor the marketingof competingproductsin violationof our proprietaryrights,generally.Proceedingsto enforceour patentrightsin foreignjurisdictionscould resultin substantialcostsand divertour effortsand attentionfrom otheraspectsof our business,could put our patentsat riskof being invalidatedor interpretednarrowly,could placeour patentapplicationsat riskof not issuingand could provoke thirdpartiesto assertclaimsagainstus or our collaborator.We may not prevailin any lawsuitsthatweinitiateand the damagesor otherremediesawarded, if any, may not be commerciallymeaningful.

The requirementsfor patentabilitydifferand certaincountrieshave heightenedrequirementsfor patentability,requiringmoredisclosurein the patentapplication.In addition,certaincountrieshave compulsory licensinglaws under which a patentowner may be compelledto grantlicensesto thirdparties.In those countries, wemay have limitedremediesif patentsare infringedor if weare compelledto granta licenseto a thirdparty, which could materiallydiminishthe value of those patents.This could limitour potentialrevenueopportunities. In addition,many countrieslimitthe enforceabilityof patentsagainstgovernmentagenciesor government contractors.In thesecountries,the patentowner may have limitedremedies,which could materiallydiminishthe value of such patent.Accordingly,our effortsto enforceintellectualpropertyrightsaround the world may be inadequateto obtaina significantcommercialadvantagefromthe intellectualpropertythatweownor license.

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We relyona licensefromTeva anda sublicensefromratiopharmto patentsandknow-howrelatedto glycoPEGylationtechnologythat are used in the development,manufactureandcommercializationof BIO89-100.Anyterminationor loss of significantrights,including the right to glycoPEGylationtechnology, or breach, under these agreementsor any future licenseagreementrelatedto our product candidates,would materiallyandadverselyaffectour abilityto continue the developmentandcommercializationof the related product candidates.

In April 2018, weenteredinto an Asset Transferand LicenseAgreement(the“FGF21Agreement”) with Teva under which weacquiredcertainpatents,intellectualpropertyand otherassetsrelatingto Teva’s glycoPEGylatedFGF21program,includingBIO89-100. Under thisagreement, wewere granteda perpetual,non-exclusive(but exclusiveas to BIO89-100), non-transferable,worldwide licenseto patentsand know-how relatedto glycoPEGylationtechnologyused in the development,manufactureand commercializationof BIO89-100 and productscontainingBIO89-100. The FGF21Agreementalso containsnumerouscovenantswith which wemustcomply,includingthe utilizationof commerciallyreasonableeffortsto develop and ultimately commercializeBIO89-100, as well as certainreportingcovenantsand the obligationto make royaltypayments,if and whenBIO89-100 is approved for commercialization.Our failureto satisfyany of thesecovenantscould resultin the terminationof the FGF21Agreement.In addition,weenteredinto a SublicenseAgreementwith ratiopharm(the“ratiopharmSublicense”),under which wewere granteda perpetual,exclusive,worldwide sublicenseto patentsand know-howrelatedto glycoPEGylationtechnologyused in the development, manufactureand commercializationof BIO89-100 and productscontainingBIO89-100. Terminationof the FGF21Agreementor the ratiopharmSublicensewill impactour rightsunder the intellectualpropertylicensedto us by Teva and ratiopharm,respectively, includingour licenseto glycoPEGylationtechnology,but will not affectour rightsunder the assetsassignedto us.

Beyondthisagreement,our commercialsuccesswill also depend upon our ability,and the abilityof our licensors,to develop, manufacture,marketand sellour productcandidatesand use our proprietarytechnologies without infringingthe proprietaryrightsof thirdparties.Athirdpartymay hold intellectualpropertyrights, includingpatentrights,thatare importantor necessaryto the developmentof our productcandidates.Asa result, wemay enterinto additionallicenseagreementsin the future.If wefailto complywith the obligationsunder theseagreements,includingpaymentand diligenceobligations,our licensorsmay have the rightto terminate theseagreements,in which event wemay not be able to develop, manufacture,marketor sellany productthatis coveredby theseagreementsor to engage in any otheractivitiesnecessaryto our businessthatrequirethe freedomto operateaffordedby the agreements,or wemay faceotherpenaltiesunder the agreements.

Anyof the foregoingcould materiallyand adverselyaffectthe value of the productcandidatebeing developedunder any such agreement.Terminationof theseagreementsor reductionor eliminationof our rights under theseagreementsmay resultin our having to negotiatenewor amendedagreements,which may not be availableto us on equallyfavorableterms,or at all,or cause us to lose our rightsunder theseagreements, includingour rightsto intellectualpropertyor technologyimportantto our developmentprograms.

Changesin patent law could diminishthe value of patentsin general, therebyimpairingour abilityto protect BIO89-100andany future product candidates.

Asis the case with otherbiotechnologyand pharmaceuticalcompanies,our successis heavilydependent on intellectualpropertyrights,particularlypatents.Obtainingand enforcingpatentsin the biopharmaceutical industryinvolvestechnologicaland legalcomplexity,and obtainingand enforcingbiopharmaceuticalpatentsis costly,time-consumingand inherentlyuncertain.The U.S.SupremeCourt in recentyearshas issuedrulings eithernarrowingthe scope of patentprotectionavailablein certaincircumstancesor weakening the rightsof patentowners in certainsituationsor rulingthatcertainsubjectmatteris not eligiblefor patentprotection.In additionto increasinguncertaintywith regardto our abilityto obtainpatentsin the future,thiscombinationof eventshas createduncertaintywith respectto the value of patents,once obtained.Depending on decisionsby Congress, the federalcourts,the USPTOand equivalentbodies in foreignjurisdictions,the laws and regulations governingpatentscould change in unpredictableways thatwould weaken our abilityto obtainnewpatentsor to enforceexistingpatentsand patentswemay obtainin the future.

Patentreformlaws, such as the Leahy-SmithAmericaInventsAct (the“Leahy-SmithAct”), as well as changes in howpatentlaws are interpreted,could increasethe uncertaintiesand costssurroundingthe prosecutionof our patentapplicationsand the enforcementor defenseof our issuedpatents.The Leahy-Smith Act made a numberof significantchanges to U.S.patentlaw. These includeprovisionsthataffectthe filingand prosecutionstrategiesassociatedwith patentapplications,includinga change froma “first-to-invent”to a “first-inventor-to-file”patentsystem,and a change allowingthird-partysubmissionof priorartto the USPTOduring patentprosecutionand additionalproceduresto attackthe validityof a patentby USPTO-administeredpost-grant proceedings,includingpost-grantreview, interpartesreview and derivationproceedings.The USPTOhas developedregulationsand proceduresto govern administrationof the Leahy-SmithAct, and many of the substantivechanges to patentlaw associatedwith the Leahy-SmithAct and, in particular,the “first-inventor-to-file”provisions,becameeffectivein 2013. The Leahy-SmithAct and itsimplementationmay increasethe uncertaintiesand costssurroundingthe prosecutionof our patentapplicationsand the enforcementor defenseof our issuedpatents,allof which could have a materialadverseeffecton our business,financial conditionand resultsof operations.

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We may be unable to obtain intellectualpropertyrightsor technologynecessaryto developandcommercialize BIO89-100andany future product candidates.

The patentlandscapearound our programsis complex,and weare aware of severalthird-partypatents and patentapplicationscontainingsubjectmatterthatmightbe relevantto BIO89-100. Depending on what claimsultimatelyissuefromthesepatentapplications,and howcourtsconstruethe issuedpatentclaims,as well as depending on the ultimateformulationand methodof use of BIO89-100 or any futureproductcandidates,we may need to obtaina licenseto practicethe technologyclaimedin such patents.There can be no assurancethat such licenseswill be availableon commerciallyreasonableterms,or at all.If a thirdpartydoes not offerus a necessarylicenseor offersa licenseonly on termsthatare unattractiveor unacceptableto us, wemightbe unable to develop and commercializeone or moreof our productcandidates,which would have a materialadverseeffect on our business,financialconditionand resultsof operations.Moreover,even if weobtainlicensesto such intellectualproperty,but subsequentlyfailto meetour obligationsunder the relevantlicenseagreements,or such licenseagreementsare terminatedfor any otherreasons,wemay lose our rightsto the technologieslicensed under those agreements.

The licensingor acquisitionof third-partyintellectualpropertyrightsis an areain which many companiesoperatethathave intereststhatare in conflictwith ours, and severalmoreestablishedcompaniesmay pursue strategiesto licenseor acquirethird-partyintellectualpropertyrightsthatwemay considerattractiveor necessary.These establishedcompaniesmay have a competitiveadvantageover us due to theirsize,capital resourcesand greaterclinicaldevelopmentand commercializationcapabilities.In addition,companiesthat perceiveus to be a competitormay be unwillingto assignor licenserightsto us. We also may be unable to licenseor acquirethird-partyintellectualpropertyrightson termsthatwould allow us to make an appropriate returnon our investment,or at all.If weare unable to successfullyobtainrightsto requiredthird-party intellectualpropertyrightsor maintainthe existingintellectualpropertyrightswehave, wemay have to abandon developmentof the relevantprogramor productcandidate,which could have a materialadverseeffecton our business,financialcondition,resultsof operationsand prospects.

We may becomeinvolvedin lawsuitsor other proceedingsto protector enforceour intellectualproperty, whichcould be expensive,time-consumingandunsuccessfulandhave a materialadverseeffectonthe success of our business.

Third partiesmay infringeour patentsor misappropriateor otherwiseviolateour intellectualproperty rights.In the future,wemay initiatelegalproceedingsto enforceor defend our intellectualpropertyrights,to protectour tradesecretsor to determinethe validityor scope of intellectualpropertyrightsweownor control. Also, thirdpartiesmay initiatelegalproceedingsagainstus to challengethe validityor scope of intellectual propertyrightsweown,controlor to which wehave rights.For example,genericor biosimilardrug manufacturersor othercompetitorsor thirdpartiesmay challengethe scope, validityor enforceabilityof our patents,requiringus to engage in complex,lengthyand costlylitigationor otherproceedings.These proceedings can be expensiveand time-consumingand many of our adversariesin theseproceedingsmay have the abilityto dedicatesubstantiallygreaterresourcesto prosecutingtheselegalactionsthan wecan. Accordingly,despiteour efforts,wemay not be able to preventthirdpartiesfrominfringingupon or misappropriatingintellectualproperty rightsweown,controlor have rightsto, particularlyin countrieswhere the laws may not protectthose rightsas fullyas in the United States.Litigationcould resultin substantialcostsand diversionof managementresources, which could harmour businessand financialresults.In addition,if weinitiatedlegalproceedingsagainsta third partyto enforcea patentcoveringa productcandidate,the defendantcould counterclaimthatsuch patentis invalidor unenforceable.In patentlitigationin the United States,defendantsusuallyassertcounterclaims alleginginvalidityor unenforceability.Grounds for a validitychallengecould be an allegedfailureto meetany of severalstatutoryrequirements,includinglack of novelty,obviousnessor non-enablement.Grounds for an unenforceabilityassertioncould be an allegationthatsomeoneconnectedwith prosecutionof the patentwithheld relevantinformationfromthe USPTO,or made a misleadingstatement,during prosecution.In an infringementor declaratoryjudgmentproceeding,a courtmay decidethata patentownedby or licensedto us is invalidor unenforceable,or may refuseto stop the otherpartyfromusing the subjectmatterallegedto be infringingon the grounds thatour patentsdo not cover thatsubjectmatter.Anadverseresultin any litigationproceedingcould put one or moreof our patentsat riskof being invalidated,narrowed, held unenforceableor interpretedin such a mannerthatwould not precludethirdpartiesfromenteringthe marketwith competingproducts.

Third-partypre-issuancesubmissionof priorartto the USPTO,or opposition,derivation,revocation, reexamination,interpartesreview or interferenceproceedings,or otherpre-issuanceor post-grantproceedingsor otherpatentofficeproceedingsor litigationin the United Statesor otherjurisdictionsprovoked by thirdpartiesor brought by us, may be necessaryto determinethe inventorship,priority,patentabilityor validityof inventions with respectto our patentsor patentapplications.Anunfavorableoutcomecould leaveour technologyor product candidateswithout patentprotection,allow thirdpartiesto commercializeour technologyor productcandidates and competedirectlywith us, without paymentto us, or could requireus to obtainlicenserightsfromthe prevailingpartyin orderto be able to manufactureor commercializeour productcandidateswithout infringing third-partypatentrights.Our businesscould be harmedif the prevailingpartyin such a case does not offerus a licenseon commerciallyreasonableterms,or at all.Even if weobtaina license,it may be non-exclusive,thereby giving our competitorsaccessto the sametechnologieslicensedto us. In addition,if the breadthor strengthof protectionprovidedby our patentsand patentapplicationsis threatened,it could dissuadecompaniesfrom collaboratingwith us to license,develop or commercializecurrentor futureproductcandidates.Even if we successfullydefend such litigationor proceeding,wemay incursubstantialcostsand our defensemay distract our managementand otheremployees.

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Furthermore,becauseof the substantialamountof discoveryrequiredin connectionwith intellectual propertylitigation,thereis a riskthatsome of our confidentialinformationcould be compromisedby disclosure during thistype of litigation.In addition,many foreignjurisdictionshave rulesof discoverythatare different than those in the United Statesand thatmay make defendingor enforcingour patentsextremelydifficult.There could also be publicannouncementsof the resultsof hearings,motionsor otherinterimproceedingsor developments.If securitiesanalystsor investorsperceivetheseresultsto be negative,it could have a material adverseeffecton the priceof sharesof our commonstock.

Third partiesmay initiatelegalproceedingsagainst us allegingthat weinfringetheirintellectualproperty rightsor wemay initiatelegalproceedingsagainst third partiesto challengethe validityor scope of intellectualpropertyrightscontrolledby third parties,the outcomeof whichwouldbe uncertain andcould have a materialadverseeffectonour business.

Our commercialsuccessdepends upon our abilityto develop, manufacture,marketand sellBIO89-100 and any futureproductcandidatesthatwemay develop and use our proprietarytechnologieswithout infringing, misappropriatingor otherwiseviolatingthe intellectualpropertyand proprietaryrightsof thirdparties.The biotechnologyand pharmaceuticalindustriesare characterizedby extensivelitigationregardingpatentsand other intellectualpropertyrights.Third partiesmay initiatelegalproceedingsagainstus allegingthatweinfringetheir intellectualpropertyrightsor wemay initiatelegalproceedingsagainstthirdpartiesto challengethe validityor scope of intellectualpropertyrightscontrolledby thirdparties,includingin oppositions,interferences, revocations,reexaminations,interpartesreview or derivationproceedingsbeforethe USPTOor itscounterparts in otherjurisdictions.These proceedingscan be expensiveand time-consumingand many of our adversariesin theseproceedingsmay have the abilityto dedicatesubstantiallygreaterresourcesto prosecutingtheselegal actionsthan wecan.

We could be found liablefor monetarydamages,includingtrebledamagesand attorneys’fees,if weare found to have willfullyinfringeda patentof a thirdparty.Afindingof infringementcould preventus from commercializingour BIO89-100 or any futureproductcandidatesor forceus to ceasesome of our business operations,which could materiallyharmour business.

We may not be aware of allthird-partyintellectualpropertyrightspotentiallyrelatingto BIO89-100 or any futureproductcandidatesand technologies.We are not aware of any factsthatwould lead us to concludethat the validand enforceableclaimsof any third-partypatentswould reasonablybe interpretedto cover our product candidates.Asto pending third-partyapplications,wecannot predictwith any certaintywhich claimswill issue, if any, or the scope of such issuedclaims.Even if webelievethird-partyintellectualpropertyclaimsare without merit,thereis no assurancethata courtwould find in our favoron questionsof infringement,validity, enforceabilityor priority.Acourtof competentjurisdictioncould hold thatthesethird-partypatentsare valid, enforceableand infringed,which could materiallyand adverselyaffectour abilityto commercializeany product candidateswemay develop and any otherproductcandidatesor technologiescoveredby the assertedthird-party patents.In orderto successfullychallengethe validityof any such U.S.patentin federalcourt,wewould need to overcomea presumptionof validity.Asthisburden is a high one requiringus to presentclearand convincing evidenceas to the invalidityof any such U.S.patentclaim,thereis no assurancethata courtof competent jurisdictionwould invalidatethe claimsof any such U.S.patent.If any such third-partypatents(includingthose thatmay issuefromsuch applications)were successfullyassertedagainstus or othercommercializationpartners and wewere unable to successfullychallengethe validityor enforceabilityof any such assertedpatents,then we and othercommercializationpartnersmay be preventedfromcommercializingour productcandidates,or may be requiredto pay significantdamages,includingtrebledamagesand attorneys’feesif weare found to willfully infringethe assertedpatents,or obtaina licenseto such patents,which may not be availableon commercially reasonableterms,or at all.Even if wewere able to obtaina license,it could be non-exclusive,therebygiving our competitorsand otherthirdpartiesaccessto the sametechnologieslicensedto us, and it could requireus to make substantiallicensingand royaltypayments.Anyof the foregoingwould have a materialadverseeffecton our business,financialconditionand operatingresults.

Although wehave reviewedcertainthird-partypatentsand patentfilingsthatwebelievemay be relevantto our therapeuticcandidatesor products,wehave not conducteda freedom-to-operatesearchor analysis for any of our therapeuticcandidatesor products,and wemay not be aware of patentsor pending or futurepatent applicationsthat,if issued,would block us fromcommercializingour therapeuticcandidatesor products.Thus, wecannot guaranteethatour therapeuticcandidatesor products,or our commercializationthereof,do not and will not infringeany thirdparty’sintellectualproperty.

We may be subjectto claimsby third partiesassertingmisappropriationof intellectualproperty,or claiming ownership of whatweregard as our ownintellectualproperty.

Although weseek to ensurethatour employeesdo not use the proprietaryinformationor know-howof othersin theirwork for us, wemay be subjectto claimsthatweor theseemployeeshave used or disclosed confidentialinformationor intellectualproperty,includingtradesecretsor otherproprietaryinformation,of any such employee’sformeremployer,or thatthirdpartieshave an interestin our patentsas an inventoror co-inventor.Litigationmay be necessaryto defend againsttheseclaims.If wefailin prosecutingor defending any such claims,in additionto paying monetarydamages,wemay lose valuableintellectualpropertyrightsor the servicesof personnelor sustainotherdamages.Such intellectualpropertyrightscould be awarded to a third party,and wecould be requiredto obtaina licensefromsuch thirdpartyto commercializeour technologyor products.Such a licensemay not be availableon commerciallyreasonableterms,or at all.Even if we successfullyprosecuteor defend againstsuch claims,litigationcould resultin substantialcostsand distract management.

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In addition,while it is our policyto requireour employeesand contractorswhomay be involvedin the conceptionor developmentof intellectualpropertyto executeagreementsassigningsuch intellectualpropertyto us, wemay be unsuccessfulin executingsuch an agreementwith each partywho,in fact,conceivesor develops intellectualpropertythatweregardas our own.The assignmentof intellectualpropertyrightsmay not be self-executing,or the assignmentagreementsmay be breached,and wemay be forcedto bring claimsagainstthird parties,or defend claimsthatthey may bring againstus, to determinethe ownership of what weregardas our intellectualproperty.Such claimscould have a materialadverseeffecton our business,financialcondition, resultsof operationsand prospects.

Ourinabilityto protectour confidentialinformationandtrade secretswouldharm our business and competitiveposition.

In additionto seekingpatentsfor some of our technologyand productcandidates,wealso rely substantiallyon tradesecrets,includingunpatentedknow-how,technologyand otherproprietarymaterialsand information,to maintainour competitiveposition.We seek to protectthesetradesecrets,in part,by enteringinto non-disclosureand confidentialityagreementswith partieswhohave accessto them,such as our employees, corporatecollaborators,outsidescientificcollaborators,contractmanufacturers,consultants,advisorsand other thirdparties.We also enterinto confidentialityand inventionor patentassignmentagreementswith our employeesand consultants.However, thesestepsmay be inadequate,wemay failto enterinto agreementswith allsuch partiesor any of thesepartiesmay breachthe agreementsand discloseour tradesecretsand theremay be no adequateremedyavailablefor such breachof an agreement.We cannot assureyou thatour tradesecretswill not be disclosedor thatwecan meaningfullyprotectour tradesecrets.Enforcinga claimthata partyillegally disclosedor misappropriateda tradesecretis difficult,expensiveand timeconsuming,and the outcomeis unpredictable.In addition,some courtsboth within and outsidethe United Statesmay be lesswilling,or unwilling,to protecttradesecrets.If a competitorlawfullyobtainedor independentlydevelopedany technology or informationthatweprotectas tradesecret,wewould have no rightto preventsuch competitorfromusing that technologyor informationto competewith us, which could harmour competitiveposition.

Intellectualpropertyrightsdo not necessarilyaddress all potentialthreats.

The degreeof futureprotectionaffordedby our intellectualpropertyrightsis uncertainbecause intellectualpropertyrightshave limitationsand may not adequatelyprotectour businessor permitus to maintain our competitiveadvantage.For example:

• othersmay be able to make productsthatare similarto BIO89-100 and any futureproduct candidateswemay develop or utilizesimilartechnologybut thatare not coveredby the claimsof the patentsthatweexclusivelylicenseor may own in the future;

• we, or our future collaborators, might not have been the first to make the inventions covered by the issued patents and pending patent applications that we exclusively license or may own in the future;

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

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

• it is possible that our pending patent applications or those that we may file in the future will not result in issued patents;

• issued patents that we hold rights to may be held invalid or unenforceable, including as a result of legal challenges by our competitors;

• 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 major commercial markets in which we do not have sufficient patent rights to stop such sales;

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

• the patents of others may be asserted against our product candidates and technologies in a manner that harms our business; and

• 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 coveringsuchtradesecretsorknow-how.

Should any of theseeventsoccur, they could have a materialadverseeffecton our business,financial condition,resultsof operationsand prospects.

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If our trademarksandtrade names are not maintainedandadequatelyprotected,wemay not be able to build name recognitionin our marketsof interest,andour business may be adverselyaffected.

Failureto obtaintrademarkregistrationsin the future,could limitour abilityto protectand enforceour trademarksand impedeour marketingeffortsin the countriesin which weoperate.We may not be able to protect our rightsto trademarksand tradenameswhich wemay need to build name recognitionwith potentialpartnersor customersin our marketsof interest.Asa meansto enforceany futuretrademarkrightsand prevent infringement,wemay be requiredto filetrademarkclaimsagainstthirdpartiesor initiatetrademarkopposition proceedings.This can be expensive,and strainthe financialresourcesof a company of our size,and time-consuming,and wemay not be successfulin enforcingour trademarkrights.In addition,our registeredor unregisteredtrademarksor tradenamesmay be challenged,infringed,circumvented,declaredgenericor determinedto be infringingon othermarks.

Future trademarkapplicationsin the United Statesand in otherforeignjurisdictionswhere wemay file may not be allowed or may subsequentlybe opposed. Even if theseapplicationsresultin registrationof trademarks,thirdpartiesmay challengeour use or registrationof thesetrademarksin the future.Over the long term,if weare unable to establishname recognitionbased on our trademarksand tradenames,then wemay not be able to competeeffectivelyand our businessmay be adverselyaffected.

Risks Related to Ownership of Our Common Stock

Thepriceof our common stock may be volatile,andyou may lose all or part of your investment.

The marketpriceof our commonstock could fluctuatesignificantly,and you may not be able to resell your sharesat or above the price you paid for your shares.Those fluctuationscould be based on variousfactorsin additionto those otherwisedescribedin thisprospectus,includingthose describedin these“Risk Factors.”Anyof these factorsmay resultin largeand sudden changes in the volumeand tradingpriceof our commonstock. In the past, followingperiodsof volatilityin the marketpriceof a company’ssecurities,stockholdershave ofteninstituted securitiesclassactionlitigationagainstthatcompany. If wewere involvedin a classactionsuit,it could divert the attentionof management,resultin negativepressreportsand, if adverselydetermined,have a material adverseeffecton our resultsof operationsand financialcondition.

In addition,the stock market,in general,and the stocksof many smallhealthcareand biotechnology companies,in particular,have experiencedextremepriceand volumefluctuationsthathave oftenbeen unrelated or disproportionateto the operatingperformanceof thesecompanies.Broad marketand industryfactorsmay negativelyaffectthe marketpriceof our commonstock, regardlessof our actualoperatingperformance.Further, a declinein the broaderfinancialmarketsand relatedfactorsbeyond our controlmay cause the priceof our commonstock to declinerapidlyand unexpectedly.

Sales of our common stock, or the perception that such sales may occur, could depress the price of our common stock.

Sales of a substantial number of shares of our common stock in the public market, or the perception that such sales may occur, could depress the market price of our common stock. Holders of an aggregate of 6,802,366 shares of our common stock have rights, subject to certain conditions, to require us to file registration statements covering their shares or to include their shares in registration statements that we may file for ourselves or other stockholders. In addition, we have filed a registration statement registering under the Securities Act the shares of our common stock reserved for issuance under our 2019 Equity Incentive Plan, including shares issuable upon exercise of outstanding options. These shares can be freely sold in the public market upon issuance, subject to volume limitations applicable to affiliates. Further, as opportunities present themselves, we may enter into financing or similar arrangements in the future, including the issuance of debt or equity securities. If we issue common stock or securities convertible into our common stock, our common stockholders would experience additional dilution and, as a result, the price of our common stock may decline.

Raising additionalcapitalmay cause dilutionto existing stockholders,restrictour operationsor requireus to relinquishrightsto our technologies.

Existing stockholderscould sufferdilutionor be negativelyaffectedby fixed paymentobligationswemay incurif weraiseadditionalfunds through the issuanceof additionalequity securitiesor debt or the Loan Agreement. Furthermore,thesesecuritiesmay have rightsseniorto those of our commonstock and could containcovenantsor protective rightsthatwould restrictour operationsand potentiallyimpairour competitiveness,such as limitationson our abilityto incuradditionaldebt, limitationson our abilityto acquire,sellor licenseintellectualpropertyrightsand otheroperatingrestrictionsthatcould adverselyimpactour abilityto conduct our business.If weneed to secure additionalfinancing,such additionalfundraisingeffortsmay divertour managementand researcheffortsfrom our day-to-dayactivities,which may adverselyaffectour abilityto develop and commercializeBIO89-100 and any futureproductcandidates.

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Tothe extentweobtainadditionalfunding through productcollaborations,thesearrangementswould generallyrequireus to relinquishrightsto some of our technologies,productcandidatesor products,and wemay not be able to enterinto such agreements,on acceptableterms,if at all.If weare unable to obtainadditional funding on a timelybasis,wemay be requiredto curtailor terminatesome or allof our developmentprogramsor productcandidates.

Ourdirectors,executiveofficersandcurrent holders of 5% or more of our capitalstock have substantialcontrolover our company,whichcould limityour abilityto influencethe outcomeof matterssubjectto stockholderapproval, including a change of control.

As of September 30, 2020, our executive officers, directors and other holders of 5% or more of our common stock beneficially owned a majority of our outstanding common stock. Asa result, our executive officers,directorsand other holders of 5% or more of our common stock, if they act, will be able to influence or control mattersrequiring approval by our stockholders,including the election of directorsand the approval of mergers, acquisitionsor other extraordinarytransactions.In addition, our current directors,executive officersand other holders of 5% or more of our common stock, acting together, would have the ability to control the managementand affairsof our company. They may also have intereststhat differ from yours and may vote in a waywith which you disagree and that may be adverse to your interests.This concentrationof ownership may have the effect of delaying, preventing or deterringa change of control of our company, could deprive our stockholdersof an opportunity to receive a premium for their shares of our common stock as part of a sale of our company and could affect the market price of our common stock.

If securitiesor industryanalystsdo not publish research,or publish inaccurateor unfavorableresearch,about our stock or business, the priceof our common stock andtrading volumecould decline.

The tradingmarketfor our commonstock depends, in part,on the researchand reportsthatsecurities or industryanalystspublishabout us or our business. If one or moreof the analystswho cover us downgrade our stock or publishinaccurateor unfavorableresearchabout our business,demand for our commonstock could decreaseand the priceof our commonstock could decline.In addition,if our operating resultsfailto meetthe forecastof analysts,the priceof our commonstock would likelydecline.If one or moreof theseanalystsceasecoverageof our company or failto publishreportson us regularly,demand for our stock could decrease,which mightcause the priceof our commonstock and tradingvolumeto decline.

We have identifiedmaterialweaknesses in our internalcontrolover financialreporting. If our remediation of the material weaknesses is not effective, or if we experience additional material weaknesses or otherwise fail to maintainaneffectivesystemof internalcontrols in the future, wemay not be able to produce timely and accurate financialstatements, and we or our independent registered public accounting firm may conclude that our internal control over financial reporting is not effective,whichcould adverselyaffect our investors’confidence and our stock price.

Prior to our initial public offering in November 2019, we were a private company and were not required to test our internal controls on a systematic basis. As an emerging growth company under the JOBS Act, our management will be required to report upon the effectiveness of our internal control over financial reporting under Section404 of the Sarbanes-OxleyAct beginning with our Annual Report on Form 10-K for the year ending December 31, 2020. Our independent registered public accounting firm is not required to formally attest to the effectiveness of our internal control over financial reporting until the date we are no longer an emerging growth company and reach accelerated filer status.

Effectiveinternalcontrolsover financialreportingare necessaryfor us to providereliablefinancial informationand, togetherwith adequatedisclosurecontrolsand procedures,are designedto preventfraud.Any failureto implementrequirednewor improvedcontrols,or difficultiesencounteredin theirimplementation, could cause us to failto meetour reportingobligations.In addition,any testingby us conductedin connection with Section404, or any subsequenttestingby our independentregisteredpublicaccountingfirm,may revealdeficienciesin our internalcontrolsover financialreportingthatare deemedto be materialweaknessesor thatmay require prospectiveor retroactivechanges to our consolidatedfinancialstatementsor identifyotherareasfor further attentionor improvement.Amaterialweakness is a deficiency,or a combinationof deficiencies,in internal controlover financialreporting,such thatthereis a reasonablepossibilitythata materialmisstatementof our annual or interimconsolidatedfinancialstatementswill not be preventedor detectedon a timelybasis.

In connectionwith our financialstatementcloseprocessfor 2018, weidentifiedmaterialweaknesses in the design and operatingeffectivenessof our internalcontrolover financialreporting.

These materialweaknessesrelatedto the following:

• We did not have an internalfinancedepartment.Consequently,welackedsufficientpersonnelwith an appropriatelevelof knowledge and requisiteU.S.generallyacceptedaccountingprinciples expertiseto identify,evaluateand accountfor complexand non-routinetransactionand an adequate supervisoryreview structurethatis needed to complywith financialreportingrequirements.

• We did not have an adequateassessmentof risksthatcould significantlyimpactinternalcontrol over financialreportingand did not effectivelydesign and monitor controlsin responseto the risksof material misstatement.

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We have implemented and are in the process of implementing measures designed to improve our disclosure controls and procedures and internal control over financial reporting to address the underlying causes of these material weaknesses, including the implementationof appropriate segregationof duties,formalizationof accountingpoliciesand controls, implementation of accounting systems to automate manual processes, formalization of our hiring practices,hiringof our Chief FinancialOfficer, principal accounting officerand additionalqualifiedaccountingand financepersonnel, appointment of two new board members, one as an audit committee chair and the other as an audit committee financial expert in June 2020 and April 2020, respectively, and engagement of financialconsultantsto enablethe implementationof internalcontrolsover financialreporting.

Our remediation efforts are ongoing. While we believe that these efforts have improved and will continue to improve our internal control over financial reporting, remediation of the material weaknesses will require validation and testing of the design and operating effectiveness of internal controls over a sustained period of financial reporting cycles. Wecannot assureyou that thesemeasureswill significantlyimproveor remediatethe materialweaknessesdescribedabove. We, and our independentregisteredpublicaccountingfirm, were not requiredto performan evaluationof our internalcontrolover financialreportingas of December31, 2019 in accordancewith the provisionsof the Sarbanes-OxleyAct. Accordingly,wecannot assureyou thatwe have identifiedallmaterialweaknessesor thattherewill not be additionalmaterialweaknessesor deficiencies thatwewill identify.

We are requiredto complywith Section404, which requires managementto certifyfinancialand otherinformationin our quarterlyand annual reportsand providean annual managementreporton the effectivenessof our internalcontrolover financialreportingcommencingwith our second annual report.Toachievecompliancewith Section404 wewill need to continueto dedicateinternalresources,outsideconsultantsand continueto executea detailedwork plan to assess and documentthe adequacy of internalcontrolover financialreporting,continuestepsto improvecontrol processes,as appropriate,validatethrough testingthatcontrolsare functioningas documentedand implementa continuousreportingand improvementprocessfor internalcontrolover financialreporting.Despiteour efforts, thereis a riskthatwewill not be able to conclude,within the prescribedtimeframeor at all,thatour internal controlover financialreportingis effectiveas requiredby Section404 and materialweaknessesmay stillexist.We also cannot assureyou thattherewill not be additionalmaterialweaknessesor significantdeficienciesin our internalcontrolsin the future.In the event thatweare not able to successfullyremediatethe existingmaterial weaknessesin our internalcontrolover financialreportingor demonstratecompliancewith the Sarbanes-Oxley Act, thatour internalcontrolover financialreportingis perceivedas inadequateor thatweare unable to produce timelyor accurateconsolidatedfinancialstatements,investorsmay lose confidencein our operatingresults, our stock price could declineand wemay not be able to remainlistedon The Nasdaq Global Market.

We have and will continue to incur increasedcostsas a resultof operatingas a public company, andour managementwill devote substantialtimeto newcomplianceinitiatives.

Asa publiccompany, we have and will continue to incursignificantlegal,accountingand otherexpensesthatwedid not incuras a privatecompany, and theseexpensesmay increaseeven moreafterweare no longeran emerging growth company.Asa publiccompany, weare subjectto the reportingrequirementsof the Exchange Act, the Sarbanes-OxleyAct, the Dodd-Frank WallStreetReformand ProtectionAct, as well as rulesadopted, and to be adopted, by the SECand Nasdaq. Our managementand otherpersonnelwill need to devote a substantial amountof timeto thesecomplianceinitiatives.Moreover,weexpecttheserulesand regulationsto substantially increaseour legaland financialcompliancecostsand to make some activitiesmoretime-consumingand costly.

The increasedcostswill increaseour net loss. For example,weexpecttheserulesand regulationsto make it moredifficultand moreexpensivefor us to obtaindirectorand officerliabilityinsuranceand wemay be forced to acceptreducedpolicylimitsor incursubstantiallyhighercoststo maintainthe sameor similarcoverage.We cannot predictor estimatethe amountor timingof additionalcostswemay incurto respond to these requirements.The impactof theserequirementscould also make it moredifficultfor us to attractand retain qualifiedpersonsto serveon our board of directors,our board committeesor as executiveofficers.

We are anemerginggrowth company, as definedin the SecuritiesAct, andwecannot be certainif the reduced disclosurerequirementsapplicableto emerginggrowth companieswill make our common stock lessattractive to investors.

We are an emerginggrowth company, as definedin Section2(a)of the SecuritiesAct, as modifiedby the JOBSAct, and wemay take advantageof certainexemptionsfromvariousreportingrequirementsthatare applicableto otherpubliccompaniesthatare not emerginggrowth companies,includingrelieffromthe auditor attestationrequirementsof Section404 lessextensivedisclosureobligationsregardingexecutivecompensationin our registrationstatements,periodicreportsand proxy statements,exemptionsfromthe requirementsto hold a nonbinding advisoryvote on executivecompensation,and exemptionsfromstockholderapprovalof any golden parachutepaymentsnot previouslyapproved. Asa result,our stockholdersmay not have accessto certain informationthatthey may deem important.We could be an emerginggrowth company for up to fiveyears, althoughcircumstancescould cause us to lose thatstatusearlier.

In addition,the JOBSAct also providesthatan emerginggrowth company can take advantageof the extendedtransitionperiodprovidedin the SecuritiesAct for complyingwith newor revisedaccounting standards.Anemerginggrowth company can thereforedelay the adoptionof certainaccountingstandardsuntil those standardswould otherwiseapply to privatecompanies.We have electedto availourselvesof this exemptionand, as a result,will not be subjectto the sameimplementationtimingfor newor revisedaccounting standardsas for otherpubliccompaniesthatare not emerginggrowth companies,which may make comparison of our consolidatedfinancialstatementsto those of otherpubliccompaniesmoredifficult.

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We cannot predictif investorswill find our commonstock lessattractivebecausewemay relyon these exemptions.If some investorsfind our commonstock lessattractiveas a result,theremay be a lessactivetrading marketfor our commonstock and the priceof our commonstock may be morevolatile.

Because wedo not expectto pay dividendsin the foreseeablefuture, you must relyonpriceappreciationof our common stock for return onyour investment.

We intendto retainmost,if not all,of our availablefunds and earningsto fund the developmentand growth of our business.Asa result,wedo not expectto pay any cash dividendsin the foreseeablefuture. In addition, the terms of our Loan Agreement with Silicon Valley Bank restrict our ability to pay dividends to limited circumstances. As a result, investors in our common stock may only receive a return if the market price of our common stock increases.

Therefore,you should not relyon an investmentin our commonstock as a sourcefor any futuredividend income.

Our board of directorshas significantdiscretionas to whether to distributedividendsand in what amounts, subject to the restrictions in the Loan Agreement.Even if our board of directorsdecidesto declareand pay dividends,the timing, amount and formof futuredividends,if any, will depend on, among othermatters,our futureresultsof operationsand cash flow, our capitalrequirementsand surplus,the amountof distributions,if any, receivedby us fromour subsidiaries,our financialcondition,contractualrestrictionsand otherfactorsdeemedrelevantby our board of directors.

Ouramended and restated certificate of incorporation,amended and restated bylaws andDelaware law could preventa third party fromacquiring us (even if anacquisitionwouldbenefitour stockholders),may limitthe abilityof our stockholders to replaceour managementandlimitthe pricethat investorsmightbe willingto pay for shares of our common stock.

Our amended and restated certificate of incorporationand our amended and restated bylaws could have the effectof makingit moredifficultfor a thirdpartyto acquire,or of discouraginga thirdpartyfromattemptingto acquire,controlof us. These provisionscould delay or preventa change in controlof the company and could limitthe pricethatinvestors mightbe willingto pay in the futurefor sharesof our commonstock. These provisions,among otherthings.

• establish a staggered board of directors divided into three classes serving staggered three-year terms, such that not all members of the board will be elected at one time;

• authorize our board of directors to issue new series of preferred stock without stockholder approval and create, subject to applicable law, a series of preferred stock with preferential rights to dividends or our assets upon liquidation, or with superior voting rights to our existing common stock;

• eliminate the ability of our stockholders to call special meetings of stockholders;

• eliminate the ability of our stockholders to fill vacancies on our board of directors;

• establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at our annual stockholder meetings;

• permit our board of directors to establish the number of directors;

• provide that our board of directors is expressly authorized to make, alter or repeal our amended and restated bylaws;

• provide that shareholders can remove directors only for cause and only upon the approval of not less than 66^2/3 of all outstanding shares of our voting stock;

• require the approval of not less than 66^2/3 of all outstanding shares of our voting stock to amend our bylaws and specific provisions of our certificate of incorporation; and

• limit the jurisdictions in which certainstockholderlitigationmay be brought.

Asa Delaware corporation,weare subjectto the anti-takeoverprovisionsof Section203 of the Delaware GeneralCorporationLaw,which prohibitsa Delaware corporationfromengaging in a business combinationspecifiedin the statutewith an interestedstockholder(as definedin the statute)for a periodof three yearsafterthe date of the transactionin which the person firstbecomesan interestedstockholder,unlessthe businesscombinationis approved in advance by a majorityof the independentdirectorsor by the holdersof at leasttwo-thirdsof the outstandingdisinterestedshares.The applicationof Section203 of the Delaware General CorporationLawcould also have the effectof delayingor preventinga change of controlof us.

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Ouramended and restated certificate of incorporation providesthat the Court of Chancery of the State of Delaware andthe federaldistrictcourts of the United Stateswill be the exclusiveforum for substantiallyall disputesbetween us andour stockholders,whichcould limitour stockholders’abilityto obtain a favorablejudicialforum for disputeswith us or our directors,officersor employees.

Our amended and restated certificate of incorporationprovidesthatthe Court of Chancery of the Stateof Delaware is the exclusiveforumfor the followingtypes of actionsor proceedingsunder Delaware statutoryor commonlaw: any derivativeactionor proceedingbrought on our behalf;any action assertinga breachof a fiduciaryduty; any actionassertinga claimagainstus arisingpursuantto the Delaware GeneralCorporationLaw,our amended and restated certificate of incorporationor our amended and restated bylaws; or any actionassertinga claim againstus thatis governed by the Delaware internalaffairsdoctrine.This provisionwould not apply to claims brought to enforcea duty or liabilitycreatedby the Exchange Act or any otherclaimfor which the federalcourts have exclusivejurisdiction.Our amended and restated certificate of incorporationprovides furtherthatthe federaldistrictcourtsof the United Stateswill be the exclusiveforumfor resolvingany complaintassertinga cause of actionarisingunder the SecuritiesAct.These choiceof forumprovisionsmay limita stockholder’s abilityto bring a claimin a judicialforumthatit findsfavorablefor disputeswith us or our directors,officersor otheremployees.If a courtwere to find the choiceof forumprovisioncontainedin our amended and restated certificate of incorporationto be inapplicableor unenforceablein an action,wemay incuradditionalcostsassociatedwith resolvingsuch actionin otherjurisdictions,which could harmour business.For example,under the SecuritiesAct, federal courtshave concurrentjurisdictionover allsuitsbrought to enforceany duty or liabilitycreatedby the Securities Act, and investorscannot waive compliancewith the federalsecuritieslaws and the rulesand regulations thereunder.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds.

Use of Proceeds from our Initial Public Offering

On November 13, 2019, we completed our initial public offering (“IPO”), pursuant to which we issued and sold an aggregate of 6,100,390 shares of common stock at the IPO price of $16.00 per share. The aggregate gross proceeds from our IPO were $97.6 million, and the net proceeds were $87.7 million after deducting underwriting discounts and commissions of $6.8 million and other offering expenses of $3.1 million. The offer and sale of the shares of common stock in the IPO were registered pursuant to registration statements on Form S-1 (File Nos. 333-234174 and 333-234617), which the SEC declared effective on November 8, 2019. 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 IPO were BofA Securities, Inc., SVB Leerink LLC, RBC Capital Markets, LLC, and Oppenheimer & Co. Inc.

The net proceeds from our IPO have been used and will be used, together with our cash and cash equivalents to complete our ongoing POC Phase 1b/2a clinical trial and initiate our subsequent Phase 2b clinical trial of BIO89-100 in patients with NASH, fund our Phase 2 trial of BIO89-100 in patients with SHTG as well as evaluate potential new indications for BIO89-100, and BIO89-100 manufacturing and scale up, with the balance to be used to fund working capital and other general corporate purposes, which may include licensing, acquiring or investing in complementary businesses, technologies, products or assets, the acquisition or licensing of other products, businesses or technologies.

There has been no material change in the intended use of proceeds from our IPO as described in our final prospectus filed with the SEC pursuant to Rule 424(b)(4) on November 12, 2019.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

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Item 6. Exhibits.

Exhibit Number	Description
2.1	Contribution and Exchange Agreement, dated as of September 17, 2019, by and among 89Bio Ltd., the Company and its shareholders (filed with the SEC as Exhibit 2.1 to the Company’s Form S-1 filed on October 11, 2019).
3.1	Second Amended and Restated Certificate of Incorporation (filed with the SEC as Exhibit 3.1 to the Company’s Form 8-K filed on November 15, 2019).
3.2	Second Amended and Restated Bylaws (filed with the SEC as Exhibit 3.2 to the Company’s Form 8-K filed on November 15, 2019).
4.1	Specimen common stock certificate of the registrant (filed with the SEC as Exhibit 4.1 to the Company’s Form S-1/A filed on October 28, 2019).
4.2	Investors’ Rights Agreement, dated as of September 17, 2019, by and among the Company and certain of its shareholders (filed with the SEC as Exhibit 4.2 to the Company’s Form S-1 filed on October 11, 2019).
4.3	Form of Warrant to Purchase Common Stock for Silicon Valley Bank (filed with SEC as Exhibit 4.1 to the Company’s Form 8-K filed on April 13, 2020).
10.1*+	Non-Employee Director Compensation Policy.
31.1*	Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934.
31.2*	Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934.
32#	Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith.

+ Indicates management contract or compensatory plan.

# Furnished herewith and not deemed to be “filed” for purposes of Section 18 of the Exchange Act, and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act.

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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.

	89bio, Inc.
Date: November 12, 2020	By:	/s/ Rohan Palekar
		Rohan Palekar
		Chief Executive Officer (principal executive officer)
Date: November 12, 2020	By:	/s/ Ryan Martins
		Ryan Martins Chief Financial Officer
		(principal financial and accounting officer)

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