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What changed in Absci Corp's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Absci Corp's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+640 added−541 removedSource: 10-K (2026-03-24) vs 10-K (2025-03-18)

Top changes in Absci Corp's 2025 10-K

640 paragraphs added · 541 removed · 349 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

75 edited+125 added−64 removed129 unchanged
Biggest changeWe believe we have the potential to unlock new and differentiated value drivers: • Enable potential first-in-class drugs : We’ve developed our Integrated Drug Creation platform which we believe enables us to access novel and differentiated biology and to address difficult-to-drug targets. 9 Table of Contents • Enable potential best-in-class drugs : Our generative AI models, including our de novo AI and AI lead optimization models, can help develop drugs with multiple, potentially superior attributes such as increased half-life, and conditional pH-dependent binding. • Potential for increased probability of success : Our AI models have been designed to enable multi-parameter predictions and simultaneous optimization of attributes in parallel, which we believe allows us to design product candidates with desired attributes, and potentially with the best chances for clinical success. • Reduce time to clinic : We believe our platform has the potential to reduce the time to IND (or foreign equivalent) from a 4-6 year industry average to around two years, enabling more programs per unit time. • Expand intellectual property space : We believe that our AI-driven drug creation strategy has the potential to generate broader IP for first-in-class antibody therapeutics and find new IP for fast-follower or best-in-class antibody therapeutics.
Biggest changeWe are leveraging our Integrated Drug Creation platform to: • Design potential first-in-class and best-in-class therapeutics : We believe our Integrated Drug Creation platform, together with our generative AI models including Origin-1 (our de novo AI model), and AI lead optimization models, enables us to access underexplored mechanisms, unlock novel biology, and design therapeutics against difficult-to-drug targets with significant unmet medical need. • Increase the potential probability of success : Our AI models have been designed to enable multi-parametric predictions and simultaneous optimization of attributes in parallel, which we believe may enable the design of product candidates with defined characteristics that may be relevant to clinical development and thus increase the potential for clinical success. • Reduce time and cost to clinic : We believe our platform may support more efficient preclinical development timelines.
Our corporate values guide both our daily decision-making and our long-term cultural development, setting the tone for how we work together with a focus on respect for patients, diversity, and community: • We believe in the impossible • We are one team with one finish line • We deliver results • We innovate because lives depend on it • We embrace our differences • We do the right thing We have integrated our values into our people processes, including performance management, the candidate selection and employee promotion processes, and recognition.
Our corporate values guide both our daily decision-making and our long-term cultural development, setting the tone for how we work together with a focus on respect for patients, diversity, and community: • We believe in the impossible • We are one team with one finish line • We deliver results • We innovate because lives depend on it • We embrace our differences • We do the right thing We have integrated our values into our people processes, including the candidate selection and employee promotion processes, performance management, and recognition.
The process required by the FDA before biologics may be marketed in the United States generally involves the following: • completion of preclinical laboratory tests and animal studies performed in accordance with the FDA’s applicable good laboratory practices regulations (GLP); • submission to the FDA of an application for an IND, which must become effective before clinical trials may begin; • approval of the protocol and related documentation by an independent institutional review board (IRB), or ethics committee at each clinical site before each trial may be initiated; • performance of adequate and well-controlled human clinical trials according to the FDA’s regulations commonly referred to as good clinical practices (GCPs), and any additional requirements for the protection of human research subjects and their health information, to establish the safety and efficacy of the proposed biological product for its intended use; • preparation of and submission to the FDA of a biologics license application (BLA), for marketing approval that includes sufficient evidence of establishing the safety, purity, and potency of the proposed biological product for its intended indication, including from results of nonclinical testing and clinical trials; • satisfactory completion of an FDA inspection of the manufacturing facility or facilities where the biological product is produced to assess compliance with current good manufacturing practices (cGMPs), to assure that the facilities, methods and controls are adequate to preserve the biological product’s identity, strength, quality and purity; • potential FDA audit of the nonclinical study and clinical trial sites that generated the data in support of the BLA; • review of the product candidate by an FDA advisory committee, where appropriate and if applicable; • payment of user fees for FDA review of the BLA (unless a fee waiver applies); and • FDA review and approval of the BLA, resulting in the licensure of the biological product for commercial marketing.
The process required by the FDA before biologics may be marketed in the United States generally involves the following: • completion of preclinical laboratory tests and animal studies performed in accordance with the FDA’s applicable good laboratory practices regulations (GLP); • submission to the FDA of an application for an IND, which must become effective before clinical trials may begin; • approval of the protocol and related documentation by an independent institutional review board (IRB), or ethics committee at each clinical site before each trial may be initiated; • performance of adequate and well-controlled human clinical trials according to the FDA’s regulations commonly referred to as good clinical practices (GCPs), and any additional requirements for the protection of human research subjects and their health information, to establish the safety and efficacy of the proposed biological product for its intended use; 22 Table of Contents • preparation of and submission to the FDA of a biologics license application (BLA), for marketing approval that includes sufficient evidence of establishing the safety, purity, and potency of the proposed biological product for its intended indication, including from results of nonclinical testing and clinical trials; • satisfactory completion of an FDA inspection of the manufacturing facility or facilities where the biological product is produced to assess compliance with current good manufacturing practices (cGMPs), to assure that the facilities, methods and controls are adequate to preserve the biological product’s identity, strength, quality and purity; • potential FDA audit of the nonclinical study and clinical trial sites that generated the data in support of the BLA; • review of the product candidate by an FDA advisory committee, where appropriate and if applicable; • payment of user fees for FDA review of the BLA (unless a fee waiver applies); and • FDA review and approval of the BLA, resulting in the licensure of the biological product for commercial marketing.
Under the Food and Drug Omnibus Reform Act of 2022 (FDORA), the FDA is now permitted to require, as appropriate, that such trials be underway prior to approval or within a specific time period after the date of approval for a product granted accelerated approval.
Under the Food and Drug Omnibus Reform Act of 2022 (FDORA), the FDA is permitted to require, as appropriate, that such trials be underway prior to approval or within a specific time period after the date of approval for a product granted accelerated approval.
If a product candidate that has orphan drug designation subsequently receives the first FDA approval for the disease or condition for which it has such designation, the product is entitled to orphan exclusivity, which means that the FDA may not approve any other applications, including a full BLA, to market the same product for the same indication for seven years from the date of such approval, except in limited circumstances, such as a showing of clinical superiority to the product with orphan exclusivity or if the holder of the orphan exclusivity cannot assure the availability of sufficient quantities of the orphan drug to meet the needs of patients with the disease or condition for which the drug was designated.
If a product candidate that has orphan drug designation subsequently receives the first FDA approval for the disease or condition for which it has such designation, the product is entitled to orphan exclusivity, which means that the FDA may not approve any other applications, including a full BLA, to market the same product for the same approved use or indication for seven years from the date of such approval, except in limited circumstances, such as a showing of clinical superiority to the product with orphan exclusivity or if the holder of the orphan exclusivity cannot assure the availability of sufficient quantities of the orphan drug to meet the needs of patients with the disease or condition for which the drug was designated.
Other potential consequences include, among other things: a. restrictions on the marketing or manufacturing of a product, complete withdrawal of the product from the market or product recalls; b. fines, warning or untitled letters or holds on post-approval clinical studies; c. refusal of the FDA to approve pending applications or supplements to approved applications, or suspension or revocation of existing product approvals; d. product seizure or detention, or refusal of the FDA to permit the import or export of products; e. consent decrees, corporate integrity agreements, debarment or exclusion from federal healthcare programs; f. mandated modification of promotional materials and labeling and the issuance of corrective information; g. the issuance of safety alerts, Dear Healthcare Provider letters, press releases and other communications containing warnings or other safety information about the product; or h. injunctions or the imposition of civil or criminal penalties.
Other potential consequences include, among other things: a. restrictions on the marketing or manufacturing of a product, complete withdrawal of the product from the market or product recalls; b. fines, warning or untitled letters or holds on post-approval clinical studies; c. refusal of the FDA to approve pending applications or supplements to approved applications, or suspension or revocation of existing product approvals; d. product seizure or detention, or refusal of the FDA to permit the import or export of products; e. consent decrees, corporate integrity agreements, debarment or exclusion from federal healthcare programs; 28 Table of Contents f. mandated modification of promotional materials and labeling and the issuance of corrective information; g. the issuance of safety alerts, Dear Healthcare Provider letters, press releases and other communications containing warnings or other safety information about the product; or h. injunctions or the imposition of civil or criminal penalties.
In addition, for products being considered for accelerated approval, the FDA generally requires, unless otherwise informed by the agency, that all advertising and promotional materials intended for dissemination or publication within 120 days of marketing approval be submitted to the agency for review during the pre-approval review period, which could adversely impact the timing of the commercial launch of the product.
In addition, for products being considered for accelerated approval, the FDA generally requires, unless the sponsor is otherwise informed by the agency, that all advertising and promotional materials intended for dissemination or publication within 120 days of marketing approval be submitted to the agency for review during the pre-approval review period, which could adversely impact the timing of the commercial launch of the product.
A designated orphan drug may not receive orphan exclusivity if it is approved for a use that is broader than the indication for which it received orphan designation.
A designated orphan drug may not receive orphan exclusivity if it is approved for a use or indication that is broader than the indication for which it received orphan designation.
Our patents and patent applications, if issued, are expected to expire between August 2033 and December 2044, in each case without taking into account any possible patent term adjustments or extensions and assuming payment of all appropriate maintenance, renewal, annuity, or other governmental fees.
Our patents and patent applications, if issued, are expected to expire between August 2033 and December 2045, in each case without taking into account any possible patent term adjustments or extensions and assuming payment of all appropriate maintenance, renewal, annuity, or other governmental fees.
Our employee benefits may vary by country and generally include an employee stock purchase plan, healthcare benefits for employees and their families, life and disability insurance, unlimited vacation, parental leave, retirement contributions, referral bonuses, access to mental health resources, wellness programs, and onsite services; 16 Table of Contents Training and development: We offer a number of educational resources and development opportunities with emphasis on internal mobility and fair and equitable talent practices.
Our employee benefits may vary by country and generally include an employee stock purchase plan, healthcare benefits for employees and their families, life and disability insurance, unlimited vacation, parental leave, retirement contributions, referral bonuses, access to mental health resources, wellness programs, and onsite services; Training and development: We offer a number of educational resources and development opportunities with emphasis on internal mobility and fair and equitable talent practices.
Government authorities in the United States, at the federal, state and local level, and in the European Union and other countries and jurisdictions, extensively regulate, among other things, the research, clinical development, testing, manufacturing, quality control approval, labeling, packaging, storage, record-keeping, promotion, advertising, distribution, post-approval monitoring and reporting, marketing and export and import of pharmaceutical products, including biological products such as those that we or our partners 18 Table of Contents develop.
Government authorities in the United States, at the federal, state and local level, and in the European Union and other countries and jurisdictions, extensively regulate, among other things, the research, clinical development, testing, manufacturing, quality control approval, labeling, packaging, storage, record-keeping, promotion, advertising, distribution, post-approval monitoring and reporting, marketing and export and import of pharmaceutical products, including biological products such as those that we or our partners develop.
There are also requirements governing the reporting of ongoing clinical studies and clinical study results to public registries. For purposes of BLA approval, human clinical trials are typically conducted in three sequential phases that may overlap or be combined: • Phase 1—The investigational product is initially introduced into healthy human subjects or patients with the target disease or condition.
There are also requirements governing the reporting of ongoing clinical studies and clinical study results to public registries. 23 Table of Contents For purposes of BLA approval, human clinical trials are typically conducted in three sequential phases that may overlap or be combined: • Phase 1—The investigational product is initially introduced into healthy human subjects or patients with the target disease or condition.
The initial PSP must include an outline of the pediatric study or studies that the sponsor plans to conduct, including study objectives and design, age groups, relevant endpoints and statistical approach, or a justification for not including such detailed information, and any request for a deferral of pediatric assessments or a full or partial waiver of the requirement to provide data from pediatric studies along with supporting information.
The initial PSP must include an outline of the pediatric study or studies that the sponsor plans to conduct, including study objectives and design, age groups, relevant endpoints and statistical approach, or a justification for not including such detailed information, and any request for a deferral of pediatric assessments or a full or partial waiver of the requirement to provide data 27 Table of Contents from pediatric studies along with supporting information.
The FDA may, on its own initiative or at the request of the applicant, grant deferrals for submission of data or full or partial waivers. Sponsors who conduct studies of their product candidate in children are eligible for pediatric exclusivity. Pediatric exclusivity, if granted, adds six months to existing exclusivity periods and patent terms.
The FDA may, on its own initiative or at the request of the applicant, grant deferrals for submission of data or full or partial waivers. Sponsors who conduct studies of their product candidate in children can be eligible for pediatric exclusivity. Pediatric exclusivity, if granted, adds six months to existing exclusivity periods and patent terms.
During this 12-year period of exclusivity, another company may still market a competing version of the reference product if the FDA approves a full BLA for the competing product containing that applicant’s own preclinical data and data from adequate and well-controlled clinical trials to demonstrate the safety, purity and potency of its product.
During 29 Table of Contents this 12-year period of exclusivity, another company may still market a competing version of the reference product if the FDA approves a full BLA for the competing product containing that applicant’s own preclinical data and data from adequate and well-controlled clinical trials to demonstrate the safety, purity and potency of its product.
We provide employees with competitive cash compensation, an all employee equity program, and a wide range of benefits. Our short-term incentive or cash bonus program is designed to recognize and reward achievement of company goals and individual performance. Individual performance is measured by delivery of results and impact and demonstration of our corporate values.
We provide employees with competitive cash compensation, an all employee equity program, and a wide range of benefits. Our short-term incentive or cash bonus program is designed to recognize and reward achievement of company goals and individual performance. Individual performance is 33 Table of Contents measured by delivery of results and impact and demonstration of our corporate values.
Changes to the manufacturing process are strictly regulated, and, depending on the significance of the change, may require prior FDA approval before being implemented. FDA regulations also require 24 Table of Contents investigation and correction of any deviations from cGMPs and impose reporting requirements upon us and any third-party manufacturers that we may decide to use.
Changes to the manufacturing process are strictly regulated, and, depending on the significance of the change, may require prior FDA approval before being implemented. FDA regulations also require investigation and correction of any deviations from cGMPs and impose reporting requirements upon us and any third-party manufacturers that we may decide to use.
Orphan drug designation must be requested before submitting a BLA. After the FDA grants orphan drug designation, 23 Table of Contents the generic identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA. Orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review or approval process.
Orphan drug designation must be requested before submitting a BLA. After the FDA grants orphan drug designation, the generic identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA. Orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review or approval process.
The senior leadership team continues to identify key initiatives that tie directly back to employee feedback to further increase employee engagement. Diversity, equity, inclusion and belonging (DEIB) : Our vision is to deliver breakthrough therapeutics that address unmet medical needs for broad and diverse patient populations.
The senior leadership team continues to identify key initiatives that tie directly back to employee feedback to further increase employee engagement. Diversity, equity, inclusion and belonging (DEIB) : Our vision is to deliver breakthrough therapeutics that address areas of significant unmet medical needs for broad and diverse patient populations.
If the FDA determines that the application, manufacturing process or manufacturing facilities are not acceptable, it will outline the deficiencies in the submission and often will request additional 21 Table of Contents testing or information. Notwithstanding the submission of any requested additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.
If the FDA determines that the application, manufacturing process or manufacturing facilities are not acceptable, it will outline the deficiencies in the submission and often will request additional testing or information. Notwithstanding the submission of any requested additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.
The Hatch-Waxman Amendments permit a patent restoration term of up to five years as compensation for patent term lost during product development and the FDA regulatory review process. However, patent term restoration cannot extend the remaining term of a patent beyond a total of 14 years 25 Table of Contents from the product’s approval date.
The Hatch-Waxman Amendments permit a patent restoration term of up to five years as compensation for patent term lost during product development and the FDA regulatory review process. However, patent term restoration cannot extend the remaining term of a patent beyond a total of 14 years from the product’s approval date.
Information contained on, or that can be accessed through, our website should not be considered to be part of this Annual Report. You are advised to read this Annual Report in conjunction with other reports and documents that we file from time to time with the SEC.
Information contained on, or that can be accessed through, our website should not be considered to be part of this Annual Report. 34 Table of Contents You are advised to read this Annual Report in conjunction with other reports and documents that we file from time to time with the SEC.
In October 2020, we completed a reorganization whereby we were converted from a Delaware limited liability company named AbSci LLC to a Delaware corporation under the name Absci Corporation. 27 Table of Contents Our principal executive offices are located at 18105 SE Mill Plain Boulevard, Vancouver, Washington 98683. Our telephone number is (360) 949-1041. Our website address is https://www.absci.com/.
In October 2020, we completed a reorganization whereby we were converted from a Delaware limited liability company named AbSci LLC to a Delaware corporation under the name Absci Corporation. Our principal executive offices are located at 18105 SE Mill Plain Boulevard, Vancouver, Washington 98683. Our telephone number is (360) 949-1041. Our website address is https://www.absci.com/.
A REMS is a safety strategy to manage a known or potential serious risk associated with a product and to enable patients to have continued access to such medicines by managing their safe use, and could include medication guides, physician communication plans, or elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools.
A REMS is a safety strategy to manage a known or potential serious risk associated with a product and to enable patients to have continued access to such medicines by managing their safe use, and could include medication guides, physician communication plans, or elements to assure safe use, such as 25 Table of Contents restricted distribution methods, patient registries and other risk minimization tools.
With each iteration, our Integrated Drug Creation platform refines its predictive capabilities, improving design capabilities and allowing us to create better antibody therapeutics against increasingly challenging targets beyond the reach of traditional drug discovery approaches.
With each iteration, our Integrated Drug Creation platform refines its predictive capabilities, improving design capabilities and allowing us to create better antibody-based therapeutics against increasingly challenging targets that are beyond the reach of traditional drug discovery approaches.
As a condition of accelerated approval, the FDA will generally require the sponsor to perform adequate and well-controlled post-marketing clinical trials to verify and describe the anticipated effect on irreversible morbidity or mortality or other clinical benefit.
As a condition of accelerated approval, the FDA will generally require the sponsor to perform adequate and well-controlled 26 Table of Contents post-marketing clinical trials to verify and describe the anticipated effect on irreversible morbidity or mortality or other clinical benefit.
In particular, in 2010, the ACA was enacted, which, among other things, subjected biologic products to potential competition by lower-cost biosimilars; addressed a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected; increased the minimum Medicaid rebates owed by most manufacturers under the Medicaid Drug Rebate Program; extended the Medicaid Drug Rebate program to utilization of prescriptions of individuals enrolled in Medicaid managed care organizations; subjected manufacturers to new annual fees and taxes for certain branded prescription drugs; created a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 50% (later increased to 70%, effective as of January 1, 2019) point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D; and provided incentives to programs that increase the federal government’s comparative effectiveness research.
In particular, in 2010, the ACA was enacted, which, among other things, subjected biologic products to potential competition by lower-cost biosimilars; addressed a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected; increased the minimum Medicaid rebates owed by most manufacturers under the Medicaid Drug Rebate Program; extended the Medicaid Drug Rebate program to utilization of prescriptions of individuals enrolled in Medicaid managed care organizations; subjected manufacturers to new annual fees and taxes for certain branded prescription drugs; created a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 50% (later increased to 70%, effective as of January 1, 2019, and subsequently replaced altogether by the Manufacturer Discount Program implemented by the Inflation Reduction Act of 2022 (IRA)) point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D; and provided incentives to programs that increase the federal government’s comparative effectiveness research.
These patent families encompass filings covering AI-guided drug design and 17 Table of Contents discovery, internally developed programs (such as composition of matter, method of use etc.), and technology relevant to our proprietary assays, cell lines and expression technology.
These patent families encompass filings covering AI-guided drug design and discovery, internally developed programs (such as composition of matter, method of use etc.), and technology relevant to our proprietary assays, cell lines and expression technology.
The BLA must include all relevant data available from preclinical studies and clinical trials, including negative or ambiguous results as well as positive findings, together with detailed information relating to the product candidate’s chemistry, manufacturing, controls, and proposed labeling, among other things.
The BLA must include all relevant data available from preclinical studies and clinical trials, including negative or ambiguous results as well as positive findings, together with detailed information relating to the product 24 Table of Contents candidate’s chemistry, manufacturing, controls, and proposed labeling, among other things.
To help reduce the risk of the introduction of adventitious agents with use of biological products, the Public Health Service Act emphasizes the importance of manufacturing control for products whose attributes cannot be precisely 20 Table of Contents defined.
To help reduce the risk of the introduction of adventitious agents with use of biological products, the Public Health Service Act emphasizes the importance of manufacturing control for products whose attributes cannot be precisely defined.
In addition, third parties may independently develop substantially equivalent proprietary information and techniques or otherwise gain access to our trade secrets or disclose our technology. As a result, we may not be able to meaningfully protect our trade secrets and other proprietary technology.
In addition, third parties may independently develop substantially equivalent proprietary information and techniques or otherwise gain access to our trade secrets or disclose our technology. As a result, we may not be able to 21 Table of Contents meaningfully protect our trade secrets and other proprietary technology.
By leveraging our data advantage, we drive a continuous learning cycle—data to train, AI to create, and wet lab to validate—that accelerates AI model innovation and thus continually improves our Integrated Drug Creation platform.
By leveraging our lab-in-the-loop, we drive a continuous learning cycle—data to train, AI to create, and wet lab to validate—that accelerates AI model innovation and thus continually improves our Integrated Drug Creation platform.
Achieving that vision isn’t possible unless we have a diverse and talented team and unless we live in a diverse and equitable world, where everyone can benefit from the potentially life-changing therapeutics we’re creating. We are committed to building a team with a variety of backgrounds, skills and perspectives. We encourage grassroots efforts by our employees.
Achieving that vision isn’t possible unless we have a diverse and talented team and unless we live in a diverse and equitable world, where everyone can benefit from the potentially life-changing therapeutics we’re creating. We are committed to building a team with a variety of backgrounds, skills and perspectives.
In addition, we may face competition in the future from companies currently offering adjacent technology (e.g. AI-enabled small molecule design) that may seek to develop antibody design capabilities, such as Recursion Pharmaceuticals, Inc., Relay Therapeutics, Inc., Isomorphic Labs Limited, and Schrodinger, Inc., among others.
In the future we may face competition from companies currently offering adjacent technology (e.g. AI-enabled small molecule design) that may seek to develop antibody design capabilities. Representative examples include Recursion Pharmaceuticals, Inc., and Isomorphic Labs Limited, among others.
In both the United States and certain foreign jurisdictions, there have been a number of legislative and regulatory changes to the health care system that could impact our ability to sell our products profitably.
In both the United States and certain foreign jurisdictions, there have been a number of legislative and regulatory changes to the health care system that could impact our ability to obtain coverage and adequate reimbursement for our products, if approved, and to sell them profitably.
Healthcare Laws and Regulations Biopharmaceutical companies are subject to additional healthcare regulation and enforcement by the federal government and by authorities in the states and foreign jurisdictions in which they conduct their business. These laws and regulations may constrain our relationships with our partners.
Healthcare Laws and Regulations Biopharmaceutical companies are subject to additional healthcare regulation and enforcement by the federal government and by authorities in the states and foreign jurisdictions in which they conduct their business.
We evaluated the efficacy of ABS-201 in a preclinical study for short term hair growth in mice. Mice were shaved until the skin was visible, then randomized into treatment groups based on skin color and initial body weight. Hair growth scores were recorded twice weekly using a predefined scale, and ABS-201 was compared to 5% topical minoxidil.
Preclinical mouse study We evaluated ABS-201 in a preclinical study for short term hair growth in female mice. Up to 11 mice per group were shaved until the skin was visible, then randomized into treatment groups based on skin color and initial body weight. Hair growth scores were recorded twice weekly using a predefined scale.
Specifically, product candidates are eligible for fast track designation if they are intended to treat a serious or life-threatening disease or condition and nonclinical or clinical data demonstrate the potential to address unmet medical needs for the disease or condition. Fast track designation applies to the combination of the product and the specific indication for which it is being studied.
Specifically, product candidates are eligible for fast track designation if they are intended to treat a serious or life-threatening disease or condition and nonclinical or clinical data demonstrate the potential to address areas of significant unmet medical needs for the disease or condition.
Moreover, success rates for traditional drug discovery, as defined by successfully reaching a marketed product, are estimated at less than 5%. In all, it can take as much as 12–15 years, with costs estimated to exceed more than $1 billion to bring a drug to market. Progress in AI has been building for decades, with increasing application in drug discovery.
Moreover, success rates for traditional drug discovery, as defined by successfully reaching a marketed product, are estimated at less than 5%. In all, it can take as much as 12–15 years, with costs estimated to exceed $1 billion to bring a drug to market. Advances in AI are increasingly being applied to drug discovery and development.
A fast track product may also be eligible for rolling review, where the FDA may consider for review sections of the BLA on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the BLA, the FDA agrees to accept sections of the BLA and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the BLA. 22 Table of Contents A product candidate intended to treat a serious or life-threatening disease or condition may also be eligible for breakthrough therapy designation to expedite its development and review.
A fast track product may also be eligible for rolling review, where the FDA may consider for review sections of the BLA on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the BLA, the FDA agrees to accept sections of the BLA and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the BLA.
The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30-day time period, raises safety concerns or questions about the proposed clinical trial.
In the United States, an IND must become effective before human clinical trials may begin. The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30-day time period, raises safety concerns or questions about the proposed clinical trial.
Such laws include, without limitation, state and federal anti-kickback, fraud and abuse, false claims, and transparency laws and regulations related to drug pricing and payments and other transfers of value made to physicians and other 26 Table of Contents healthcare providers.
Such laws include, without limitation, state and federal anti-kickback, fraud and abuse, false claims, and transparency laws and regulations (including laws and regulations related to drug pricing and reimbursement; payments and other transfers of value to physicians and other healthcare providers; and, to the extent applicable, patient privacy and data protection and anti-bribery requirements).
We cannot predict, however, how changes in these laws may affect our future operations. Healthcare Reform Payors, whether domestic or foreign, or governmental or private, are developing increasingly sophisticated methods of controlling healthcare costs and those methods are not always specifically adapted for new technologies.
Healthcare Reform Payors, whether domestic or foreign, governmental or private, are developing increasingly sophisticated methods of controlling healthcare costs and those methods are not always specifically adapted for new technologies.
Overall, our intellectual property estate includes 79 issued or granted patents and 159 pending patent applications worldwide, which includes ten issued U.S. patents and 24 pending regular U.S. patent applications. We also have granted patents in the EU, Australia, Japan, Canada, China, Hong Kong, Israel, Mexico and South Korea. This number does not include provisional applications we have filed.
Overall, our intellectual property estate includes 69 issued or granted patents and 53 pending patent applications worldwide, which includes 12 issued U.S. patents and 20 pending regular U.S. patent applications. We also have granted patents in the EU, Australia, Japan, Canada, China, Hong Kong, Israel, Mexico and South Korea, as well as other countries.
In the healthcare sector, anti-corruption risk can also arise in the context of improper interactions with doctors, key opinion leaders and other healthcare professionals who work for state-affiliated hospitals, research institutions or other organizations.
In the healthcare sector, anti-corruption risk can also arise in the context of improper interactions with doctors, key opinion leaders and other healthcare professionals who work for state-affiliated hospitals, research institutions or other organizations. Human Capital Our employees, who we refer to as “Unlimiters”, are essential to our ability to achieve our mission to design differentiated antibody-based therapeutics.
We aim to expand and diversify our portfolio of partnered programs through these collaborations, each of which may include up-front fees and research fees, as well as potential clinical and/or commercial milestones and royalties. • Co-development Programs : We enter into co-development partnerships with third parties who may offer perceived synergies with our Integrated Drug Creation platform.
Partnered Programs: We may enter into drug creation collaborations for drug creation programs and co-development partnerships with third parties. Our drug creation collaboration programs may include up-front fees and research fees, as well as potential clinical and/or commercial milestones and royalties.
The more data we generate, the more design campaigns we complete, the more our AI models learn and advance, all of which we believe enables us to create new and better antibody therapeutics against increasingly challenging targets. Competition Absci is a data-first generative AI drug creation company with the mission to to design differentiated antibody therapeutics.
The more data we generate, the more design campaigns we complete, the more our AI models advance, all of which we believe will enable us to create new and better antibody-based therapeutics against increasingly challenging targets.
If our partners’ operations are found to be in violation of any of such laws or any other governmental regulations that apply, by extension, we may be subject to penalties, including, without limitation, administrative, civil and criminal penalties, damages, fines, disgorgement, the curtailment or restructuring of operations, integrity oversight and reporting obligations, exclusion from participation in federal and state healthcare programs and responsible individuals may be subject to imprisonment.
If our operations or those of our partners, vendors, service providers, collaborators, or other third parties with whom we do business are found to be in violation of any of such laws or any other governmental regulations that apply, by extension, we may be subject to penalties, including, without limitation, administrative, civil and criminal penalties, damages, fines, disgorgement, the curtailment or restructuring of operations, integrity oversight and reporting obligations, exclusion from participation in federal and state healthcare programs and responsible individuals may be subject to imprisonment, any of which could adversely affect our business, financial condition, results of operations, and prospects. 31 Table of Contents Additional Regulations In addition to the foregoing, state and federal U.S. laws regarding environmental protection and hazardous substances affect our business.
We continue to evolve and advance our DEIB efforts. We believe that inclusiveness helps drive innovation and increases our understanding of the diverse group of patients we seek to benefit. Health, safety, well-being : We are committed to promoting the health, safety, and well-being of our employees.
We believe that inclusiveness helps drive innovation and increases our understanding of the diverse group of patients we seek to benefit. Health, safety, well-being : We are committed to promoting the health, safety, and well-being of our employees. Our Employee Safety Committee is comprised of cross-departmental members and meets regularly to review workplace safety and adherence to safety policies.
Preclinical studies include laboratory evaluations of drug chemistry, formulation and stability, as well as in vitro and animal 19 Table of Contents studies to assess safety and in some cases to establish the rationale for therapeutic use.
Preclinical studies include laboratory evaluations of drug chemistry, formulation and stability, as well as in vitro and animal studies to assess safety and in some cases to establish the rationale for therapeutic use. The conduct of preclinical studies is subject to applicable federal/national, supranational, state and local level regulations and requirements, including GLP, requirements for safety/toxicology studies.
Our proprietary synthetic-biology technologies and efficient operational infrastructure generates high-quality data in a high-throughput manner to train our AI models. AI to Create : We design product candidates using our generative AI models trained on both proprietary and public biological datasets. Our generative AI models can create epitope-specific product candidates against a therapeutic target of interest, including “hard-to-drug” targets.
We also regularly make use of public biological datasets. Our ability to generate accurate data through efficient operational infrastructure generates high-quality data in a high-throughput manner to train and test our AI models. AI to Create : We design product candidates using our generative AI models trained on both proprietary and public biological datasets.
Our Business Model Our business model is focused on monetizing our Integrated Drug Creation platform by generating internally developed programs that are later partnered or out-licensed following certain value inflection points (anywhere from preclinical through clinical development) or by partnering with third parties who wish to leverage our Integrated Drug Creation platform for early discovery efforts in a variety of deal structures.
We leverage our Integrated Drug Creation platform to (1) build and advance an internal pipeline of differentiated therapeutic programs that we advance through clinical development and commercialization, (2) generating internally developed programs that are subsequently partnered or out-licensed following certain value inflection points (anywhere from preclinical through early phases of clinical 11 Table of Contents development), and (3) strategically partnering with third parties to leverage our Integrated Drug Creation platform to support early discovery efforts in a variety of deal structures.
Enabling the Development of New Antibody Modalities: Our ability to design, construct and rapidly screen large numbers of molecules enables us to evaluate billions of unique protein variants and increase the probability of finding the most promising product candidate. We design and optimize new-to-nature modalities driven by our AI models.
We may continue to evaluate strategic and synergistic technology acquisitions to expand and strengthen our capabilities and deepen our expertise in the aforementioned areas. 12 Table of Contents Enabling the development of new antibody modalities: Our ability to design, construct and rapidly screen large numbers of molecules enables us to evaluate billions of unique protein variants in silico and hence to increase the probability of finding the most promising product candidate.
Building a Diverse Portfolio of Internally Developed Programs: We are actively building and expanding a portfolio of internally developed programs, each designed using our generative AI models, including our de novo AI and AI-driven lead optimization models. These programs span multiple therapeutic areas, leveraging our ability to design novel biologics against complex and hard-to-drug targets.
Advancing a diverse portfolio of internally developed programs: We are advancing a portfolio of internally developed programs, each designed using our generative AI models, including our Origin-1 de novo AI models, and our AI-driven lead optimization models. These programs span multiple therapeutic areas and focus on areas with significant unmet medical need.
Whether or not we obtain FDA approval for a product, we would need to obtain the necessary approvals by the comparable foreign regulatory authorities before we can commence clinical trials or marketing of the product in foreign countries and jurisdictions.
Whether or not we obtain FDA approval for a product, we must obtain the requisite approvals from regulatory authorities in foreign countries prior to the commencement of clinical studies or marketing of the product in those countries.
Our Employee Safety Committee is comprised of cross-departmental members and meets regularly to review workplace safety and adherence to safety policies. We require annual workplace safety training to reinforce workplace safety procedures that may be useful in the event of emergency situations and to assist our employees in helping to prevent workplace accidents.
We require annual workplace safety training to reinforce workplace safety procedures that may be useful in the event of emergency situations and to assist our employees in helping to prevent workplace accidents. We have numerous employees with current first aid, CPR, and AED certifications for emergency preparedness.
The conduct of preclinical studies is subject to applicable federal/national, supranational, state and local level regulations and requirements, including GLP, requirements for safety/toxicology studies. The results of the preclinical studies, together with manufacturing information and analytical data, must be submitted to the FDA as part of an IND or foreign equivalent such as a clinical trial application (CTA).
The results of the preclinical studies, together with manufacturing information and analytical data, must be submitted to the FDA as part of an IND or to a foreign regulatory authority through a comparable application, such as a clinical trial application (CTA). An IND is a request for authorization from the FDA to administer an investigational new drug to humans.
Our proprietary Integrated Drug Creation platform enables us to build a strong pipeline of both internally developed and partnered programs that can expand therapeutic possibilities. Lab in a loop 7 Table of Contents Data to Train : We leverage a 77,000+ square feet facility and wet-lab to generate high-quality data at scale for AI model training.
Lab-in-a-loop 8 Table of Contents Data to Train : We leverage a combined 77,000+ square feet wet-lab and dry-lab facility to generate high-quality data at scale for AI model training and testing.
The quality and scale of wet lab data give us extensive training data, propelling our iterative design-build-test-learn cycle. All together, our lab-in-the-loop capabilities can take us from AI-designed antibodies to wet lab-validated candidates in as little as six weeks.
Wet Lab to Validate : We assess our product candidates with our wet lab's high-throughput functional validation capabilities, which are designed to prove our AI models in the lab. The quality and scale of wet lab data give us extensive training data, propelling our iterative design-build-test-learn cycle.
In addition, our AI lead optimization models enable parallel multi-parametric optimization to improve certain product candidate attributes including, but not limited to, tunable binding affinity, immunogenicity, pharmacological profile, and developability. Wet Lab to Validate : We assess our product candidates with our wet lab's high-throughput functional validation capabilities, which are designed to prove our AI models in the lab.
Our generative AI models can create epitope-specific product candidates against a therapeutic target of interest, including “hard-to-drug” targets. In addition, our AI lead optimization models enable parallel multi-parametric optimization to improve certain product candidate attributes including, but not limited to, tunable binding affinity, immunogenicity, pharmacological profile, and developability.
With the data to learn, the AI to create, and the wet lab to validate, we believe we can create billions of antibody designs and screen millions of ranked antibody sequences in weeks, allowing us to go from AI-designed to wet lab-validated product candidates in as little as six weeks.
Each cycle refines our data and strengthens our models, facilitating rapid innovation and enhancing the precision of our therapeutic designs. With the data to learn, the AI to create, and the wet lab to validate, we believe our lab-in-a-loop powers our ability to go from AI designs to wet lab-validated product candidates in as little as six weeks.
Item 1. Business Our Mission We are a data-first generative AI drug creation company with the mission to design differentiated antibody therapeutics. Our Integrated Drug Creation platform comprises, in part, cutting edge generative AI models aimed at designing better antibody therapeutics, including against hard-to-drug targets.
Beyond the competitors for IBD, there will be additional competitors for the indications outside of IBD that we or a potential partner may explore. Integrated Drug Creation platform Our Integrated Drug Creation platform comprises, in part, cutting edge generative AI models aimed at designing differentiated antibody-based therapeutics, including against hard-to-drug targets.
Additional Regulations In addition to the foregoing, state and federal U.S. laws regarding environmental protection and hazardous substances affect our business. These and other laws govern our use, handling and disposal of various biological, chemical and radioactive substances used in, and wastes generated by, our operations.
These and other laws govern our use, handling and disposal of various biological, chemical and radioactive substances used in, and wastes generated by, our operations. If our operations result in contamination of the environment or expose individuals to hazardous substances, we could be liable for damages and governmental fines.
If our operations result in contamination of the environment or expose individuals to hazardous substances, we could be liable for damages and governmental fines. We believe that we are in material compliance with applicable environmental laws and that continued compliance therewith will not have a material adverse effect on our business.
We believe that we are in material compliance with applicable environmental laws and that continued compliance therewith will not have a material adverse effect on our business. We cannot predict, however, how changes in these laws may affect our future operations.
The market for technologies that enable biopharmaceutical research and development, such as ours, includes multiple categories of pharmaceutical and biotechnology industries where competitors are similarly working to address certain steps in target identification, biologic drug discovery, or adjacent aspects of the broad process, including: • in the field of AI-guided drug design and discovery, we may face competition from companies attempting to use AI to design novel biologic drugs such as Generate Biomedicines, Inc., and Xaira Therapeutics, Inc., among others.
There are multiple potential competitors developing technologies that seek to improve target identification and drug design or discovery. More specifically, in the field of AI-based drug design and discovery we may face competition from companies attempting to use AI to design therapeutics. Representative examples include Generate Biomedicines, Inc. and Xaira Therapeutics, Inc., among others.
Our co-development programs are based on a clear alignment to take these programs through to certain value inflection points before considering partnering or out-licensing opportunities. Our co-development partnerships may be directed to either single and multi-target programs and may include mutual cost-sharing and/or technology contributions.
Through our co-development partnerships, we collaborate to develop drug creation programs to certain value inflection points before considering partnering or out-licensing opportunities and may include mutual cost-sharing and/or technology contributions. Absci has had a track record of partnerships with leading biopharmaceutical companies including Merck, AstraZeneca, Almirall and others.
As of December 31, 2024, we had 157 employees, of which 156 were full-time employees, many of whom have advanced post-graduate degrees.
As of December 31, 2025, we had 140 employees, many of whom have advanced post-graduate degrees, primarily engaged in research and development and general and administrative functions.
Strengthening Our Position as a Partner of Choice: We have formed partnerships with large pharmaceutical companies, large biotechnology companies, and other third parties to continually expand the breadth and depth of our partnered drug creation programs and co-development programs.
Strengthening our position as a partner of choice through platform differentiation: We have entered into drug creation partnerships with pharmaceutical companies, biotechnology companies and other third parties to support the development of programs generated using our platform. These collaborations may include provisions for upfront payments, research funding, milestone payments and royalties on potential future product sales.
For a discussion of the risks we face relating to competition, see “Risk Factors—Risks Related to Biologic Drug Development—We face competition from entities that have made substantial investments into the rapid development of novel treatments for the therapeutic indications in which we are engaged in partnered programs and internally developed programs, including large and specialty pharmaceutical and biotechnology companies”.
Moreover, other pharmaceutical and biotechnology companies seeking to develop AI capabilities for biologic drug design may also pose competition. 20 Table of Contents We also face competition from entities that have made substantial investments in developing treatments for the therapeutic indications which our internal programs and partnered programs target. These competitors may include large and specialty pharmaceutical and biotechnology companies.
In women, the frontal hairline is typically spared with diffuse hair loss at the crown and top of the head, with loss often marked by a wider center part. Current FDA-approved treatments for AGA are limited due to variable efficacy, lack of patient compliance, potential sexual and neurological side effects. Additionally, incremental limitations exist for women of reproductive age.
Moreover, current FDA-approved treatments for AGA, which target dihydrotestosterone (DHT) and/or seek to increase blood flow to hair follicles, provide limited and/or variable efficacy, are inconvenient and thus patient compliance is limited, and some have been reported to cause potential sexual and neurological side effects. Additionally, incremental limitations exist for women of reproductive age.
Our Integrated Drug Creation platform enables our core competencies in three broad areas: • Target selection and discovery : There are a variety of manners in which we identify targets for our internally developed programs and collaborations. Those targets can be partner-identified targets or Absci-identified targets. One of the methods we use to identify targets is our proprietary reverse-immunology technology.
Our Integrated Drug Creation platform enables our core competencies in three broad areas: • Target selection and discovery : Target selection is a strategic pillar of our AI-native approach, allowing us to identify opportunities where we can establish first-in-class or best-in-class positions.
We expect to continue to grow and maintain an integrated team of subject matter experts in AI and drug creation, thereby bolstering our capabilities in areas such as disease biology, molecular sciences, protein engineering, computational drug design, deep learning, and AI. We expect to grow and enhance our intellectual property portfolio to protect and secure the value of our innovations.
Continuous investment in our team and integrated drug creation platform: We intend to maintain our technological differentiation through continued investment in our team and platform. We expect to maintain an integrated team of subject matter experts in AI, drug discovery, disease biology, protein engineering, and clinical development.
Furthermore in August 2022, the Inflation Reduction Act (IRA) was enacted, which among other things: allows for the Centers for Medicare & Medicaid Services to impose price controls for certain single-source drugs and biotherapeutics reimbursed under Medicare Part B and Part D. Anti-Corruption Laws We are subject to the U.S.
Furthermore the IRA also allows for the Centers for Medicare & Medicaid Services to negotiate maximum prices for certain single-source drugs and biotherapeutics reimbursed under Medicare Part B and Part D, and makes other changes that affect manufacturer discount and rebate obligations and the Medicare Part D benefit design over time.
Foreign Regulation In order to market any product outside of the United States, we would need to comply with numerous and varying regulatory requirements of other countries and jurisdictions regarding quality, safety, and efficacy and governing, among other things, clinical trials, marketing authorization, commercial sales and distribution of our products.
The BPCIA also created certain exclusivity periods for biosimilars approved as interchangeable products. Government Regulation Outside the United States In addition to regulations in the United States, we will be subject to a variety of regulations in other jurisdictions governing, among other things, clinical studies and any commercial sales and distribution of our products.
In May 2023, the U.S. Food and Drug Administration (FDA) acknowledged that AI will undoubtedly play a critical role in drug development and recognized its potential to enhance drug development in many ways, including to help bring safe and effective drugs to patients faster.
In May 2023, the U.S. Food and Drug Administration (FDA) acknowledged that AI has the potential to play an important role in drug development, including supporting efforts to improve aspects of the drug development process. Some industry participants and analysts have identified generative AI as a potential approach for designing potential drug candidates with specific attributes.
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Antibody therapeutics represent a growing market and significant medical opportunity, yet the biopharmaceutical industry faces challenges in bringing these potentially life-changing medicines to patients.
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Item 1. Business Overview We are a clinical-stage biopharmaceutical company using an AI-native approach to develop differentiated antibody therapeutics. Our integrated drug creation platform combines Origin-1, our generative design model, with rapid validation using our lab-in-the-loop. We focus on underexplored mechanisms where unmet medical need is high and competition is low.
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Leveraging our synthetic biology roots, we expect our Integrated Drug Creation platform to improve upon traditional biologic drug discovery by using AI to simultaneously optimize multiple drug characteristics that may be important to development and therapeutic benefit. Through these efforts, we aim to shorten time to clinic, while increasing the probability of success.
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We have advanced our first two programs from AI design to IND (or foreign equivalent) in around two years with a total investment of approximately $15 million per program, compared to an industry average of 4–6 years at a cost of greater than $50 million. This combination of underexplored target selection and capital-efficient execution is central to our strategy.
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Our approach expands the possibilities in biopharmaceuticals — shifting from a paradigm of drug discovery to drug creation — with the goal of bringing best-in-class and first-in-class antibody therapeutics to the patients who need them. The AI Drug Creation Opportunity Traditional drug discovery and preclinical development can take 4–6 years to go from discovery to clinical development.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn the broader field of antibody therapeutic development, we may face competition from pharmaceutical and biotechnology companies that are developing therapeutics that address the same disease targets and/or indications addressed by our internally developed programs, including: • in the field of developing antibody therapeutics targeting TL1A for the treatment of inflammatory bowel disease, we are aware of several companies with product candidates in clinical development, including Merck’s MK-7240, Roche/Roivant’s RVT-3101, Sanofi/Teva’s TEV-48574 TL1A, Spyre’s SPY002, and Xencor’s XmAb942; and • in the field of developing antibody therapeutics targeting PRLR for the treatment of androgenic alopecia, we are aware of Hope Medicine’s HMI-115.
Biggest changeInternally developed programs We may face competition from pharmaceutical and biotechnology companies that are developing therapeutics that address the same disease targets and/or indications addressed by our internally developed programs.
For example, this may include reasons such as to: • advance our existing internally developed programs through preclinical and clinical development; • advance new or additional internally developed programs through preclinical and clinical development; • further advance our AI capabilities, including AI capabilities related to our Integrated Drug Creation platform; • further expand the capabilities of our Integrated Drug Creation platform into additional areas of biopharmaceutical research and development, such as target discovery or translational medicine; • increase our business development efforts to drive market recognition of our Integrated Drug Creation platform, our internally developed programs and address competitive developments; • fund business development efforts for our current or future internally developed programs and partnered programs; • acquire, license or invest in additional technologies or complementary businesses or assets; • finance capital expenditures and general and administrative expenses.
For example, this may include reasons such as to: • advance our existing internally developed programs through preclinical and clinical development; • advance new or additional internally developed programs through preclinical and clinical development; • further advance our AI capabilities, including AI capabilities related to our Integrated Drug Creation platform; • further expand the capabilities of our Integrated Drug Creation platform into additional areas of biopharmaceutical research and development, such as target discovery or translational medicine; • increase our business development efforts to drive market recognition of our Integrated Drug Creation platform, our internally developed programs and address competitive developments; • fund business development efforts for our current or future internally developed programs and partnered programs; • acquire, license or invest in additional technologies or complementary businesses or assets; and • finance capital expenditures and general and administrative expenses.
As a result, our future growth is dependent on our ability to successfully advance our internally developed programs through to clinical development and eventual marketing approval and commercialization, and the ability of our partners to successfully develop and commercialize therapies based on product candidates generated using our Integrated Drug Creation platform.
As a result, our future growth is dependent on our ability to successfully advance our internally developed programs through clinical development and eventual marketing approval and commercialization, and the ability of our partners to successfully develop and commercialize therapies based on product candidates generated using our Integrated Drug Creation platform.
The commencement and rate of completion of preclinical studies and clinical trials for a product candidate may be delayed by many factors, including, for example: • inability to generate sufficient preclinical or other in vivo or in vitro data to support the initiation of clinical studies; • delays in reaching a consensus with regulatory agencies on study design; and • the FDA not allowing us to rely on previous findings of safety and efficacy for other similar but approved products and published scientific literature; and • use of our product candidates could be associated with adverse side effects, adverse events or other properties or safety risks, which could delay or preclude approval, cause us or our partners to suspend or discontinue preclinical or clinical trials, abandon a product candidate, limit the commercial profile of an approved product or result in other significant negative consequences.
The commencement and rate of completion of preclinical studies and clinical trials for a product candidate may be delayed by many factors, including, for example: • inability to generate sufficient preclinical or other in vivo or in vitro data to support the initiation of clinical studies; • delays in reaching a consensus with regulatory agencies on study design; • the FDA not allowing us to rely on previous findings of safety and efficacy for other similar but approved products and published scientific literature; and • use of our product candidates could be associated with adverse side effects, adverse events or other properties or safety risks, which could delay or preclude approval, cause us or our partners to suspend or discontinue preclinical or clinical trials, abandon a product candidate, limit the commercial profile of an approved product or result in other significant negative consequences.
We face competition from entities that have made substantial investments into the rapid development of novel treatments for the therapeutic indications in which we are engaged in partnered programs and internally developed programs, including large and specialty pharmaceutical and biotechnology companies. The discovery and development of therapies is highly competitive.
We face competition from entities that have made substantial investments into the rapid development of novel treatments for the therapeutic indications in which we are engaged in internally developed programs and partnered programs, including large and specialty pharmaceutical and biotechnology companies. The discovery and development of therapies is highly competitive.
Due to the trend toward value-based pricing and coverage, the increasing influence of health maintenance organizations and additional legislative changes, we expect our partners to experience pricing pressures on antibody therapeutics generated using our Integrated Drug Creation platform that our partners may commercialize. The downward pressure on healthcare costs in general, particularly novel therapeutics, has become very intense.
Due to the trend toward value-based pricing and coverage, the increasing influence of health maintenance organizations and additional legislative changes, we expect our partners to experience pricing pressures on antibody-based therapeutics generated using our Integrated Drug Creation platform that our partners may commercialize. The downward pressure on healthcare costs in general, particularly novel therapeutics, has become very intense.
There can be no guarantee that our Integrated Drug Creation platform will meet the expectations of pharmaceutical and biotechnology companies. We will need to develop and expand our workforce, commercial infrastructure and laboratory operations to support anticipated growth in demand for our drug creation programs, and we may encounter difficulties in managing this development and expansion.
There can be no guarantee that our Integrated Drug Creation platform will meet the expectations of pharmaceutical and biotechnology companies. We may need to develop and expand our workforce, commercial infrastructure and laboratory operations to support anticipated growth in demand for our drug creation programs, and we may encounter difficulties in managing this development and expansion.
This inefficiency could impair our productivity and operational effectiveness, impacting our overall business performance; or • Expanding our computational infrastructure or resorting to third-party cloud services to meet our computational needs could expose us to increased compliance and security risks.
This inefficiency could impair our productivity and operational effectiveness, impacting our overall business performance; and • Expanding our computational infrastructure or resorting to third-party cloud services to meet our computational needs could expose us to increased compliance and security risks.
Additionally, pursuant to the ATM, the number of shares that are sold by Sales Agent, if any, after we request that sales be made will fluctuate based on the market price of our common stock during the sales period and limits we set with Sales Agent.
Additionally, pursuant to the ATM, the number of shares that are sold by the Sales Agent, if any, after we request that sales be made will fluctuate based on the market price of our common stock during the sales period and limits we set with Sales Agent.
Any such cybersecurity incident, data breach or interruption could compromise our networks and the information stored there could be accessed by unauthorized parties, publicly disclosed, lost, or misused,or stolen.
Any such cybersecurity incident, data breach or interruption could compromise our networks and the information stored there could be accessed by unauthorized parties, publicly disclosed, lost, misused, or stolen.
Unauthorized access, loss, misuse, or dissemination could also disrupt our operations and damage our reputation, any of which could adversely affect our business. The activities of cyber threat actors and other third parties, including nation-state actors directly and indirectly associated with military geopolitical conflicts and defense activities have been increasing in number and sophistication.
Unauthorized access, loss, misuse, or dissemination could also disrupt our operations and damage our reputation, any of which could adversely affect our business. The activities of cyber threat actors and other third parties, including nation-state actors directly and indirectly associated with military and geopolitical conflicts and defense activities have been increasing in number and sophistication.
We or our partners may experience numerous unforeseen events during, or as a result of, preclinical studies or any clinical trials that could delay or prevent the ability to conduct further development or obtain regulatory approval or licensure of, or commercialize, product candidates, including: • preclinical studies designed to enable the submission of IND applications, or other preclinical development activities, by our partners may not result in data sufficient to support the advancement of the applicable product candidates into clinical development, or our partners may abandon development activities for such product candidates prior to any IND submission for a variety of reasons; • regulatory authorities or ethical review boards, including IRBs, may not authorize commencement of a clinical trial or conduct a clinical trial at a prospective trial site; • there may be delays in reaching or failure to reach agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites; • the FDA or other regulatory authorities may disagree with a clinical trial design or a sponsor’s interpretation of data even after such regulatory authorities have reviewed and commented on the clinical trial design; • differences in trial design between early stage clinical trials and later-stage clinical trials may make it difficult to extrapolate the results of earlier clinical trials to later-stage clinical trials; • the FDA or other regulatory authorities may disagree about whether study endpoints are clinically meaningful or recommend study endpoints that require lengthy periods of observation; • the number of patients, or amount of data, required to complete clinical trials may be larger than anticipated, patient enrollment in these clinical trials may be slower than anticipated or patients may drop out of clinical trials at a higher rate than anticipated; • CROs and other contracted third parties may fail to perform their duties in accordance with the study protocol or applicable laws and regulations; • changes may be made to product candidates after commencing clinical trials, which may require that previously completed stages of clinical testing be repeated or delay later stages of testing; • clinical trials may fail to satisfy the applicable regulatory requirements of the FDA or other regulatory authorities responsible for oversight of the conduct of clinical trials in other countries; • regulators may elect to impose a clinical hold, or we or our partners, governing IRBs, data safety monitoring boards or ethics committees may elect to suspend or terminate our or our partners’ clinical research or trials for various reasons, including non-compliance with regulatory requirements or a finding that the participants are being exposed to undesirable side effects that could lead to serious adverse events or other unacceptable risks to their health or the privacy of their health information being disclosed; • the cost of clinical trials of the applicable product candidates, or improvements to such product candidates, may be greater than we or our partners anticipate, causing us or our partners to delay or terminate applicable clinical development efforts; • CROs and other contracted third parties may fail to perform their duties in accordance with the relevant manufacturing and/or clinical supply agreements; • the supply or quality of materials necessary to conduct clinical trials of the applicable product candidates may be insufficient or inadequate; • the outcome of our or our partners’ preclinical studies and early clinical trials may not be predictive of the success of later clinical trials, and interim results of a clinical trial do not necessarily predict final results; 34 Table of Contents • product candidates may be associated with negative or inconclusive results in clinical trials, and we or our partners may decide to deprioritize or abandon these partnered product candidates, or regulatory authorities may require our partners to abandon them or may impose onerous changes or requirements, which could lead to de-prioritization or abandonment; • the data collected from clinical trials of product candidates that we or our partners may identify and pursue may not be sufficient to support the submission of a BLA or other submission for regulatory approval in the United States or elsewhere; and • we may be unable to demonstrate to the FDA or comparable foreign regulatory authorities that a product candidate’s risk-benefit ratio for its proposed indication is acceptable, or clinical trials may suggest or demonstrate that products are not safe and effective, or as safe and effective as competing therapies on the market or in development.
We or our partners may experience numerous unforeseen events during, or as a result of, preclinical studies or any clinical trials that could delay or prevent the ability to conduct further development or obtain regulatory approval or licensure of, or commercialize, product candidates, including: • preclinical studies designed to enable the submission of IND applications, or other preclinical development activities, by our partners may not result in data sufficient to support the advancement of the applicable product candidates into clinical development, or our partners may abandon development activities for such product candidates prior to any IND submission for a variety of reasons; • regulatory authorities or ethical review boards, including IRBs, may not authorize commencement of a clinical trial or conduct a clinical trial at a prospective trial site; • there may be delays in reaching or failure to reach agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites; • the FDA or other regulatory authorities may disagree with a clinical trial design or a sponsor’s interpretation of data even after such regulatory authorities have reviewed and commented on the clinical trial design; • differences in trial design between early stage clinical trials and later-stage clinical trials may make it difficult to extrapolate the results of earlier clinical trials to later-stage clinical trials; • the FDA or other regulatory authorities may disagree about whether study endpoints are clinically meaningful or recommend study endpoints that require lengthy periods of observation; • the number of participants, or amount of data, required to complete clinical trials may be larger than anticipated, participant enrollment in these clinical trials may be slower than anticipated or patients may drop out of clinical trials at a higher rate than anticipated; • CROs and other contracted third parties may fail to perform their duties in accordance with the study protocol or applicable laws and regulations; • changes may be made to product candidates after commencing clinical trials, which may require that previously completed stages of clinical testing be repeated or delay later stages of testing; • clinical trials may fail to satisfy the applicable regulatory requirements of the FDA or other regulatory authorities responsible for oversight of the conduct of clinical trials in other countries; • regulators may elect to impose a clinical hold, or we or our partners, governing IRBs, data safety monitoring boards or ethics committees may elect to suspend or terminate our or our partners’ clinical research or trials for various reasons, including non-compliance with regulatory requirements or a finding that the participants are being exposed to undesirable side effects that could lead to serious adverse events or other unacceptable risks to their health or the privacy of their health information being disclosed; • the cost of clinical trials of the applicable product candidates, or improvements to such product candidates, may be greater than we or our partners anticipate, causing us or our partners to delay or terminate applicable clinical development efforts; • CROs and other contracted third parties may fail to perform their duties in accordance with the relevant manufacturing and/or clinical supply agreements; • the supply or quality of materials necessary to conduct clinical trials of the applicable product candidates may be insufficient or inadequate; • the outcome of our or our partners’ preclinical studies and early clinical trials may not be predictive of the success of later clinical trials, and interim results of a clinical trial do not necessarily predict final results; 42 Table of Contents • product candidates may be associated with negative or inconclusive results in clinical trials, and we or our partners may decide to deprioritize or abandon these partnered product candidates, or regulatory authorities may require our partners to abandon them or may impose onerous changes or requirements, which could lead to de-prioritization or abandonment; • the data collected from clinical trials of product candidates that we or our partners may identify and pursue may not be sufficient to support the submission of a BLA or other submission for regulatory approval in the United States or elsewhere; and • we may be unable to demonstrate to the FDA or comparable foreign regulatory authorities that a product candidate’s risk-benefit ratio for its proposed indication is acceptable, or clinical trials may suggest or demonstrate that products are not safe and effective, or as safe and effective as competing therapies on the market or in development.
Our current and planned international operations could expose us to additional risks that may adversely affect our business and financial results, including: • multiple, conflicting and changing laws and regulations such as privacy security and data use regulations, tax laws, export and import controls and restrictions, tariffs, economic sanctions and embargoes, employment laws, anticorruption laws, regulatory requirements, reporting and disclosure obligations, reimbursement or payor regimes and other governmental approvals, permits and licenses; • failure by us, our partners or our distributors to obtain regulatory clearance, authorization or approval for the use of our technologies in various countries; • additional potentially relevant third-party patent rights; • complexities and difficulties in obtaining intellectual property protection and enforcing our intellectual property; • difficulties in staffing and managing foreign operations; 54 Table of Contents • complexities associated with managing multiple payor reimbursement regimes, government payors or patient self-pay systems; • difficulties in negotiating favorable reimbursement negotiations with governmental authorities; • complexities in technology transfer regulations and logistics related to delivery of our bioengineered E. coli to partners; • logistics and regulations associated with shipping samples, including infrastructure conditions and transportation delays; • limits in our ability to penetrate international markets if we are not able to conduct our operations locally; • financial risks, such as longer payment cycles, difficulty collecting accounts receivable, the impact of local and regional financial crises on demand and payment for our technologies, exposure to foreign currency exchange rate fluctuations and different tax jurisdictions; • natural disasters, political and economic instability, including wars, terrorism, political unrest and global conflicts such as Russia’s invasion of Ukraine, ongoing conflicts in the Middle East and heightened tensions in the Pacific region, outbreak of disease or other public health crises, such as the COVID-19 pandemic, boycotts, curtailment of trade, including as a result of tariffs, export controls and sanctions implemented by or against the United States in relation to other countries or jurisdictions, and other business restrictions; • certain expenses, including expenses for travel, translation services, labor and employment costs and insurance; • regulatory and compliance risks that relate to maintaining accurate information and control over sales and distributors’ activities that may fall within the purview of the U.S.
Our current and planned international operations could expose us to additional risks that may adversely affect our business and financial results, including: • multiple, conflicting and changing laws and regulations such as privacy security and data use regulations, tax laws, export and import controls and restrictions, tariffs, economic sanctions and embargoes, employment laws, anticorruption laws, regulatory requirements, reporting and disclosure obligations, reimbursement or payor regimes and other governmental approvals, permits and licenses; • failure by us, our partners or our distributors to obtain regulatory clearance, authorization or approval for the use of our technologies in various countries; • additional potentially relevant third-party patent rights; • complexities and difficulties in obtaining intellectual property protection and enforcing our intellectual property; • difficulties in staffing and managing foreign operations; • complexities associated with managing multiple payor reimbursement regimes, government payors or patient self-pay systems; • difficulties in negotiating favorable reimbursement arrangements with governmental authorities; • complexities in technology transfer regulations and logistics related to delivery of our bioengineered E. coli to partners; 64 Table of Contents • logistics and regulations associated with shipping samples, including infrastructure conditions and transportation delays; • limits in our ability to penetrate international markets if we are not able to conduct our operations locally; • financial risks, such as longer payment cycles, difficulty collecting accounts receivable, the impact of local and regional financial crises on demand and payment for our technologies, exposure to foreign currency exchange rate fluctuations and different tax jurisdictions; • natural disasters, political and economic instability, including wars, terrorism, political unrest and global conflicts such as Russia’s invasion of Ukraine, ongoing conflicts in the Middle East and heightened tensions in the Pacific region, outbreak of disease or other public health crises, such as the COVID-19 pandemic, boycotts, curtailment of trade, including as a result of tariffs, export controls and sanctions implemented by or against the United States in relation to other countries or jurisdictions, and other business restrictions; • certain expenses, including expenses for travel, translation services, labor and employment costs and insurance; • regulatory and compliance risks that relate to maintaining accurate information and control over sales and distributors’ activities that may fall within the purview of the U.S.
As a result, our competitors and potential competitors may be able to respond more quickly to changes in partner requirements, devote greater resources to the development, promotion and sale of their platforms or solutions than we can, or sell their platforms or solutions, or offer solutions competitive with our Integrated Drug Creation platform and solutions at prices designed to win significant levels of market share.
As a result, our platform-based competitors and potential competitors may be able to respond more quickly to changes in partner requirements, devote greater resources to the development, promotion and sale of their platforms or solutions than we can, or sell their platforms or solutions, or offer solutions competitive with our Integrated Drug Creation platform and solutions at prices designed to win significant levels of market share.
For example: • others may be able to make products that are similar to any product candidates generated by our Integrated Drug Creation platform that our partners may develop but that are not covered by the claims of the patents that we own or may license or own in the future; • we, or our current or future partners, might not have been the first to make the inventions covered by the issued patents and pending patent applications that we own or may license or own in the future; • we, or our current or future partners, 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 any future licensed intellectual property rights; • it is possible that our pending patent applications or those that we may own in the future will not lead to 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 our major commercial markets; • we cannot ensure that any patents issued to us, or our licensors will provide a basis for an exclusive market for our commercially viable technologies or will provide us with any competitive advantages; • we cannot ensure that our commercial activities or technologies will not infringe upon the patents of others; • we cannot ensure that we or our partners or future licensees will be able to further commercialize our technologies on a substantial scale, if approved, before the relevant patents that we own or may license expire; • we cannot ensure that any of our patents, or any of our pending patent applications, if issued, or those of our licensors, will include claims having a scope sufficient to protect our technology; • we may not develop additional proprietary technologies that are patentable; 63 Table of Contents • the patents or intellectual property rights of others may harm 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 covering such intellectual property.
For example: • others may be able to make products that are similar to any product candidates generated by our Integrated Drug Creation platform that our partners may develop but that are not covered by the claims of the patents that we own or may license or own in the future; • we, or our current or future partners, might not have been the first to make the inventions covered by the issued patents and pending patent applications that we own or may license or own in the future; • we, or our current or future partners, 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 any future licensed intellectual property rights; • it is possible that our pending patent applications or those that we may own in the future will not lead to 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 our major commercial markets; • we cannot ensure that any patents issued to us, or our licensors will provide a basis for an exclusive market for our commercially viable technologies or will provide us with any competitive advantages; • we cannot ensure that our commercial activities or technologies will not infringe upon the patents of others; • we cannot ensure that we or our partners or future licensees will be able to further commercialize our technologies on a substantial scale, if approved, before the relevant patents that we own or may license expire; • we cannot ensure that any of our patents, or any of our pending patent applications, if issued, or those of our licensors, will include claims having a scope sufficient to protect our technology; • we may not develop additional proprietary technologies that are patentable; • the patents or intellectual property rights of others may harm 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 covering such intellectual property.
Since our inception, we have financed our operations primarily from private placements of our equity securities, convertible promissory notes, the sale of common stock in our initial public offering (IPO), subsequent follow-on offering, the incurrence of other indebtedness and other financing activities, and to a lesser extent, revenue derived from our drug creation activities leveraging our Integrated Drug Creation platform.
Since our inception, we have financed our operations primarily from private placements of our equity securities, convertible promissory notes, the sale of common stock in our initial public offering (IPO), subsequent follow-on offerings, the incurrence of other indebtedness and other financing activities, and to a lesser extent, revenue derived from our drug creation activities leveraging our Integrated Drug Creation platform.
Even if coverage is provided, the approved reimbursement amount may not be high enough to allow our partners to establish or maintain pricing sufficient to realize an adequate return on their investment in such antibody therapeutics, and may lead to discontinuation or deprioritization of development, marketing and sales efforts for such products.
Even if coverage is provided, the approved reimbursement amount may not be high enough to allow our partners to establish or maintain pricing sufficient to realize an adequate return on their investment in such antibody-based therapeutics, and may lead to discontinuation or deprioritization of development, marketing and sales efforts for such products.
Changes in the reimbursement landscape may occur, which are outside of our control, and may impact the commercial viability of our drug creation services and/or product candidates. There is significant uncertainty related to the insurance coverage and reimbursement of newly cleared, authorized or approved antibody therapeutics in the United States and other jurisdictions.
Changes in the reimbursement landscape may occur, which are outside of our control, and may impact the commercial viability of our drug creation services and/or product candidates. There is significant uncertainty related to the insurance coverage and reimbursement of newly cleared, authorized or approved antibody-based therapeutics in the United States and other jurisdictions.
Ensuring data protection and meeting regulatory requirements become more challenging as we scale our computational resources, potentially leading to financial penalties and reputational damage. We continually assess our computational need s and strategically invest in our infrastructure, including access to compute via cloud computing arrangements, to mitigate these risks.
Ensuring data protection and meeting regulatory requirements may become more challenging as we scale our computational resources, potentially leading to financial penalties and reputational damage. We continually assess our computational need s and strategically invest in our infrastructure, including access to compute via cloud computing arrangements, to mitigate these risks.
In addition, because the product candidates we generate may represent new classes of treatments for diseases, we and our partners cannot accurately estimate how such future antibody therapeutics would be priced, whether reimbursement could be obtained or any potential revenue generated.
In addition, because the product candidates we generate may represent new classes of treatments for diseases, we and our partners cannot accurately estimate how such future antibody-based therapeutics would be priced, whether reimbursement could be obtained or any potential revenue generated.
As a result, the quality and sophistication of our Integrated Drug Creation platform and technologies are critical to our ability to conduct our drug creation activities and to generate more promising product candidates and cell lines and to shorten and lower the costs of therapeutic development for our existing and potential partners, as compared to other methods.
As a result, the quality and sophistication of our Integrated Drug Creation platform and technologies are critical to our ability to conduct our drug creation activities and to generate more promising product candidates and cell lines and to shorten and lower the costs of therapeutic development for us and our existing and potential partners, as compared to other methods.
A failure of one or more clinical trials can occur at any stage of testing, and our future clinical trials may not be successful. If our preclinical product candidates experience delays or never advance to clinical trials, it would have an adverse effect on our business.
A failure of one or more clinical trials can occur at any stage of testing, and our current and future clinical trials may not be successful. If our preclinical product candidates experience delays or never advance to clinical trials, it would have an adverse effect on our business.
Our product candidates will require processing steps that are more complex than those required for most small molecule drugs. Moreover, unlike small molecules, the physical and chemical properties of biologics such as antibody therapeutics generally cannot be fully characterized.
Our product candidates will require processing steps that are more complex than those required for most small molecule drugs. Moreover, unlike small molecules, the physical and chemical properties of biologics such as antibody-based therapeutics generally cannot be fully characterized.
Our ability, and the ability of our partners, to enroll patients in clinical trials of product candidates developed using our platform technology is affected by factors including: • the ability to identify clinical trial sites and recruit clinical trial investigators with the appropriate capabilities, competencies and experience; • the ability to open clinical trial sites; • the ability to identify, solicit and recruit a sufficient number of patients; • the severity of the disease under investigation; • the design of the clinical trial and whether the FDA agrees to the design and implementation of the trial; • the size and nature of the patient populations to be investigated in the applicable clinical trials; • eligibility criteria for the clinical trials in question; • clinicians’ and patients’ perceptions as to the potential risks and benefits of the product candidate under study, including any perceived risks associated with product candidates; • changing medical practices or guidelines related to the indications we or our partners are investigating; • the availability of competing therapies and clinical trials; • efforts to facilitate timely enrollment in clinical trials; • the availability of time and resources at the institutions at which our or our partners’ clinical trials will be conducted, including any constraints on resources, or policies and procedures implemented, at hospitals and clinical trial sites as a result of any public health crisis; • the ability to monitor patients adequately during and after treatment; and • the proximity and availability of clinical trial sites for prospective patients.
Our ability, and the ability of our partners, to enroll patients in clinical trials of product candidates developed using our platform technology is affected by factors including: 45 Table of Contents • the ability to identify clinical trial sites and recruit clinical trial investigators with the appropriate capabilities, competencies and experience; • the ability to open clinical trial sites; • the ability to identify, solicit and recruit a sufficient number of patients; • the severity of the disease under investigation; • the design of the clinical trial and whether the FDA agrees to the design and implementation of the trial; • the size and nature of the patient populations to be investigated in the applicable clinical trials; • eligibility criteria for the clinical trials in question; • clinicians’ and patients’ perceptions as to the potential risks and benefits of the product candidate under study, including any perceived risks associated with product candidates; • changing medical practices or guidelines related to the indications we or our partners are investigating; • the availability of competing therapies and clinical trials; • efforts to facilitate timely enrollment in clinical trials; • the availability of time and resources at the institutions at which our or our partners’ clinical trials will be conducted, including any constraints on resources, or policies and procedures implemented, at hospitals and clinical trial sites as a result of any public health crisis; • the ability to monitor patients adequately during and after treatment; and • the proximity and availability of clinical trial sites for prospective patients.
As we seek to increase the number of our partnerships, expand the scope of our existing partnerships, pursue internally developed programs and further develop our technological capabilities, we may need to incorporate new equipment, implement new technology systems and laboratory processes and hire new personnel with different qualifications.
As we seek to pursue and advance internally developed programs, increase the number of our partnerships, expand the scope of our existing partnerships, and further develop our technological capabilities, we may need to incorporate new equipment, implement new technology systems and laboratory processes and hire new personnel with different qualifications.
The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could adversely affect our reputation, business, financial condition and results of operations.
The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could adversely affect our reputation, business, financial condition or results of operations.
Any further deterioration in the macroeconomic economy or financial services industry could lead to losses or defaults by our partners or vendors, which in turn, could have a material adverse effect on our current and/or projected business operations and results of operations and financial condition.
Any further deterioration in the macroeconomic economy or financial services industry could also lead to losses or defaults by our partners or vendors, which in turn, could have a material adverse effect on our current and/or projected business operations and results of operations and financial condition.
Before we or our partners can commence clinical trials for a product candidate, we or our partners must complete extensive preclinical testing and studies that support our planned INDs in the United States. All of our internally developed programs are in preclinical development.
Before we or our partners can commence clinical trials for a product candidate, we or our partners must complete extensive preclinical testing and studies that support our planned INDs in the United States. All of our internally developed programs are in early clinical or preclinical development.
Any problems in our supply chain, manufacturing process or facilities could result in delays in planned clinical trials and increased costs, and could make us a less attractive collaborator for potential partners, including larger pharmaceutical companies and academic research institution.
Any problems in our supply chain, manufacturing process or facilities could result in delays in ongoing or planned clinical trials and increased costs, and could make us a less attractive collaborator for potential partners, including larger pharmaceutical companies and academic research institution.
If we do not achieve our projected development goals in the timeframes we announce and expect, the commercialization of our programs and validation of our Integrated Drug Creation platform may be delayed and our expenses may increase and, as a result, our stock price may decline.
If we do not achieve our projected development goals in the timeframes we announce and expect, the clinical development of our programs, commercialization of our programs, and validation of our Integrated Drug Creation platform may be delayed and our expenses may increase and, as a result, our stock price may decline.
Preliminary or interim data from clinical trials are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues, the duration of treatment increases and more patient data become available.
Preliminary or interim data from clinical trials are subject to the risk that one or more of the clinical outcomes may materially change as participant enrollment continues, the duration of treatment increases and more patient data become available.
The availability and extent of reimbursement by governmental and private payors is essential for most patients to be able to afford any antibody therapeutics generated using our Integrated Drug Creation platform.
The availability and extent of reimbursement by governmental and private payors is essential for most patients to be able to afford any antibody-based therapeutics generated using our Integrated Drug Creation platform.
In the event we are required to repeat, extend, delay or terminate our preclinical or any eventual clinical development activities due to one or more third parties not successfully carrying out its contractual duties, meeting expected deadlines, or conducting development activities in accordance with regulatory requirements or our stated protocols, we may not be able to achieve, or may be delayed in achieving, product development milestones, including our internal timelines or certain regulatory requirements.
In the event we are required to repeat, extend, delay or terminate our preclinical or clinical development activities due to one or more third parties not successfully carrying out its contractual duties, meeting expected deadlines, or conducting development activities in accordance with regulatory requirements or our stated protocols, we may not be able to achieve, or may be delayed in achieving, product development milestones, including our internal timelines or certain regulatory requirements.
If we or our partners experience any of a number of possible unforeseen or negative events in connection with preclinical or clinical development, regulatory approval or commercialization of 33 Table of Contents product candidates generated through our platform, this could negatively affect our revenue opportunity for that program, and/or have broader deleterious effects on our reputation and future partnership prospects.
If we or our partners experience any of a number of possible unforeseen or negative events in connection with preclinical or clinical development, regulatory approval or commercialization of product candidates generated through our platform, this could negatively affect our revenue 41 Table of Contents opportunity for that program, and/or have broader deleterious effects on our reputation and future partnership prospects.
For example, we may encounter unacceptable side effects for our product candidates as patient dosing progresses in our clinical trials and additional data become available. Our preliminary or interim results and related conclusions also are subject 35 Table of Contents to change following a more comprehensive review of the data related to the particular study or trial.
For example, we may encounter unacceptable side effects for our product candidates as patient dosing progresses in our clinical trials and additional data become available. Our preliminary or interim results and related conclusions also are subject 43 Table of Contents to change following a more comprehensive review of the data related to the particular study or trial.
If reimbursement is not available, or is available only to limited levels, our partners may not be able to successfully commercialize some antibody therapeutics generated with our technology.
If reimbursement is not available, or is available only to limited levels, our partners may not be able to successfully commercialize some antibody-based therapeutics generated with our technology.
We also cannot be sure that submission of an IND (or foreign equivalent) will result in the FDA or other regulatory authority, as applicable, allowing clinical trials to begin in a timely manner, if at all. Moreover, even if these trials begin, issues may arise that could suspend or terminate such clinical trials.
We also cannot be sure that submission of an IND (or foreign equivalent) will result in the FDA or other regulatory authority, as applicable, allowing clinical trials to begin in a timely manner, if at all. Moreover, even if these trials begin, issues may arise that could cause us or a regulatory authority to suspend or terminate such clinical trials.
Moreover, disputes may arise with respect to our licensing or other upstream agreements, including: • the scope of rights granted under the agreements and other interpretation-related issues; • the extent to which our technology development processes infringe on intellectual property of the licensor that is not subject to the licensing agreement; • the sublicensing of patent and other rights under our partnership agreements; • our diligence obligations under the license agreements and what activities satisfy those diligence obligations; • the inventorship and ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our partners; and 60 Table of Contents • the priority of invention of patented technology.
Moreover, disputes may arise with respect to our licensing or other upstream agreements, including: • the scope of rights granted under the agreements and other interpretation-related issues; • the extent to which our technology development processes infringe on intellectual property of the licensor that is not subject to the licensing agreement; • the sublicensing of patent and other rights under our partnership agreements; • our diligence obligations under the license agreements and what activities satisfy those diligence obligations; • the inventorship and ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our partners; and • the priority of invention of patented technology.
It cannot be predicted whether, when, in what form or with what effective dates tax laws, regulations and rulings may be enacted, promulgated or issued, which could result in an increase in our or our shareholders’ tax liability or require changes in the manner in which we operate in order to minimize or mitigate any adverse effects of changes in tax law.
It cannot be predicted whether, when, in what form or with what effective dates tax laws, regulations and rulings may be enacted, promulgated or issued, which could result in an increase in our or our stockholders’ tax liability or require changes in the manner in which we operate in order to minimize or mitigate any adverse effects of changes in tax law.
Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended if a corporation undergoes an “ownership change,” generally defined as a cumulative change of more than 50 percentage points (by value) in its equity ownership by certain stockholders over a rolling three-year period, the corporation’s ability to use its pre-change net operating loss (NOL) carryforwards and other pre-change tax attributes (such as research tax credits) to offset its post-change taxable income or taxes may be limited.
Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended if a corporation undergoes an “ownership change,” generally defined as a cumulative change of more than 50 percentage points (by value) in its equity ownership by certain stockholders over a rolling three-year period, the corporation’s ability to use its pre-change NOL carryforwards and other pre-change tax attributes (such as research tax credits) to offset its post-change taxable income or taxes may be limited.
Technology development fees are generated by drug creation activities that we perform for our partners, the timing and nature of which are dictated by the timing of program commencement, which depends on various permissions, information and supplies provided by our partners and/or third party vendors as well as the pace of program progression and receipt of ongoing input from our partners.
Fees generated by drug creation activities that we perform for our partners, the timing and nature of which are dictated by the timing of program commencement, which depends on various permissions, information and supplies provided by our partners and/or third party vendors as well as the pace of program progression and receipt of ongoing input from our partners.
While we currently receive payments for performing drug creation activities and successfully completing technical program deliverables and milestones for our partners with respect to our partnered programs, we anticipate that the vast majority of the economic value of the agreements that we enter into with our partners will be in the downstream payments that would be payable if certain milestones are met by our partners with respect to product candidates generated utilizing our Integrated Drug Creation platform and royalties on net sales if such product candidates are approved for marketing and successfully commercialized.
While we currently receive 38 Table of Contents payments for performing drug creation activities and successfully completing technical program deliverables and milestones for our partners with respect to our partnered programs, we anticipate that the vast majority of the economic value of the agreements that we enter into with our partners will be in the downstream payments that would be payable if certain milestones are met by our partners with respect to product candidates generated utilizing our Integrated Drug Creation platform and royalties on net sales if such product candidates are approved for marketing and successfully commercialized.
To the extent we are unable to successfully identify and manage the performance of third-party service providers in the future, our business may be materially and adversely affected. In addition, from time to time we have relied upon, and may continue to rely upon, third parties that are based in jurisdictions outside the United States.
To the extent we are unable to successfully identify and manage the performance of third-party service providers in the future, our business may be materially and adversely affected. In addition, from time to time we have relied upon, and may continue to rely upon, third parties that are based in jurisdictions outside the United States, including China.
In addition, principal investigators for our clinical trials, if any, may serve as scientific advisors or consultants to us from time to time and receive compensation in connection with such services. Under certain circumstances, we may be required to report some of these relationships to the FDA.
In addition, principal investigators for our clinical trials may serve as scientific advisors or consultants to us from time to time and receive compensation in connection with such services. Under certain circumstances, we may be required to report some of these relationships to the FDA.
During times of war and other major conflicts, we, the third parties upon which we rely, and our partners may be vulnerable to a heightened risk of such cyber-attacks, including retaliatory cyberattacks, that could materially disrupt our systems and operations, supply chain, and ability to develop our programs.
During times of war and other major conflicts, we, the third parties upon which we rely, and our partners may be vulnerable to a heightened risk of such cyberattacks, including retaliatory cyberattacks, that could materially disrupt our systems and operations, supply chain, and ability to develop our programs.
We will need to expand our workforce, commercial infrastructure and laboratory operations to support anticipated growth in demand for our drug creation programs. If we are unable to support fluctuations in the demand for our drug creation programs, including ensuring that we have adequate capacity to meet increased demand, our business could suffer.
We may need to expand our workforce, commercial infrastructure and laboratory operations to support anticipated growth in demand for our drug creation programs. If we are unable to support fluctuations in the demand for our drug creation programs, including ensuring that we have adequate capacity to meet increased demand, our business could suffer.
Even if we do succeed, it is possible that none of the product candidates created using our Integrated Drug Creation platform, if any, that are further developed by our partners will achieve development or 31 Table of Contents regulatory milestones, including marketing approval, or become viable commercial technologies, on a timely basis or at all, which would harm our ability to generate revenue.
Even if we do succeed, it is possible that none of the product candidates created using our Integrated Drug Creation platform, if any, that are further developed by our partners will achieve development or regulatory milestones, including marketing approval, or become viable commercial technologies, on a timely basis or at all, which would harm our ability to generate revenue.
We base our estimates on historical experience, known trends and events, and various other factors that we believe to be reasonable under the circumstances, as provided in “Management’s 79 Table of Contents Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates.” The results of these estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
We base our estimates on historical experience, known trends and events, and various other factors that we believe to be reasonable under the circumstances, as provided in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates.” The results of these estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
Our preclinical product candidates may experience delays or may never advance to clinical trials, which would adversely affect our or our partners’ ability to obtain regulatory approvals or commercialize these product candidates on a timely basis or at all, which would have an adverse effect on our business .
Our or our partners' preclinical and clinical product candidates may experience delays or may never advance to and/or through clinical trials, which would adversely affect our or our partners’ ability to obtain regulatory approvals or commercialize these product candidates on a timely basis or at all, which would have an adverse effect on our business .
Although we seek to take reasonable measures to protect confidential and sensitive data from unauthorized access, use or disclosure, no security measures can be perfect and our information technology systems and infrastructure, and those of our vendors, subcontractors, and partners upon which we rely, are vulnerable to cyberattacks, computer viruses, bugs, worms, or other malicious codes, malware (including as a result of advanced persistent threat intrusions), and other attacks by computer hackers, cracking, application security attacks, ransomware, extortion events, social engineering fraud (including through phishing attacks), supply chain attacks and vulnerabilities through our third-party service providers, denial-of-service attacks (such as credential stuffing), credential harvesting, personnel misconduct or error, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data or other information technology assets, 76 Table of Contents adware, and other similar threats by hackers or breaches or compromises caused by erroneous actions or inactions by our employees, consultants, third parties or their contracted service providers, malfeasance or other malicious or inadvertent disruptions.
Although we seek to take reasonable measures to protect confidential and sensitive data from unauthorized access, use or disclosure, our information technology systems and infrastructure, and those of our vendors, subcontractors, 87 Table of Contents and partners upon which we rely, are vulnerable to cyberattacks, computer viruses, bugs, worms, or other malicious codes, malware (including as a result of advanced persistent threat intrusions), and other attacks by computer hackers, cracking, application security attacks, ransomware, extortion events, social engineering fraud (including through phishing attacks), supply chain attacks and vulnerabilities through our third-party service providers, denial-of-service attacks (such as credential stuffing), credential harvesting, personnel misconduct or error, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data or other information technology assets, adware, and other similar threats by hackers or breaches or compromises caused by erroneous actions or inactions by our employees, consultants, third parties or their contracted service providers, malfeasance or other malicious or inadvertent disruptions.
Risks Related to Our Partnership Business Strategy Our commercial success depends on the technological capabilities of our Integrated Drug Creation platform and the advancement of our internally developed programs. We utilize our Integrated Drug Creation platform to identify promising opportunities for development and potential commercialization by our partners.
Risks Related to Our Business Strategy Our commercial success depends on the technological capabilities of our Integrated Drug Creation platform and the advancement of our Internally Developed Programs. We utilize our Integrated Drug Creation platform to identify promising opportunities for development and potential commercialization by us and our partners.
If we make any acquisitions, we may not be able to integrate these acquisitions successfully into our existing business, these acquisitions may not strengthen our competitive position, the transactions may be viewed 50 Table of Contents negatively by partners or investors, we may be unable to retain key employees of any acquired business, relationships with key suppliers, manufacturers or partners of any acquired business may be impaired due to changes in management and ownership, and we could assume unknown or contingent liabilities.
If we make any acquisitions, we may not be able to integrate these acquisitions successfully into our existing business, these acquisitions may not strengthen our competitive position, the transactions may be viewed negatively by partners or investors, we may be unable to retain key employees of any acquired business, relationships with key suppliers, manufacturers or partners of any acquired business may be impaired due to changes in management and ownership, and we could assume unknown or contingent liabilities.
On or after March 16, 2013, under the Leahy-Smith America Invents Act (America Invents Act) enacted on September 16, 2011, the United States transitioned to a 58 Table of Contents first inventor to file system in which, assuming that other requirements for patentability are met, the first inventor to file a patent application will be entitled to the patent on an invention regardless of whether a third party was the first to invent the claimed invention.
On or after March 16, 2013, under the Leahy-Smith America Invents Act (America Invents Act) enacted on September 16, 2011, the United States transitioned to a first inventor to file system in which, assuming that other requirements for patentability are met, the first inventor to file a patent application will be entitled to the patent on an invention regardless of whether a third party was the first to invent the claimed invention.
Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which prohibits a person who owns in excess of 15% of our outstanding 72 Table of Contents voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner.
Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner.
If potential investors are skeptical of the success of our technologies, our ability to raise capital and the value of our stock may be adversely affected. We rely and expect to continue to rely on third parties to conduct our preclinical studies and any eventual clinical trials.
If potential investors are skeptical of the success of our technologies, our ability to raise capital and the value of our stock may be adversely affected. We rely and expect to continue to rely on third parties to conduct our preclinical studies and clinical trials.
We have made technology acquisitions and expect to pursue acquisitions of businesses and assets in the future. We also may pursue strategic alliances, joint ventures or other commercial deal structures that leverage our technologies and industry experience to expand our offerings.
We have made technology acquisitions in the past and may, in the future, pursue acquisitions of businesses and assets in the future. We also may pursue strategic alliances, joint ventures or other commercial deal structures that leverage our technologies and industry experience to expand our offerings.
Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for certain disputes between us and our stockholders and that the federal district courts of the United States will be the exclusive forum for certain actions under federal securities laws, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for certain disputes between us and our stockholders and that the federal district courts of the United States will be the exclusive forum for certain 83 Table of Contents actions under federal securities laws, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
We have installed, and expect to expand, a number of enterprise software systems that affect a broad range of business processes and functional areas, including for example, systems handling human resources, procurement, financial controls and reporting, contract management, regulatory compliance and other infrastructure operations. These implementations were expensive and required significant time and effort.
We have installed, and expect to expand, a number of enterprise software systems that affect a broad range of business processes and functional areas, including for example, systems handling human resources, procurement, financial controls and reporting, contract 63 Table of Contents management, regulatory compliance and other infrastructure operations. These implementations were expensive and required significant time and effort.
Because patent applications in the United States and most other countries are confidential for a period of time after filing or until issuance, we cannot be certain that we or our licensors were the first to either (i) file any patent application related to our technology or (ii) invent any of the inventions claimed in our or our licensor’s patents or patent applications.
Because patent applications in the United States and most other countries are confidential for a period of time after filing or until issuance, we 68 Table of Contents cannot be certain that we or our licensors were the first to either (i) file any patent application related to our technology or (ii) invent any of the inventions claimed in our or our licensor’s patents or patent applications.
Some of our jointly owned intellectual property has been discovered through government funded programs and thus may be subject to federal regulations such as “march-in” rights, certain reporting requirements and 67 Table of Contents a preference for U.S.-based companies, and compliance with such regulations may limit our exclusive rights and our ability to contract with non-U.S. manufacturers.
Some of our jointly owned intellectual property has been discovered through government funded programs and thus may be subject to federal regulations such as “march-in” rights, certain reporting requirements and a preference for U.S.-based companies, and compliance with such regulations may limit our exclusive rights and our ability to contract with non-U.S. manufacturers.
In addition, clinical trial sites may need to delay or pause patient enrollment or treatment in clinical trials as a result of public health crises, supply chain shortages or a variety of factors beyond our control.
In addition, clinical trial sites may need to delay or pause participant enrollment or treatment in clinical trials as a result of public health crises, supply chain shortages or a variety of factors beyond our control.
Our revenue recognition model also makes it difficult for us to rapidly increase our revenue through increased operations in any period, as revenue from partners is recognized over the course of their drug development and commercialization efforts. 47 Table of Contents The failure of our drug creation partners to meet their contractual obligations to us could adversely affect our business.
Our revenue recognition model also makes it difficult for us to rapidly increase our revenue through increased operations in any period, as revenue from partners is recognized over the course of their drug development and commercialization efforts. The failure of our drug creation partners to meet their contractual obligations to us could adversely affect our business.
In spite of our efforts to comply with our obligations under any future in-license agreements, our licensors might conclude that we have materially breached our obligations under our license agreements and might therefore, including in connection with any aforementioned disputes, terminate the relevant license agreement, thereby removing or limiting our ability to develop and commercialize technology covered by these license agreements.
In spite of our efforts to comply with our obligations under any future in-license agreements, our licensors might conclude that we have materially breached our obligations under our license agreements and might therefore, including in connection with any aforementioned disputes, terminate the relevant license agreement, thereby removing or limiting our ability to develop and commercialize technology covered by 70 Table of Contents these license agreements.
In addition, while it is our policy to require our employees and contractors who may be involved in the conception or development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who, in fact, conceives or develops intellectual property that we regard as our own.
In addition, while it is our policy to require our employees and contractors who may be involved in the conception or development of intellectual property to execute agreements assigning such intellectual 74 Table of Contents property to us, we may be unsuccessful in executing such an agreement with each party who, in fact, conceives or develops intellectual property that we regard as our own.
Integration of an acquired company also may disrupt ongoing operations and require management resources that we would otherwise focus on developing our existing business. We may not realize the anticipated benefits of any acquisition, technology license, strategic alliance, joint venture, or other commercial deal structure.
Integration of an acquired company also may disrupt ongoing operations and require management resources that we would otherwise focus on developing our existing 60 Table of Contents business. We may not realize the anticipated benefits of any acquisition, technology license, strategic alliance, joint venture, or other commercial deal structure.
Misconduct by these parties could include intentional failures to comply with the applicable laws and regulations in the United States and abroad, report financial information or data accurately or disclose unauthorized activities to us. These laws and regulations may restrict or prohibit a wide range of pricing, discounting and other business arrangements.
Misconduct by these parties could include intentional failures to comply with the applicable laws 86 Table of Contents and regulations in the United States and abroad, report financial information or data accurately or disclose unauthorized activities to us. These laws and regulations may restrict or prohibit a wide range of pricing, discounting and other business arrangements.
In addition, investors’ perceptions that our internal controls are inadequate or that we are unable to produce accurate financial statements on a timely basis may harm the market price of our stock. Our results of operations and financial condition could be materially adversely affected by changes in accounting principles.
In addition, investors’ perceptions that our internal controls are inadequate or that 90 Table of Contents we are unable to produce accurate financial statements on a timely basis may harm the market price of our stock. Our results of operations and financial condition could be materially adversely affected by changes in accounting principles.
We are increasingly dependent on information technology systems and infrastructure, including services licensed, leased or purchased from third parties such as cloud computing infrastructure and operating systems, for significant elements of our business operations, including the operation of our Integrated Drug Creation 53 Table of Contents platform (which includes for example our proprietary AI models, our antibody discovery software platform, our computational biology system), our knowledge management system, our partner reporting, our advanced automation systems, and advanced application software.
We are increasingly dependent on information technology systems and infrastructure, including services licensed, leased or purchased from third parties such as cloud computing infrastructure and operating systems, for significant elements of our business operations, including the operation of our Integrated Drug Creation platform (which includes our proprietary AI models, antibody discovery software platform and computational biology system), our knowledge management system, our partner reporting, our advanced automation systems, and advanced application software.
Any successful 59 Table of Contents third party challenge to our patents in this or any other proceeding could result in the unenforceability or invalidity of such patents or amendment to our patents in such a way that they no longer cover our Integrated Drug Creation platform and our technology, which may lead to increased competition to our business, which could harm our business.
Any successful third party challenge to our patents in this or any other proceeding could result in the unenforceability or invalidity of such patents or amendment to our patents in such a way that they no longer cover our Integrated Drug Creation platform and our technology, which may lead to increased competition to our business, which could harm our business.
Any infringement claim, regardless of its validity, could harm our business by, among other things, resulting in time-consuming and costly litigation, diverting management’s time and attention from the development of our business, requiring the payment of monetary damages (including treble damages, attorneys’ fees, costs, and expenses) or royalty payments.
Any infringement claim, regardless of its validity, could harm our business by, among other things, resulting in time-consuming and costly litigation, diverting management’s time and attention from the development of our business, requiring 76 Table of Contents the payment of monetary damages (including treble damages, attorneys’ fees, costs, and expenses) or royalty payments.
This could result in a delay in approval, or rejection, of our marketing applications by the FDA and may ultimately lead to the denial of regulatory approval of one or more of our product candidates, if any.
This could result in a delay in approval, or rejection, of our marketing applications by the FDA and may ultimately lead to the denial of regulatory approval of one or more of our product candidates.
The rapid evolution of artificial intelligence will require the application of significant resources to design, develop, test and maintain such systems to help ensure that artificial intelligence is implemented in accordance with applicable law and regulation and in a socially responsible manner and to minimize any real or perceived unintended harmful impacts.
The rapid evolution of AI will require the application of significant resources to design, develop, test and maintain such systems to help ensure that AI is implemented in accordance with applicable law and regulation and in a socially responsible manner and to minimize any real or perceived unintended harmful impacts.
Should any of these events occur, they could have a material adverse effect on our business, financial condition, results of operations and prospects. If we are unable to protect the confidentiality of our information and our trade secrets, the value of our technologies could be materially adversely affected, and our business could be harmed.
Should any of these events occur, they could have a material adverse effect on our business, financial condition, results of operations and prospects. 73 Table of Contents If we are unable to protect the confidentiality of our information and our trade secrets, the value of our technologies could be materially adversely affected, and our business could be harmed.
To date, we have only entered into a limited number of programs with respect to which we have or are positioned to negotiate royalty- and milestone-bearing licenses. Accordingly, we do not presently have sufficient information to make accurate predictions regarding our potential revenue and future financial performance.
To date, we have only entered into a limited number of programs with respect to which 80 Table of Contents we have or are positioned to negotiate royalty- and milestone-bearing licenses. Accordingly, we do not presently have sufficient information to make accurate predictions regarding our potential revenue and future financial performance.
In addition, there is risk of inaccurate disclosure of information about us, our technology, or our programs on any social media platform. Although 77 Table of Contents we have adopted policies and procedures around the use of social media by our employees, we may be unable to control the disclosure of non-public information by our workforce.
In addition, there is risk of inaccurate disclosure of information about us, our technology, or our programs on any social media platform. Although we have adopted policies and procedures around the use of social media by our employees, we may be unable to control the disclosure of non-public information by our workforce.
If we do not successfully innovate and invest in new technologies, including within the field of AI, our platform may become less competitive, we may fail 43 Table of Contents to advance our internally developed programs, and our partners could move to new technologies or engage in drug creation activities themselves.
If we do not successfully innovate and invest in new technologies, including within the field of AI, our platform may become less competitive, we may fail to advance our internally developed programs, and our partners could move to new technologies or engage in drug creation activities themselves.
The legal systems of many other countries do not favor the enforcement of patents and other intellectual property protection, particularly those relating to biotechnology, which could make it difficult for us to stop the misappropriation or other violations of our intellectual property rights including infringement of our patents in such countries.
The legal systems of many other countries do not favor the enforcement of patents and other intellectual property protection, particularly those relating to biotechnology, which could make it difficult for us to stop the misappropriation or other violations of our intellectual property rights 72 Table of Contents including infringement of our patents in such countries.
The number of shares of common stock reserved for issuance under the 2021 Plan and 2021 ESPP are automatically increased on each January 1 by 5% and 1%, 70 Table of Contents respectively, of the total number of shares of common stock outstanding on December 31 of the preceding calendar year or a lesser number of shares determined by our board of directors.
The number of shares of common stock reserved for issuance under the 2021 Plan and 2021 ESPP are automatically increased on each January 1 by 5% and 1%, respectively, of the total number of shares of common stock outstanding on December 31 of the preceding calendar year or a lesser number of shares determined by our board of directors.
The disaster recovery and business continuity plans we and our partners currently have in place may not prove adequate in the event of a serious disaster or similar event, which could have a material adverse impact on our business. Social media platforms present new risks and challenges to our business.
The disaster recovery and business continuity plans we and our partners currently have in place may not prove adequate in the event of a serious disaster or similar event, which could have a material adverse impact on our business. 88 Table of Contents Social media platforms present new risks and challenges to our business.
Additionally, if we enable or use solutions that draw controversy due to perceived or actual negative societal impact, we may experience brand or reputational harm, competitive harm or legal liability.
If we enable or use AI solutions that draw controversy due to perceived or actual negative societal impact, we may experience brand or reputational harm, competitive harm or legal liability.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe maintain an established process to notify management of identified cybersecurity incidents and to provide an assessment of the potential criticality and impact of such incidents. We have also implemented procedures for response and containment efforts to address the actual or potential impact of identified cybersecurity incidents, as applicable.
Biggest changeAs part of our cybersecurity risk management program, we also maintain processes to assess and review the cybersecurity practices of third-party vendors and suppliers when applicable. Moreover, we maintain an established process to notify management of identified cybersecurity incidents and to provide an assessment of the potential criticality and impact of such incidents.
For more information about the cybersecurity risks we face, please refer to Item 1A, “Risk Factors,” in this annual report on Form 10-K, including the risk factor titled “Cybersecurity incidents, data breaches, loss of data and other disruptions could compromise sensitive information related to our business or prevent us from accessing critical information and expose us to liability, which could adversely affect our business and our reputation.” Governance Under the ultimate direction of our chief executive officer, or CEO, and our executive management team (including our Chief Legal Officer who serves as our Chief Compliance Officer), with oversight from our audit committee of the board of directors (Audit Committee), our Head of Information Technology (Head of IT) has primary responsibility for assessing, operating and managing our cybersecurity threat management program.
For more information about the cybersecurity risks we face, please refer to Item 1A, “Risk Factors,” in this annual report on Form 10-K, including the risk factor titled “Cybersecurity incidents, data breaches, loss of data and other disruptions could compromise sensitive information related to our business or prevent us from accessing critical information and expose us to liability, which could adversely affect our business and our reputation.” Governance Under the ultimate direction of our chief executive officer, or CEO, and our executive management team (including our Chief Legal Officer, who also serves as our Chief Compliance Officer), with oversight from our audit committee of the board of directors (Audit Committee), our Head of Information Technology (Head of IT) has primary responsibility for assessing, operating and managing our cybersecurity threat management program.
On an annual basis, our Chief Legal Officer provides an update to our Audit Committee regarding our cybersecurity risk management program, including as relates to critical cybersecurity risks, ongoing cybersecurity initiatives and strategies, and applicable regulatory requirements and industry standards. The Audit Committee periodically reports on cybersecurity risk management to the full board of directors.
On a quarterly basis, our Head of IT provides an update to our Audit Committee regarding our cybersecurity risk management program, including as relates to critical cybersecurity risks, ongoing cybersecurity initiatives and strategies, and applicable regulatory requirements and industry standards. The Audit Committee periodically reports on cybersecurity risk management to the full board of directors.
Although risks from cybersecurity threats have not materially affected, and are not reasonably likely to materially affect our company, including our business strategy, results of operations, or financial condition, to date, we have, from time to time, experienced threats to and security incidents related to our and our third-party vendors’ information systems.
Although our business strategy, results of operations, and financial condition have not, to date, been materially affected by risks from cybersecurity threats, we have, from time to time, experienced threats to and security incidents related to our and our third-party vendors’ information systems data and systems, including for example, phishing attacks.
We also engage assessors, consultants, auditors, or other third parties in connection with our risk assessment processes to assist us in our design and implementation of our cybersecurity policies and procedures and in our assessment and testing of our security safeguards.
In addition to the risk assessments described above, we utilize a managed detection and response (MDR) service that provides continuous monitoring of our network environment and assists with threat detection and incident response. These third parties also assist us in our design and implementation of our cybersecurity policies and procedures and in our assessment and testing of our security safeguards.
Removed
We maintain policies and processes for assessing, identifying, and managing risks from cybersecurity threats, and have integrated these policies and processes into our overall risk management strategy. Our cybersecurity program is informed by standards established by the National Institute of Standards and Technology (NIST) and the Center for Internet Security (CIS).
Added
In addition, we have a process to assess the security practices of certain third-party vendors, including through the use of vendor security questionnaires, as appropriate. We continue to develop and update a comprehensive cybersecurity strategy to guide cybersecurity risk management activities, align corporate security standards, and guide requirements for all technology across the organization with regards to cybersecurity.
Removed
This includes a third-party managed detection and response team (MDR) to conduct ongoing network monitoring and to support incident management and threat assessment.
Added
We have taken additional steps to further mature our cybersecurity monitoring and response, vulnerability management, and incident response capabilities through new vendor partnerships to centralize and develop additional detection and response capabilities.
Removed
Additionally, as a public company, we are subject to regulatory requirements and undergo audits of our financial statements, which include a review of related cybersecurity controls and information technology systems. 80 Table of Contents We maintain a cybersecurity awareness training program for employees, which is provided during onboarding and on an annual basis thereafter.
Added
We have also implemented procedures for response and containment efforts to address the actual or potential impact of identified cybersecurity incidents, as applicable. As a public company, our information technology systems and related cybersecurity controls are also subject to review as part of our financial statement audit and internal control over financial reporting processes.
Removed
Our training program includes simulated phishing campaigns, which are designed to increase awareness and detection and to equip our personnel with effective tools to identify and address cybersecurity threats.
Added
Additionally, we have implemented an employee education program that is designed to raise awareness of cybersecurity threats, including risks posed by phishing attempts. This training is included during the employee onboarding process and periodically thereafter. We, like other companies in our industry, face a number of cybersecurity risks in connection with our business.
Removed
As we are in the process of hiring a new Director of Information Technology, our Chief Legal Officer is fulfilling these functions in the interim with assistance from third-party information technology and cybersecurity experts.
Added
Our Chief Legal Officer and Head of IT consult with other members of our information technology department, and with third parties with expertise in cybersecurity, to develop strategies to assess, address and align cybersecurity efforts with our business objectives and operational requirements.
Removed
Although our Chief Legal Officer does not have direct cybersecurity expertise obtained through certifications, her experience as a member of our company’s senior management team and overseeing enterprise risks, which includes consulting and coordinating as necessary with third-party information technology and cybersecurity experts, enables her to assess and manage material risks from cybersecurity threats.
Added
The Head of IT role 92 Table of Contents is currently held by an individual with over 25 years of experience leading information security, corporate systems, technology risk, and compliance management, bringing deep expertise in cybersecurity and digital infrastructure operations across diverse industries and regulatory environments.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAdditionally, we have research and development presence in Belgrade, Serbia. Substantially all of our office space is leased with varying expiration dates. We believe our facilities are adequate and suitable for our current and near future needs. 81 Table of Contents
Biggest changeAdditionally, we have research and development presence in Belgrade, Serbia. Substantially all of our office space is leased with varying expiration dates. We believe our facilities are adequate and suitable for our current and near future needs.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeMine Safety Disclosures Not applicable. 82 Table of Contents Part II.
Biggest changeMine Safety Disclosures Not applicable. 93 Table of Contents Part II.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeEquity Compensation Plans Information regarding securities authorized for issuance under equity compensation plans is included in Part III, Item 12 of this report. Unregistered Sales of Equity Securities There were no unregistered sales of equity securities during the year ended December 31, 2024. Issuer Purchases of Equity Securities None. Item 6. [Reserved] 83 Table of Contents
Biggest changeEquity Compensation Plans Information regarding securities authorized for issuance under equity compensation plans is included in Part III, Item 12 of this report.
Holders of Common Stock As of February 28, 2025, there were 46 holders of record of our common stock. The actual number of stockholders is greater than this number of record holders and includes stockholders who are beneficial owners but whose shares are held in street name by brokers and other nominees.
Holders of Common Stock As of March 6, 2026, there were 38 holders of record of our common stock. The actual number of stockholders is greater than this number of record holders and includes stockholders who are beneficial owners but whose shares are held in street name by brokers and other nominees.
Added
Unregistered Sales of Equity Securities Other than as disclosed in Part II, Item 2 of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, there were no unregistered sales of equity securities during the year ended December 31, 2025. Issuer Purchases of Equity Securities None. Item 6. [Reserved] 94 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe following tables set forth our results of operations for the periods presented (In thousands): For the Years Ended December 31, 2024 2023 Revenues Partner program revenue $ 4,534 $ 5,718 Total revenues 4,534 5,718 Operating expenses Research and development 63,859 48,067 Selling, general and administrative 36,174 37,832 Depreciation and amortization 13,389 13,999 Goodwill impairment — 21,335 Total operating expenses 113,422 121,233 Operating loss (108,888) (115,515) Other income (expense) Interest expense (565) (1,010) Other income, net 6,417 6,059 Total other income, net 5,852 5,049 Loss before income taxes (103,036) (110,466) Income tax expense (70) (100) Net loss $ (103,106) $ (110,566) 90 Comparison of the Years Ended December 31, 2024 and 2023 The following table summarizes our results of operations for the years ended December 31, 2024 and 2023 (In thousands, except for percentages): Revenue For the Years Ended December 31, 2024 2023 $ Change % Change Revenues Partner program revenue $ 4,534 $ 5,718 $ (1,184) (21) % Total revenues $ 4,534 $ 5,718 $ (1,184) (21) % Partner program revenue decreased by $1.2 million, or 21%, for the year ended December 31, 2024 compared to the year ended December 31, 2023, driven by a combination of the timing of achieving project-based milestones and the mix of ongoing program activity under our drug creation agreements.
Biggest changeThe following tables set forth our results of operations for the periods presented (In thousands): For the Years Ended December 31, 2025 2024 Partner program revenue $ 2,800 $ 4,534 Operating expenses Research and development 81,418 63,859 Selling, general and administrative 35,058 36,174 Depreciation and amortization 11,742 13,389 Gain on settlement of contingent consideration (5,101) — Total operating expenses 123,117 113,422 Operating loss (120,317) (108,888) Other income (expense) Interest expense (209) (565) Other income, net 5,412 6,417 Total other income, net 5,203 5,852 Loss before income taxes (115,114) (103,036) Income tax expense (69) (70) Net loss $ (115,183) $ (103,106) Comparison of the Years Ended December 31, 2025 and 2024 Revenue Partner program revenue decreased by $1.7 million, or 38%, for the year ended December 31, 2025 compared to the year ended December 31, 2024, driven by a combination of the timing of achieving project-based milestones and the mix of ongoing program activity under our drug creation agreements.
Research and development activities consist of continued development of our Integrated Drug Creation platform, internally developed programs, and partnered programs. We derive improvements to our Integrated Drug Creation platform from each type of activity. Research and development efforts apply to our Integrated Drug Creation platform broadly, as well as and across programs.
Research and development activities consist of continued development of our Integrated Drug Creation platform, internally developed programs, and partnered programs. We derive improvements to our Integrated Drug Creation platform from each type of activity. Research and development efforts apply to our Integrated Drug Creation platform broadly, as well as across programs.
We also hold trademarks and trademark applications in the United States and foreign jurisdictions. Costs to secure and defend our intellectual property are expensed as incurred and are classified as selling, general and administrative expenses. 89 Depreciation and amortization Depreciation and amortization expense consists of the depreciation expense of our property and equipment and amortization of our intangibles.
We also hold trademarks and trademark applications in the United States and foreign jurisdictions. Costs to secure and defend our intellectual property are expensed as incurred and are classified as selling, general and administrative expenses. Depreciation and amortization Depreciation and amortization expense consists of the depreciation expense of our property and equipment and amortization of our intangibles.
Debt financing and preferred equity financing, if available, may involve agreements that include covenants restricting our ability to take specific actions, such as incurring additional debt, selling or licensing our programs, making product acquisitions, making capital expenditures, or declaring dividends.
Debt financing and preferred equity financing, if available, may involve agreements that include covenants restricting our 99 ability to take specific actions, such as incurring additional debt, selling or licensing our programs, making product acquisitions, making capital expenditures, or declaring dividends.
We refer to our customers as “partners” when describing our relationship in an agreement. 94 Partner program revenue Our drug creation agreements related to our partnered programs generally include multiple stages of drug creation that combined represent a single performance obligation.
We refer to our customers as “partners” when describing our relationship in an agreement. Partner program revenue Our drug creation agreements related to our partnered programs generally include multiple stages of drug creation that combined represent a single performance obligation.
Operating Expenses Research and development Research and development expenses include the personnel-related costs (comprised of salaries, benefits and share-based compensation), contract research services, contract manufacturing, consulting fees, laboratory supplies and facilities, and certain technology costs. These expenses are exclusive of depreciation and amortization.
Operating Expenses Research and development Research and development expenses include personnel-related costs (comprised of salaries, benefits and share-based compensation), contract research services, contract manufacturing, consulting fees, laboratory supplies and facilities, and certain technology costs. These expenses are exclusive of depreciation and amortization.
If we are unable to execute on our business plan and adequately fund operations, or if our business plan requires a level of spending in excess of cash resources, we may be required to change our strategies related to pre-clinical and clinical development and our approach to negotiating partnerships.
If we are unable to execute on our business plan and adequately fund operations, or if our business plan requires a level of spending in excess of cash resources, we may be required to change our strategies related to preclinical and clinical development and our approach to negotiating partnerships.
Income taxes Income tax expense for the year ended December 31, 2024 represents state income tax obligations and taxes in foreign jurisdictions for which we conduct business. Income tax expense for the year ended December 31, 2023 represents our federal and certain state income tax obligations and taxes in foreign jurisdictions for which we conduct business.
Income taxes Income tax expense for the year ended December 31, 2025 represents taxes in foreign jurisdictions for which we conduct business. Income tax expense for the year ended December 31, 2024 represents our federal and certain state income tax obligations and taxes in foreign jurisdictions for which we conduct business.
As of December 31, 2024, we have recorded a full valuation allowance on our U.S. federal and state deferred tax assets. Our effective income tax rate from continuing operations was (0.1)% and (0.1)% for the years ended December 31, 2024 and 2023, respectively.
As of 101 December 31, 2025, we have recorded a full valuation allowance on our U.S. federal and state deferred tax assets. Our effective income tax rate from continuing operations was (0.1)% for the years ended December 31, 2025 and 2024.
We expect research and development expenses to increase in absolute dollars over the long term as we develop and advance our internally developed programs, enter into additional partnerships, and continue to invest in technology enhancements.
We expect research and development expenses to increase in absolute dollars over the long term as we develop and advance our internally developed programs through pre-clinical and clinical activities, enter into additional partnerships, and continue to invest in technology enhancements.
We expect that our revenue will fluctuate from period to period due to, for example, the timing of executing additional partnerships, the contractual structure of future partnerships, the uncertainty of the timing of milestone achievements and dependence on our partners’ program-related decisions.
We expect that our revenue will fluctuate from period to period due to, for example, the timing of executing additional partnerships, the contractual structure of future partnerships, the measurement of progress towards completion of each program, the uncertainty of the timing of milestone achievements and dependence on our partners’ program-related decisions.
We believe that our cash, cash equivalents and short-term investments will be sufficient to meet our operating expenses, working capital and capital expenditure needs over at least the next 12 months following the date of this filing.
We believe that our cash, cash equivalents and marketable securities will be sufficient to meet our operating expenses, working capital and capital expenditure needs over at least the next 12 months following the date of this filing.
Our future capital requirements will depend on many factors, including, but not limited to our ability to raise additional capital through equity or debt financing, the development of our internally developed programs including the progress and strategy of any pre-clinical and clinical activities, our ability to successfully secure additional partnerships under contract with new partners and increase the number of programs covered under contracts with existing partners, the advancement of technology development activities with existing and future partners, the successful preclinical and clinical development by us and our partners of product candidates generated using our Integrated Drug Creation platform, and the successful commercialization by us and our partners of any such product candidates that are approved.
Our future capital requirements will depend on many factors, including, but not limited to our ability to raise additional capital through equity or debt financing, the development of our internally developed programs including the progress and strategy of our preclinical and clinical activities, our ability to successfully enter into additional partnerships with new and existing partners, the advancement of technology development activities with existing and future partners, the successful preclinical and clinical development by us and our partners of product candidates generated using our Integrated Drug Creation platform, and the successful commercialization by us and our partners of any such product candidates that are approved.
Emerging Growth Company Status We are an emerging growth company, as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies.
Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies.
On June 16, 2023, we entered into a Sales Agreement with Cowen and Company, LLC, as Sales Agent, with respect to an “at the market offering” program under which we may offer and sell, from time to time at our sole discretion, shares of our common stock, par value $0.0001 per share, having an aggregate offering price of up to $100.0 million through the Sales Agent.
At-the-market offering In June 2023, the Company entered into a Sales Agreement with Cowen and Company, LLC, as Sales Agent (the “Prior Sales Agreement”), with respect to an “at the market offering” program under which the Company had the ability to offer and sell, from time to time, shares of its common stock, par value $0.0001 per share, having an aggregate offering price of up to $100.0 million through the Sales Agent.
Sources of liquidity Since our inception, we have financed our operations primarily from the issuance and sale of our redeemable convertible preferred stock, issuances of equity securities, borrowings under long-term debt agreements, and to a lesser extent, cash flow from operations. Equipment financing In 2022, we received a total of $12.0 million of proceeds from equipment financing arrangements.
Sources of liquidity Since our inception, we have financed our operations primarily from the issuance and sale of our redeemable convertible preferred stock, issuances of equity securities, borrowings under long-term debt agreements, and to a lesser extent, cash flow from operations.
Total revenue was $4.5 million for the year ended December 31, 2024, compared to $5.7 million for the year ended December 31, 2023, a decrease of $1.2 million due to the number of ongoing partnered programs and respective timing of project-based milestones achieved.
Financial results Revenue was $2.8 million for the year ended December 31, 2025 compared to $4.5 million for the year ended December 31, 2024 due to the number of ongoing partnered programs and respective timing of project-based milestones achieved.
In the year ended December 31, 2023, net cash used in financing activities was $4.5 million primarily from cash used for principal payments of $5.3 million made for financed equipment, partially offset by proceeds of $0.9 million from the issuance of common stock from option exercises and our 2021 ESPP.
In the year ended December 31, 2024, net cash provided by financing activities was $82.5 million primarily from proceeds of $82.4 million from the issuance of common stock from a public offering and the Prior Sales Agreement and proceeds of $4.2 million from the issuance of common stock from option exercises and our 2021 ESPP, partially offset by principal payments of $4.0 million made for financed equipment.
We incurred a net loss of $103.1 million for the year ended December 31, 2024, compared to a net loss of $110.6 million for the year ended December 31, 2023. Research and development expenses increased by $15.8 million, or 33%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.
We incurred a net loss of $115.2 million for the year ended December 31, 2025 compared to a net loss of $103.1 million for the year ended December 31, 2024. Research and development expenses increased by $17.6 million, or 27%, for the year ended December 31, 2025 compared to the year ended December 31, 2024.
Selling, general, and administrative Selling, general, and administrative expenses include personnel-related costs (comprised of salaries, benefits and share-based compensation) for executive, business development, legal, finance, human resources, information technology and other administrative functions. Business development expenses include costs associated with attending conferences and other promotion efforts of our Integrated Drug Creation platform.
Selling, general, and administrative Selling, general, and administrative expenses include personnel-related costs (comprised of salaries, benefits and share-based compensation) for executive, business development, legal, finance, human resources, information technology and other administrative functions.
Our equipment is used most actively as part of our lab operations. We expect depreciation expense to fluctuate in future periods in line with continued growth and compute demands in absolute dollars as we purchase additional equipment.
Our equipment is used most actively as part of our lab operations. We expect depreciation expense to fluctuate in future periods in line with continued growth in absolute dollars as we purchase additional equipment. Other income (expense) Interest expense Interest expense, net, consists primarily of interest related to borrowings under our term debt and financed laboratory equipment.
Subsequent to December 31, 2024 , the Company issued and sold 5,269,192 shares of common stock for net proceeds of $21.7 million pursuant to the Sales Agreement. On March 1, 2024, we closed the sale of an aggregate of 19,205,000 shares of our common stock, pursuant to an underwriting agreement with Morgan Stanley & Co.
During the year ended December 31, 2025, the Company issued 927,855 shares and received $3.5 million in net proceeds from the sale of securities pursuant to the Sales Agreement. Public offerings of common stock On March 1, 2024, we sold an aggregate of 19,205,000 shares of our common stock, pursuant to an underwriting agreement with Morgan Stanley & Co.
General and administrative expenses include certain professional service expenses such as, external legal, accounting, and other consultants, as well as certain technology costs and allocated facility costs. These expenses are exclusive of depreciation and amortization. As we grow our operations, we expect personnel-related costs to increase in absolute dollars and we expect to actively manage other general and administrative expenses.
General and administrative expenses include certain professional service expenses, such as external legal, accounting, and other consultants, as well as insurance, certain technology costs, and allocated facility costs. These expenses are exclusive of depreciation and amortization.
Cash flows from investing activities In the year ended December 31, 2024, net cash used in investing activities was $41.6 million primarily from purchases of short-term investments of $186.1 million, partially offset by cash provided by maturities of short-term investments of $144.0 million. 93 In the year ended December 31, 2023, net cash provided by investing activities was $81.9 million primarily from maturities of short-term investments of $229.9 million, partially offset by cash used for purchases of short-term investments of $147.3 million and purchases of lab equipment of $0.9 million.
In the year ended December 31, 2024, net cash used in investing activities was $41.6 million primarily from purchases of marketable securities of $186.1 million, partially offset by maturities of marketable securities of $144.0 million. Cash flows from financing activities In the year ended December 31, 2025, net cash provided by financing activities was $105.9 million.
The net cash provided resulted primarily from proceeds of $82.4 million from the issuance of common stock from a public offering and the Sales Agreement, pursuant to the “at the market offering” program, and proceeds of $4.2 million from the issuance of common stock from stock option exercises and our 2021 ESPP, partially offset by principal payments of $4.0 million made for financed equipment.
The net cash provided resulted primarily from aggregate proceeds of $105.8 million from the issuance of common stock pursuant to the PIPE with AMD, the issuance of common stock pursuant to our July 2025 underwritten offering and pursuant to the Sales Agreement and Prior Sales Agreement, and proceeds of $3.3 million from the issuance of common stock from stock option exercises and our 2021 ESPP, partially offset by principal payments of $3.2 million made for financed equipment.
Liquidity and Capital Resources Overview As of December 31, 2024, we had $112.4 million of cash, cash equivalents and short-term investments. We have incurred net operating losses since inception. As of December 31, 2024, our accumulated deficit was $509.6 million.
Liquidity and Capital Resources Overview As of December 31, 2025, we had $144.3 million of cash, cash equivalents and marketable securities. We have incurred net operating losses since inception. As of December 31, 2025, our accumulated deficit was $624.8 million.
We expect to continue to incur significant expenses in connection with our ongoing activities, including as we: • develop our internally developed programs across diverse indications, including the advancement of these product candidates through preclinical and clinical development; • continue to engage in discovery, research and development efforts and scale our activities to meet potential demand from both new and existing partners; • execute an effective business development strategy to drive adoption of our Integrated Drug Creation platform by new and existing partners and, as relevant, to identify partners for internally developed programs; • develop, acquire, in-license or otherwise obtain technologies that enable us to expand our Integrated Drug Creation platform capabilities; and • attract, retain and motivate highly qualified personnel.
As of December 31, 2025, we had an accumulated deficit of $624.8 million and cash equivalents and marketable securities totaling $144.3 million. 95 We expect to continue to incur significant expenses in connection with our ongoing activities, including as we: • develop ABS-201 and other internally developed programs across diverse indications, including the advancement of these product candidates through preclinical and clinical development; • continue to engage in discovery, research and development efforts and scale our activities through our existing and potential new partnerships; • develop, acquire, in-license or otherwise obtain technologies that enable us to expand our Integrated Drug Creation platform capabilities; and • attract, retain and motivate highly qualified personnel to join Absci in our mission.
Cash Flows The following summarizes our cash flows (In thousands): For the Years Ended December 31, 2024 2023 Net cash provided by (used in) Operating activities (72,402) (64,636) Investing activities (41,577) 81,944 Financing activities 82,526 (4,483) Net (decrease) increase in cash, cash equivalents, and restricted cash $ (31,453) $ 12,825 Cash flows from operating activities In the year ended December 31, 2024, net cash used in operating activities was $72.4 million and consisted primarily of a net loss of $103.1 million adjusted for non-cash items, including depreciation and amortization expense of $13.4 million, stock-based compensation of $19.5 million, and impairment of $1.4 million for assets that met the held for sale criteria during the period, partially offset by $3.7 million of accretion of discount on short-term investments.
In the year ended December 31, 2024, net cash used in operating activities was $72.4 million and consisted primarily of a net loss of $103.1 million adjusted for non-cash items, including depreciation and amortization expense of $13.4 million, stock-based compensation expense of $19.5 million, impairment of $1.4 million for asset that met the held for sale criteria during the period, partially offset by $3.7 million of accretion of discount on marketable securities.
In certain drug creation agreements that require a portion of the contract consideration to be received in advance at the commencement of the contract, such advance payment is initially recorded as a contract liability.
In certain drug creation agreements 102 that require a portion of the contract consideration to be received in advance at the commencement of the contract, such advance payment is initially recorded as a contract liability. Accrued preclinical and clinical development expenses We expense all research and development costs in the periods in which they are incurred.
We will pay the Sales Agent a commission up to 3.0% of the gross sales proceeds of any shares sold under the Sales Agreement. As of December 31, 2024, we have issued 377,996 shares and received $1.6 million net proceeds from the sale of securities registered pursuant to the Sales Agreement.
The Company agreed to pay the Sales Agent a commission up to 3.0% of the gross sales proceeds of any shares sold under the Prior Sales Agreement. During the year ended December 31, 2025, the Company issued 10,377,752 shares and received $35.7 million in net proceeds from the sale of securities pursuant to the Prior Sales Agreement.
For the years ended December 31, 2024 and 2023, two partners represented approximately 99% and 89% of partner program revenue, respectively.
For the year ended December 31, 2025, three partners represented 95% of partner program revenue. For the year ended December 31, 2024, two partners represented 99% of partner program revenue.
Goodwill impairment We performed a quantitative impairment evaluation of goodwill as of June 30, 2023 and recorded an impairment charge in the amount of $21.3 million . 91 Other income (expense) Interest expense Interest expense was $0.6 million for the year ended December 31, 2024, compared to $1.0 million for the year ended December 31, 2023, representing a decrease of $0.4 million, or 44%, primarily attributable to decreased finance lease and long-term debt obligations.
Other income (expense) Interest expense Interest expense was $0.2 million for the year ended December 31, 2025, compared to $0.6 million for the year ended December 31, 2024, representing a decrease of $0.4 million, or 63%. This decrease was primarily attributable to decreased finance lease and long-term debt obligations.
Results of Operations The results of operations presented below should be reviewed in conjunction with our consolidated financial statements and notes included elsewhere in this Annual Report.
Other income, net Other income, net consists primarily of interest income from our cash, cash equivalents and marketable securities and realized and unrealized gains and losses on foreign currency transactions. 97 Results of Operations The results of operations presented below should be reviewed in conjunction with our consolidated financial statements and notes included elsewhere in this Annual Report.
These fees are earned and paid at various points throughout the terms of these agreements including upfront, upon the achievement of specified project-based milestones, and throughout the program.
These fees are earned and paid at various points throughout the terms of these agreements including upfront, upon the achievement of specified project-based milestones, and throughout the program. Future revenue may also be earned from our partners’ achievements of certain clinical, regulatory, and commercial milestones and through royalties as a percentage of net product sales.
Net cash used in operations increased by $7.8 million year-over-year primarily due to increased research and development costs, including ABS-101 IND-enabling studies.
Net cash used in operations increased by $20.5 million year-over-year primarily due to increased research and development costs, including external preclinical and clinical development costs related to our internally developed programs.
Private Investment in Public Equity On January 7, 2025, we closed the sale of an aggregate of 5,714,285 shares of our common stock, through a private investment in public equity (PIPE) to Advanced Micro Devices, Inc. (AMD), at an offering price of $3.50 per share. We received total net proceeds from the offering of $20.0 million.
Private investment in public equity In January 2025, we entered into a strategic collaboration with AMD and sold an aggregate of 5,714,285 shares of our common stock to AMD for net proceeds of $20.0 million through a private investment in public equity (PIPE).
Other income, net Other income, net, was $6.4 million for the year ended December 31, 2024, compared to $6.1 million for the year ended December 31, 2023, representing an increase of $0.3 million, or 6%, primarily attributable to increases in investment income from cash, cash equivalents and short-term investments due to higher balances and interest rates, offset by impairment of a non-marketable equity investment.
Other income, net Other income, net, was $5.4 million for the year ended December 31, 2025, compared to $6.4 million for the year ended December 31, 2024, representing a decrease of $1.0 million, or 16%, primarily attributable to realized and unrealized gains and losses on foreign currency transactions and a decrease in investment income from cash, cash equivalents and investments.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Overview We are a data-first generative AI drug creation company with the mission to design differentiated antibody therapeutics. Our Integrated Drug Creation platform comprises, in part, cutting edge generative AI models aimed at designing better antibody therapeutics, including against hard-to-drug targets.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Overview We are a clinical-stage biopharmaceutical company using an AI-native approach to develop differentiated antibody therapeutics. Our integrated drug creation platform combines Origin-1, our generative design model, with rapid validation using our lab-in-the-loop.
Operating expenses The following table summarizes our operating expenses for the years ended December 31, 2024 and 2023 (In thousands, except for percentages): For the Years Ended December 31, 2024 2023 $ Change % Change Operating expenses Research and development $ 63,859 $ 48,067 $ 15,792 33 % Selling, general and administrative 36,174 37,832 (1,658) (4) % Depreciation and amortization 13,389 13,999 (610) (4) % Goodwill impairment — 21,335 (21,335) 100 % Total operating expenses $ 113,422 $ 121,233 $ (7,811) (6) % Research and development Research and development expenses increased by $15.8 million, or 33%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Operating expenses The following tables summarize our operating expenses for the years ended December 31, 2025 and 2024 (In thousands, except for percentages): For the Years Ended December 31, 2025 2024 $ Change % Change Operating expenses Research and development $ 81,418 $ 63,859 $ 17,559 27 % Selling, general and administrative 35,058 36,174 (1,116) (3) % Depreciation and amortization 11,742 13,389 (1,647) (12) % Gain on settlement of contingent consideration (5,101) — (5,101) 100 % Total operating expenses $ 123,117 $ 113,422 $ 9,695 9 % Research and development Research and development expenses increased by $17.6 million, or 27%, for the year ended December 31, 2025 compared to the year ended December 31, 2024.
Cash flows from financing activities In the year ended December 31, 2024, net cash provided by financing activities was $82.5 million.
Cash flows from investing activities In the year ended December 31, 2025, net cash used in investing activities was $50.2 million primarily from purchases of marketable securities of $119.9 million, partially offset by cash provided by maturities of marketable securities of $69.5 million.
We will remain an emerging growth company until the earlier of (a) the last day of the fiscal year in which we have total annual gross revenue of $1.235 billion or more; (b) December 31, 2026, the last day of 95 the fiscal year following the fifth anniversary of the date of the completion of our IPO; (c) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years; or (d) the date we qualify as a “large accelerated filer,” which requires the market value of our common stock that are held by non-affiliates to exceed $700.0 million as of the prior June 30th.
We will remain a smaller reporting company until (a) the last day of the fiscal year in which we have total annual gross revenue of less than $100 million and the market value of our common stock held by non-affiliates exceeds $700.0 million as of the prior June 30th, or (b) the last day of the fiscal year in which we have total annual gross revenue exceeding $100 million and the market value of our common stock held by non-affiliates exceeds $250.0 million.
The decrease was primarily attributable to a decrease in personnel costs of $4.2 million, decreased other administrative costs of $2.7 million, offset by a $5.2 million increase in stock-based compensation.
The decrease was primarily attributable to a decrease of $1.5 million in personnel and stock-based compensation costs. Depreciation and amortization Depreciation and amortization expense decreased by $1.6 million, or 12%, for the year ended December 31, 2025 compared to the year ended December 31, 2024, primarily due to disposals of lab equipment.
The increase was primarily attributable to the advancement of our drug creation programs representing $11.8 million of this increase, which also included direct costs associated with IND-enabling studies for ABS-101, an increase in stock-based compensation of $2.8 million, and an increase in impairment expense of $0.9 million for assets.
The increase was primarily attributable to the advancement of our drug creation programs representing $17.3 million of this increase, including $13.1 million of direct costs associated with external preclinical and clinical development of our internally developed programs including ABS-101 and ABS-201, and an increase of $1.9 million of personnel costs and stock-based compensation, offset by a decrease of $1.6 million in other lab costs. 98 Selling, general and administrative expenses Selling, general, and administrative expenses decreased by $1.1 million, or 3%, for the year ended December 31, 2025 compared to the year ended December 31, 2024.
In the year ended December 31, 2023, net cash used in operating activities was $64.6 million and consisted primarily of a net loss of $110.6 million adjusted for non-cash items, including depreciation and amortization expense of $14.0 million, stock-based compensation of $11.4 million, and goodwill impairment of $21.3 million, partially offset by $2.7 million of accretion of discount on short-term investments.
The issuance of stock to AMD was at a premium of approximately $2.5 million over the market price on the issuance date. 100 Cash Flows The following summarizes our cash flows (In thousands): For the Years Ended December 31, 2025 2024 Net cash provided by (used in) Operating activities (92,925) (72,402) Investing activities (50,160) (41,577) Financing activities 105,949 82,526 Net decrease in cash, cash equivalents, and restricted cash $ (37,136) $ (31,453) Cash flows from operating activities In the year ended December 31, 2025, net cash used in operating activities was $92.9 million and consisted primarily of a net loss of $115.2 million adjusted for non-cash items, including depreciation and amortization expense of $11.7 million, stock-based compensation expense of $18.3 million, and a net decrease in operating assets and liabilities in the amount of $0.4 million.
Removed
Antibody therapeutics represent a growing market and significant medical opportunity, yet the biopharmaceutical industry faces challenges in bringing these potentially life-changing medicines to patients.
Added
We focus on underexplored mechanisms where unmet medical need is high and competition is low. We have advanced our first two programs from AI design to IND (or foreign equivalent) in around two years with a total investment of approximately $15 million per program, compared to an industry average of 4–6 years at a cost of greater than $50 million.
Removed
Leveraging our synthetic biology roots, we expect our Integrated Drug Creation platform to improve upon traditional biologic drug discovery by using AI to simultaneously optimize multiple drug characteristics that may be important to development and therapeutic benefit. Through these efforts, we aim to shorten time to clinic, while increasing the probability of success.
Added
This combination of underexplored target selection and capital-efficient execution is central to our strategy. Our lead product candidate, ABS-201, is an anti-prolactin receptor (PRLR) antibody engineered with an extended half-life to support a patient-friendly dosing interval. We believe PRLR is an underexplored target with the potential to provide durable, disease-modifying effects.
Removed
Our approach expands the possibilities in biopharmaceuticals — shifting from a paradigm of drug discovery to drug creation — with the goal of bringing best-in-class and first-in-class antibody therapeutics to the patients who need them. Traditional drug discovery and preclinical development can take 4–6 years to go from discovery to clinical development.
Added
If successfully developed, ABS-201 could establish a new treatment category in indications where current options remain inadequate.
Removed
Moreover, success rates for traditional drug discovery, as defined by successfully reaching a marketed product, are estimated at less than 5%. In all, it can take as much as 12–15 years, with costs estimated to exceed more than $1 billion to bring a drug to market. Progress in AI has been building for decades, with increasing application in drug discovery.
Added
ABS-201 is being developed for two indications, androgenetic alopecia (AGA) or pattern hair loss (PHL) and endometriosis, each with large affected populations and significant unmet need: • Androgenetic Alopecia: ABS-201 is being evaluated in the HEADLINE™ Phase 1/2a clinical trial (NCT07317544) for AGA, a condition affecting approximately 80 million people in the United States.
Removed
In May 2023, the U.S. Food and Drug Administration (FDA) acknowledged that AI will undoubtedly play a critical role in drug development and recognized its potential to enhance drug development in many ways, including to help bring safe and effective drugs to patients faster.
Added
Our own patient and clinician surveys, as well as those of other parties, show broad dissatisfaction with current standard of care, which is limited by variable efficacy, poor compliance, and a lack of durable approaches. No approved therapy provides durable hair regrowth. We have dosed the first three single ascending dose cohorts with a favorable safety profile to date.
Removed
A June 2023 study estimated that AI could yield time and cost savings of at least 25–50% in drug discovery up to the preclinical stage.
Added
Interim proof-of-concept data, including exploratory efficacy endpoints, are expected in the second half of 2026. • Endometriosis: We plan to initiate a Phase 2 clinical trial of ABS-201 in endometriosis, a chronic condition estimated to affect approximately 10% of women of reproductive age worldwide. There is currently no FDA-approved disease-modifying therapy for endometriosis.
Removed
Some analysts point specifically to g enerative AI as a promising approach to creating novel drugs with improved attributes, allowing drug development to move closer to drug design, speeding up the process and creating better-targeted drugs. However, generative AI depends on massive high-quality training datasets to generate quality results.
Added
The condition is associated with significant chronic pain, reduced quality of life, and impaired fertility, and treatment options are limited by inadequate long-term effectiveness and tolerability. PRLR signaling may contribute to both endometrial lesion development and pain-related pathways, which if demonstrated clinically, could support the potential for a non-hormonal and non-surgical treatment.
Removed
For example, GPT-4, a well-known generative AI model, was trained on data at scale readily available through public sources such as the internet. This type of dataset is more limited and not as accessible for biologics drug discovery.
Added
A recent clinical trial has demonstrated clinical proof of concept for targeting PRLR for endometriosis. Our Phase 2 clinical trial for endometriosis is planned for the fourth quarter of 2026, subject to data from the ongoing HEADLINE trial and regulatory considerations. Beyond ABS-201, we are advancing additional preclinical programs using our platform.
Removed
With the data to learn, the AI to create, and the wet lab to validate, we believe we can create billions of antibody designs and screen millions of ranked antibody sequences in weeks, allowing us to go from AI-designed to wet lab-validated product candidates in as little as six weeks.
Added
We may seek partnerships or out-licensing arrangements for select pipeline assets, which would provide non-dilutive capital We believe we are positioned to execute on near-term catalysts while building long-term pipeline value.
Removed
Our proprietary Integrated Drug Creation platform enables us to build a strong pipeline of both internal and partnered programs that can expand therapeutic possibilities.
Added
AMD strategic collaboration In January 2025, we entered into a strategic collaboration with Advanced Micro Devices, Inc. (AMD) with a goal to optimize the performance of AMD Instinct TM accelerators and ROCm TM software to support our AI drug creation, including our de novo antibody design models.
Removed
Our business model is focused on monetizing our Integrated Drug Creation platform by generating internally developed programs that are later partnered or out-licensed following certain value inflection points (anywhere from preclinical through clinical development) or by partnering with third parties who wish to leverage our Integrated Drug Creation platform for early discovery efforts in a variety of deal structures.
Added
Additionally, AMD invested $20.0 million through the purchase of 5,714,285 shares of our common stock a private investment in public equity (PIPE) at a premium over the market price.
Removed
Internally Developed Programs: We believe that by developing our own pipeline, we will create optionality for enhanced monetization and validation of our Integrated Drug Creation platform.
Added
At this time, we cannot reasonably estimate or know the nature, timing, and estimated costs of the efforts that will be necessary to complete the development of, and obtain regulatory approval for, any of our product candidates.
Removed
With the ability to selectively choose both novel and fast-follower targets, in addition to develop potentially best-in-class attributes, we aim to take our internally developed programs to certain value inflection points before considering partnering or out-licensing opportunities.
Added
We expect our research and development expenses to increase substantially for the foreseeable future as we continue to invest in preclinical and clinical activities related to developing our product candidates, as our product candidates advance into later stages of development, as we begin to 96 conduct larger clinical trials, as we seek regulatory approvals for any product candidates that successfully complete clinical trials, and incur expenses associated with hiring additional personnel to support our research and development efforts.
Removed
Partnered Programs: • Drug Creation Programs: We enter into collaborations with third parties who are seeking to leverage our platform to solve challenging problems. We work closely with our partners on single and multi-target programs to develop product candidates against targets they have selected.
Added
As we expand our clinical development and regulatory operations and require further administrative support, and also prepare for a potential future commercial launch of a product candidate, we expect personnel-related costs may increase in absolute dollars and we expect to continue to actively manage other general and administrative expenses.
Removed
We aim to expand and diversify our portfolio of partnered programs through these collaborations, each of 84 which may include up-front fees and research fees, as well as potential clinical and/or commercial milestones and royalties. • Co-development Programs: We enter into co-development partnerships with third parties who may offer perceived synergies with our Integrated Drug Creation platform.
Added
Gain on settlement of contingent consideration In June 2021, we entered into a merger agreement with Totient, Inc. (“Totient”). Pursuant to the merger agreement, at closing, Totient shareholders received $40.0 million in cash, and 2,212,208 shares of the our common stock, and became eligible to receive contingent consideration of $15.0 million in cash payable upon the achievement of specified milestones.
Removed
Our co-development programs are based on a clear alignment to take these programs through to certain value inflection points before considering partnering or out-licensing opportunities. Our co-development partnerships may be directed to either single and multi-target programs and may include mutual cost-sharing and/or technology contributions.
Added
In October 2025, we entered into an agreement with the selling stockholders of Totient to settle the contingent consideration liability for a payment of approximately $7.6 million and to release the remaining $8.7 million, held as restricted cash on the consolidated balance sheets, from escrow to the Company. In 2025, we recognized a $5.1 million gain on this settlement.
Removed
We aim to further expand and diversify our portfolio of partnered programs through these co-development partnerships. By sharing both the risks and rewards of these programs, we ensure both parties are motivated for success.
Added
In August 2025, the Company entered into a Sales Agreement with TD Securities (USA) LLC, as Sales Agent (the “Sales Agreement”), with respect to an “at the market offering” program under which the Company may offer and sell, from time to time, shares of its common stock having an aggregate offering price of up to $100.0 million through the Sales Agent.
Removed
Our evolving business model is underpinned by our Integrated Drug Creation platform which supports a strategic diversification of our program portfolio through internally developed programs, partnered drug creation programs and co-development programs.
Added
The Company has agreed to pay the Sales Agent a commission of up to 3.0% of the gross proceeds of any shares sold under the Sales Agreement. Upon execution, the Sales Agreement terminated and superseded the Prior Sales Agreement in its entirety.

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