10q10k10q10k.net

What changed in Aclaris Therapeutics, Inc.'s 10-K — 2024 vs 2025

vs

Paragraph-level year-over-year comparison of Aclaris Therapeutics, Inc.'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.

+392 added−401 removedSource: 10-K (2026-02-26) vs 10-K (2025-02-27)

Top changes in Aclaris Therapeutics, Inc.'s 2025 10-K

392 paragraphs added · 401 removed · 291 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

83 edited+36 added−55 removed118 unchanged
Biggest changeIf our operations are found to be in violation of any such laws or any other governmental regulations, we may be subject to significant penalties, including, without limitation, administrative, civil, and criminal penalties, damages, fines, disgorgement, imprisonment, contractual damages, reputational harm, diminished profits and future earnings, the curtailment or restructuring of our operations, exclusion from participation in federal and state health care programs, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws and individual imprisonment, any of which could adversely affect our ability to operate our business and our financial results. ​ We may also be subject to data privacy and security regulation by both the federal government and the states in which we conduct our business.
Biggest changeIn addition, certain state laws govern the privacy and security of health information in certain circumstances, some of which are more stringent than HIPAA and many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts. ​ Failure to comply with these laws, where applicable, can result in the imposition of significant penalties, including, without limitation, administrative, civil, and criminal penalties, damages, fines, disgorgement, imprisonment, contractual damages, reputational harm, diminished profits and future earnings, the curtailment or restructuring of our operations, exclusion from participation in federal and state health care programs, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws and individual imprisonment. ​ Health Care Reform ​ In the United States, there have been and continue to be a number of significant legislative initiatives to contain health care costs.
Pursuant to the terms of the Confluence Agreement, the Merger Sub merged with and into Confluence, with Confluence surviving as our wholly-owned subsidiary, resulting in our acquisition of 100% of the outstanding shares of Confluence.
Pursuant to the terms of the Confluence Agreement, Merger Sub merged with and into Confluence, with Confluence surviving as our wholly owned subsidiary, resulting in our acquisition of 100% of the outstanding shares of Confluence.
In addition, we have agreed to pay the former Confluence equity holders future royalty payments calculated as a low single-digit percentage of annual net sales, subject to specified reductions, limitations and other adjustments, until the date that all of the patent rights for that product have expired, as determined on a country-by-country and product-by-product basis or, in specified circumstances, ten years from the first commercial sale of such product.
In addition, we agreed to pay the former Confluence equity holders future royalty payments calculated as a low single-digit percentage of annual net sales, subject to specified reductions, limitations and other adjustments, until the date that all of the patent rights for that product have expired, as determined on a country-by-country and product-by-product basis or, in specified circumstances, ten years from the first commercial sale of such product.
For example, in Japan, it may be possible to extend the patent term for up to five years and in the European Union, it may be possible to obtain a supplementary patent certificate that would effectively extend patent protection for up to five years. ​ Coverage and Reimbursement ​ We believe the success of our product candidates, if approved, will depend on obtaining and maintaining coverage and adequate reimbursement as a prescription treatment or in the absence of coverage and adequate reimbursement, on the extent to which patients will be willing to pay out of pocket for our prescription drug products. ​ Third-party payors determine which prescription drug products they will cover and establish reimbursement levels.
For example, in Japan, it may be possible to extend the patent term for up to five years and in the European Union, it may be possible to obtain a supplementary protection certificate that would effectively extend patent protection for up to five years. ​ Coverage and Reimbursement ​ We believe the success of our product candidates, if approved, will depend on obtaining and maintaining coverage and adequate reimbursement as a prescription treatment or in the absence of coverage and adequate reimbursement, on the extent to which patients will be willing to pay out of pocket for our prescription drug products. ​ Third-party payors determine which prescription drug products they will cover and establish reimbursement levels.
The process required by the FDA before new drug and biologic product candidates may be marketed in the United States generally involves the following: ● completion of preclinical laboratory tests, animal studies and formulation studies in compliance with the FDA’s good laboratory practice (“GLP”) regulations; ● submission to the FDA of an IND which must take effect before clinical trials may begin; ● approval by an independent institutional review board (“IRB”) representing each clinical site before clinical testing may be initiated at the clinical site; ● performance of adequate and well-controlled clinical trials in accordance with good clinical practice (“GCP”) regulations to establish the safety and efficacy of the proposed drug product for each indication; ● preparation and submission to the FDA of a New Drug Application (“NDA”) for a drug or a Biologics License Application (“BLA”) for a biologic, after completion of all pivotal trials; ● determination by the FDA within 60 days of its receipt of an NDA or BLA to file the application for review; ● review of the NDA or BLA by an FDA advisory committee, if applicable; ● satisfactory completion of one or more FDA inspections of the manufacturing facility or facilities at which the drug or biologic or its components are produced to assess compliance with current good manufacturing practices (“cGMP”) and regulations to assure that the facilities, methods and controls are adequate to preserve the product’s identity, strength, quality and purity; ● payment of user fees and securing FDA approval of the NDA or BLA; and ● compliance with any post-approval requirements, including potential requirements for a risk evaluation and mitigation strategy and post-approval studies required by the FDA. ​ Once a drug or biological product candidate is identified for development, it enters the preclinical or nonclinical testing stage.
The process required by the FDA before new drug and biologic product candidates may be marketed in the United States 11 Table of Contents generally involves the following: ● completion of preclinical laboratory tests, animal studies and formulation studies in compliance with the FDA’s good laboratory practice (“GLP”) regulations; ● submission to the FDA of an IND which must take effect before clinical trials may begin; ● approval by an independent institutional review board (“IRB”) representing each clinical site before clinical testing may be initiated at the clinical site; ● performance of adequate and well-controlled clinical trials in accordance with good clinical practice (“GCP”) regulations to establish the safety and efficacy of the proposed drug product for each indication; ● preparation and submission to the FDA of a New Drug Application (“NDA”) for a drug or a Biologics License Application (“BLA”) for a biologic, after completion of all pivotal trials; ● determination by the FDA within 60 days of its receipt of an NDA or BLA to file the application for review; ● review of the NDA or BLA by an FDA advisory committee, if applicable; ● satisfactory completion of one or more FDA inspections of the manufacturing facility or facilities at which the drug or biologic or its components are produced to assess compliance with current good manufacturing practices (“cGMP”) and regulations to assure that the facilities, methods and controls are adequate to preserve the product’s identity, strength, quality and purity; ● payment of user fees and securing FDA approval of the NDA or BLA; and ● compliance with any post-approval requirements, including potential requirements for a risk evaluation and mitigation strategy and post-approval studies required by the FDA. ​ Once a drug or biological product candidate is identified for development, it enters the preclinical or nonclinical testing stage.
In addition to the payments described above, if we sell, license or transfer any of the intellectual property acquired from Confluence pursuant to the Confluence Agreement to a third party, we will be obligated to pay the former Confluence equity holders a portion of any consideration received from such sale, license or transfer in specified circumstances. ​ Government Regulation and Product Approval ​ Governmental authorities in the United States, at the federal, state and local level, and analogous authorities in other countries extensively regulate, among other things, the research, development, testing, manufacture, safety surveillance, efficacy, quality control, labeling, packaging, distribution, record keeping, promotion, storage, advertising, distribution, marketing, sale, export and import, and the reporting of safety and other post-market information of products 11 Table of Contents such as the ones we are developing.
In addition to the payments described above, if we sell, license or transfer any of the intellectual property acquired from Confluence pursuant to the Confluence Agreement to a third party, we will be obligated to pay the former Confluence equity holders a portion of any consideration received from such sale, license, or transfer in specified circumstances. ​ Government Regulation and Product Approval ​ Governmental authorities in the United States, at the federal, state and local level, and analogous authorities in other countries extensively regulate, among other things, the research, development, testing, manufacture, safety surveillance, efficacy, quality control, labeling, packaging, distribution, record keeping, promotion, storage, advertising, distribution, marketing, sale, export and import, and the reporting of safety and other post-market information of products such as the ones we are developing.
In addition, the Affordable Care Act codified case law that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act. ​ Federal false claims and false statement laws, including the federal civil False Claims Act, prohibits, among other things, any person or entity from knowingly presenting, or causing to be presented, for payment to, or approval by, federal programs, including Medicare and Medicaid, claims for items or services, including drugs, that are false or fraudulent or not provided as claimed.
In addition, the Affordable Care Act codified case law that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act. ​ Federal false claims and false statement laws, including the federal civil False Claims Act, prohibit, among other things, any person or entity from knowingly presenting, or causing to be presented, for payment to, or approval by, federal programs, including Medicare and Medicaid, claims for items or services, including drugs, that are false or fraudulent or not provided as claimed.
In addition, we and our potential third-party partners may be subject to transparency laws and patient privacy regulation by the federal government and by the U.S. states and foreign jurisdictions in which we or they conduct business. ​ The federal Anti-Kickback Statute makes it illegal for any person or entity, including a prescription drug manufacturer (or a party acting on its behalf) to knowingly and willfully, directly or indirectly, solicit, receive, offer, or pay any remuneration that is intended to induce the referral of business, including the purchase, order, or lease of any good, facility, item or service for which payment may be made under a federal health care program, such as Medicare or Medicaid.
In addition, we and our potential third-party partners may be subject to transparency laws and patient privacy regulation by the federal government and by the U.S. states and foreign jurisdictions in which we or they conduct business. ​ The federal Anti-Kickback Statute makes it illegal for any person or entity, including a prescription drug manufacturer (or a party acting on its behalf) to knowingly and willfully, directly or indirectly, solicit, receive, offer, or pay any remuneration that is intended to induce the referral of business, including the purchase, order, or lease of any 16 Table of Contents good, facility, item or service for which payment may be made under a federal health care program, such as Medicare or Medicaid.
This six-month exclusivity, which runs from the end of other exclusivity protection, may be granted based on the voluntary completion of a pediatric study in accordance with an FDA-issued “Written Request” for such a study. ​ Regulation Outside of the United States ​ Even if we obtain FDA approval for a drug or biological product candidate, we must obtain approval by the comparable regulatory authorities of countries outside of the United States before we can commence clinical trials in such countries, and our potential third-party partners must obtain approval of the regulators of such countries or economic areas, such as the European Union, before they may market any of our product candidates in those countries or areas.
This six-month exclusivity, which runs from the end of other exclusivity protection, may be granted based on the voluntary completion of a pediatric study in accordance with an FDA-issued “Written Request” for such a study. 15 Table of Contents Regulation Outside of the United States ​ Even if we obtain FDA approval for a drug or biological product candidate, we must obtain approval by the comparable regulatory authorities of countries outside of the United States before we can commence clinical trials in such countries, and our potential third-party partners must obtain approval of the regulators of such countries or economic areas, such as the European Union, before they may market any of our product candidates in those countries or areas.
These trials are intended to establish the overall risk-benefit ratio of the drug or biological product candidate and provide an adequate basis for product approval and labeling claims. ​ Phase 4 clinical trials are conducted after approval to gain additional experience from the treatment of patients in the intended therapeutic indication and to document a clinical benefit in the case of drugs or biologics approved under accelerated approval regulations, or when otherwise requested by the FDA in the form of post-market requirements or commitments.
These trials are intended 12 Table of Contents to establish the overall risk-benefit ratio of the drug or biological product candidate and provide an adequate basis for product approval and labeling claims. ​ Phase 4 clinical trials are conducted after approval to gain additional experience from the treatment of patients in the intended therapeutic indication and to document a clinical benefit in the case of drugs or biologics approved under accelerated approval regulations, or when otherwise requested by the FDA in the form of post-market requirements or commitments.
For example, we own one U.S. patent and pending U.S., European Union and other foreign country applications directed to ATI-2138 and analogs thereof and methods of using the same, which, if issued, would expire in 2039, subject to any applicable adjustment or extension.
For example, we own multiple U.S. patent and pending U.S., European Union and other foreign country applications directed to ATI-2138 and analogs thereof and methods of using the same, which, if issued, would expire in 2039, subject to any applicable adjustment or extension.
The European Union does have a compensation program similar to patent term extension called supplementary patent certificate that would effectively extend patent protection for up to five years. ​ 10 Table of Contents We also use other forms of protection, such as trademark, copyright, and/or trade secret protection, to protect our intellectual property, particularly where we do not believe patent protection is appropriate or obtainable.
The European Union does have a compensation program similar to patent term extension called supplementary protection certificate that would effectively extend patent protection for up to five years. ​ We also use other forms of protection, such as trademark, copyright, and/or trade secret protection, to protect our intellectual property, particularly where we do not believe patent protection is appropriate or obtainable.
Accordingly, manufacturers must continue to expend time, money, and effort in the area of production and quality control to maintain cGMP compliance. ​ 14 Table of Contents Failure to comply with the applicable U.S. requirements at any time during the product development process or approval process, or after approval, may subject us to administrative or judicial sanctions, any of which could have a material adverse effect on us.
Accordingly, manufacturers must continue to expend time, money, and effort in the area of production and quality control to maintain cGMP compliance. ​ Failure to comply with the applicable U.S. requirements at any time during the product development process or approval process, or after approval, may subject us to administrative or judicial sanctions, any of which could have a material adverse effect on us.
If the product has not received a National MA in any Member State at the time of application, it can be approved simultaneously in various Member States through the Decentralized Procedure. 16 Table of Contents ​ In the EEA, upon receiving marketing authorization, NCEs generally receive eight years of data exclusivity and an additional two years of market exclusivity.
If the product has not received a National MA in any Member State at the time of application, it can be approved simultaneously in various Member States through the Decentralized Procedure. ​ In the EEA, upon receiving marketing authorization, NCEs generally receive eight years of data exclusivity and an additional two years of market exclusivity.
As part of the Confluence acquisition we acquired our investigational product candidates zunsemetinib, lepzacitinib and ATI-2138. ​ Under the Confluence Agreement, we agreed to pay the former Confluence equity holders aggregate remaining contingent consideration of up to $75.0 million based upon the achievement of specified regulatory and commercial milestones set forth in the Confluence Agreement.
As part of the Confluence acquisition we acquired, among others, our investigational product candidates lepzacitinib and ATI-2138. ​ Under the Confluence Agreement, we agreed to pay the former Confluence equity holders aggregate remaining contingent consideration of up to $75.0 million based upon the achievement of specified regulatory and commercial milestones set forth in the Confluence Agreement.
The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to significant liability. However, physicians may, in their independent medical judgment, prescribe legally available products for off-label uses.
The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to significant liability. However, physicians may, in their independent medical judgment, 14 Table of Contents prescribe legally available products for off-label uses.
The filing of a patent infringement lawsuit within 45 days of the receipt of a Paragraph IV certification automatically prevents the FDA from approving the ANDA or Section 505(b)(2) application until the earliest of 30 months, expiration of the patent, settlement of the lawsuit, and a decision in the infringement case that is favorable to the ANDA or Section 505(b)(2) applicant.
The filing of a patent infringement lawsuit within 45 days of the receipt of a Paragraph IV certification automatically prevents the FDA from approving the ANDA or Section 505(b)(2) application until the earliest of 30 months, expiration of the patent, settlement of the lawsuit, and a decision in the infringement case that is favorable to 19 Table of Contents the ANDA or Section 505(b)(2) applicant.
An IRB for each site participating in the clinical trial 12 Table of Contents must review and approve the protocol before the clinical trial commences at that institution and must also approve the information regarding the trial and the consent form that must be provided to each research subject or the subject’s legal representative, monitor the study until completed and otherwise comply with IRB regulations. ​ Clinical trials are typically conducted in three sequential phases that may overlap or be combined: ​ ● Phase 1.
An IRB for each site participating in the clinical trial must review and approve the protocol before the clinical trial commences at that institution and must also approve the information regarding the trial and the consent form that must be provided to each research subject or the subject’s legal representative, monitor the study until completed and otherwise comply with IRB regulations. ​ Clinical trials are typically conducted in three sequential phases that may overlap or be combined: ​ ● Phase 1.
The SEC also maintains a website that contains our reports, proxy and information statements and other information. The address of the SEC’s website is www.sec.gov. ​ 22 Table of Contents
The SEC also maintains a website that contains our reports, proxy and information statements and other information. The address of the SEC’s website is www.sec.gov. ​ 21 Table of Contents
Biosimilarity, which requires that there be no clinically meaningful differences between the biological 15 Table of Contents product and the reference product in terms of safety, purity, and potency, can be shown through, as applicable, analytical studies, animal studies, and a clinical study or studies.
Biosimilarity, which requires that there be no clinically meaningful differences between the biological product and the reference product in terms of safety, purity, and potency, can be shown through, as applicable, analytical studies, animal studies, and a clinical study or studies.
A priority review designation is intended to direct overall attention and resources to the evaluation of such applications, and to shorten the FDA’s goal for taking action on the NDA or BLA from ten months to six months from filing of the NDA or BLA.
A priority review 13 Table of Contents designation is intended to direct overall attention and resources to the evaluation of such applications, and to shorten the FDA’s goal for taking action on the NDA or BLA from ten months to six months from filing of the NDA or BLA.
The Affordable Care Act was designed to expand coverage for the uninsured and at the same time contain overall health care costs. ​ There have been executive branch, judicial and Congressional challenges and amendments to certain aspects of the Affordable Care Act.
The Affordable Care Act was designed to, among other things, expand coverage for the uninsured and at the same time contain overall health care costs. ​ There have been executive branch, judicial and Congressional challenges and amendments to certain aspects of the Affordable Care Act.
Several companies are developing or have commercialized JAK inhibitors that may compete with ATI-2138, if approved, including Pfizer (tofacitinib, abrocitinib, and ritlecitinib), Eli Lilly/Incyte (baricitinib), and AbbVie (upadacitinib). ​ The commercial opportunity for our product candidates, if approved, could be reduced or eliminated if our competitors develop and commercialize drugs that are safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive than any drug we may develop.
In addition, several companies are developing or have commercialized JAK inhibitors that may compete with ATI-2138, if approved, including Pfizer (tofacitinib, abrocitinib, and ritlecitinib), Eli Lilly (baricitinib), AbbVie (upadacitinib), and Sun Pharmaceutical (deuruxolitinib). ​ The commercial opportunity for our product candidates, if approved, could be reduced or eliminated if our competitors develop and commercialize drugs that are safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive than any drug we may develop.
The Drug Price Competition and Patent Term Restoration Act of 1984 (the “Hatch-Waxman Act”), permits a patent term extension of up 20 Table of Contents to five years beyond the expiration of the patent.
The Drug Price Competition and Patent Term Restoration Act of 1984 (the “Hatch-Waxman Act”), permits a patent term extension of up to five years beyond the expiration of the patent.
We also agreed to pay, in the aggregate (i) $6.2 million for reimbursement of certain development costs and drug product material, (ii) up to $125 million upon the achievement of specified regulatory milestones beginning with product approval, (iii) up to $795 million upon the achievement of specified sales milestones, (iv) a tiered low-to-mid single digit royalty based upon a percentage of annual net sales, subject to specified reductions, and (v) a portion of any sublicense consideration received from granting sublicense or similar rights under any of the rights or licenses granted to us. ​ Agreement and Plan of Merger with Confluence ​ In August 2017, we entered into an Agreement and Plan of Merger (the “Confluence Agreement”) with Confluence, Aclaris Life Sciences, Inc., our wholly-owned subsidiary (“Merger Sub”), and Fortis Advisors LLC, as representative of the former equity holders of Confluence.
We also agreed to pay, in the aggregate (i) up to $125 million upon the achievement of specified regulatory milestones beginning with product approval, (ii) up to $795 million upon the achievement of specified sales milestones, (iii) a tiered low-to-mid single digit royalty based upon a percentage of annual net sales, subject to specified reductions, and (iv) a portion of any sublicense consideration received from granting sublicense or similar rights under any of the rights or licenses granted to us. ​ Agreement and Plan of Merger with Confluence ​ In 2017, we entered into an Agreement and Plan of Merger (the “Confluence Agreement”) with Confluence, Aclaris Life Sciences, Inc., our wholly owned subsidiary (“Merger Sub”), and Fortis Advisors LLC, as representative of the former equity holders of Confluence.
These types of drugs are produced and sold, or are 8 Table of Contents approved for marketing, by large pharmaceutical companies, including AbbVie (upadacitinib), Incyte (ruxolitinib), LEO Pharma A/S (delgocitinib), Pfizer (crisaborole; abrocitinib), Eli Lilly (lebrikizumab), Dermavant Sciences (tapinarof), and Regeneron Pharmaceuticals and Sanofi (dupilumab).
These types of drugs are produced and sold, or are approved for marketing, by large pharmaceutical companies, including AbbVie (upadacitinib), Incyte (ruxolitinib), LEO Pharma A/S (delgocitinib, tralokinumab), Pfizer (crisaborole; abrocitinib), Eli Lilly (lebrikizumab), Dermavant Sciences (tapinarof), Galderma (nemolizumab), and Regeneron Pharmaceuticals and Sanofi (dupilumab).
In addition, we also require confidentiality or service agreements from third parties that receive our confidential information or materials. ​ Acquisition and License Agreements ​ Exclusive License Agreement with Biosion ​ In November 2024, we entered into an exclusive license agreement (the “Biosion Agreement”) with Biosion, pursuant to which we received exclusive rights to develop, manufacture and commercialize bosakitug and ATI-052 worldwide, excluding Mainland China, Macau, Hong Kong and Taiwan (“Greater China”).
In addition, we also require confidentiality or service agreements from third parties that receive our confidential information or materials. ​ Acquisition and License Agreements ​ Exclusive License Agreement with Biosion ​ In November 2024, we entered into an exclusive license agreement (the “Biosion Agreement”) with Biosion, pursuant to which we received exclusive rights to develop, manufacture and commercialize bosakitug and ATI-052 worldwide, excluding Greater China.
In a Phase 2a, single-arm, proof-of-concept trial in 22 U.S. patients with moderate to severe atopic dermatitis conducted by Biosion, bosakitug demonstrated a positive pharmacodynamic, safety and efficacy profile, with 94% of patients achieving a 75% improvement in the Eczema Area and Severity Index (“EASI”), 65% of patients achieving EASI-90, and 88% of patients achieving an Investigator’s Global Assessment (“IGA”) score of 0 or 1 (clear or almost clear skin), at week 26 (n=17).
In a Phase 2a, single-arm, proof-of-concept trial in 22 U.S. patients with moderate to severe atopic dermatitis conducted by Biosion, 94% of patients receiving bosakitug achieved at least a 75% improvement in the Eczema Area and Severity Index (“EASI”), 65% of patients achieved EASI-90, and 88% of patients achieved an Investigator’s Global Assessment (“IGA”) score of 0 or 1 (clear or almost clear skin), at week 26 (n=17).
Bosakitug was generally well-tolerated with no serious adverse events reported. The most common treatment-emergent adverse event was headache (22.7% of patients). Grade 1 injection site reactions, primarily tenderness, occurred in 47.6% of patients.
Bosakitug demonstrated a strong pharmacodynamic profile and was generally well-tolerated with no serious adverse events reported. The most common treatment-emergent adverse event was headache (22.7% of patients). Grade 1 injection site reactions, primarily tenderness, occurred in 47.6% of patients.
It may request additional information rather than accept 13 Table of Contents an NDA or BLA for filing. In this event, the NDA or BLA must be resubmitted with the additional information.
It may request additional information rather than accept an NDA or BLA for filing. In this event, the NDA or BLA must be resubmitted with the additional information.
We also exclusively license a pending provisional application directed to methods of using TSLP monoclonal antibodies for the treatment of atopic dermatitis, which, if issued, would 9 Table of Contents naturally expire in 2045, subject to any applicable patent term adjustment or extension that may be available in a particular country. ​ With respect to our ITK inhibitor development program, we own numerous issued patents and pending applications in the United States and foreign countries directed to novel inhibitors of ITK, including ATI-2138, and methods of use that expire, or would expire, between 2035 and 2044, subject to any applicable patent term adjustment or extension that may be available in a particular country.
We also exclusively license a pending international patent application filed under the Patent Cooperation Treaty (“PCT”) directed to methods of using TSLP monoclonal antibodies for the treatment of atopic dermatitis, which, if issued, would naturally expire in 2045, subject to any applicable patent term adjustment or extension that may be available in a particular country. ​ With respect to our ITK inhibitor development program, we own numerous issued patents and pending applications in the United States and foreign countries directed to novel inhibitors of ITK, including ATI-2138 and ATI-9494, and methods of use that expire, or would expire, between 2035 and 2046, subject to any applicable patent term adjustment or extension that may be available in a particular country.
This approach delivers inhibitors exhibiting enhanced potency, selectivity and 7 Table of Contents biochemical efficiency thereby allowing pharmacological access to ‘hard to drug’ kinases.
This approach delivers inhibitors exhibiting enhanced potency, selectivity and biochemical efficiency thereby allowing pharmacological access to ‘hard to drug’ kinases.
By pursuing both traditional monoclonal antibodies and innovative bispecific approaches, we aim to develop differentiated biological therapies that address significant unmet needs in immuno-inflammatory diseases. ● Create small molecule medicines through kinome innovation.
By pursuing both traditional monoclonal antibodies and innovative multispecific approaches, we aim to develop differentiated biological therapies that address significant unmet needs in immuno-inflammatory diseases. ● Create small molecule medicines through kinome innovation utilizing our proprietary KINect platform.
Our business could be harmed if reimbursement of our product candidates, if approved, is unavailable or limited in scope or amount or if pricing is set at unsatisfactory levels. 21 Table of Contents ​ Employees and Human Capital Resources ​ As of December 31, 2024, we had 64 total employees, of which 61 were full-time employees.
Our business could be harmed if reimbursement of our product candidates, if approved, is unavailable or limited in scope or amount or if pricing is set at unsatisfactory levels. ​ Employees and Human Capital Resources ​ As of December 31, 2025, we had 73 total employees, of which 69 were full-time employees.
Our proprietary KINect platform enables us to identify potential small molecule product candidates through a unique combination of our proprietary chemical library of kinase inhibitors, our novel approach to inhibitor modalities, our expertise in SBDD and our custom kinase assays. 4 Table of Contents ● Broaden our drug development pipeline internally and externally.
Our proprietary KINect platform enables us to identify potential small molecule product candidates through a unique combination of our proprietary chemical library of kinase inhibitors, our novel approach to inhibitor modalities, our expertise in SBDD and our custom kinase assays.
There are over 80 kinase inhibitors approved by the FDA on the market; however, these drugs only target a small fraction of the kinome, with many clinically relevant kinase targets lacking validated inhibitors. In 2023, the kinase inhibitors market was valued at over $57 billion.
There are over 80 kinase inhibitors approved by the FDA on the market; however, these drugs only target a small fraction of the kinome, with many clinically relevant kinase targets lacking validated inhibitors. In 2025, the kinase inhibitors market was valued at over $67 billion and is expected to grow to over $94 billion by 2030.
We also own a pending international patent application filed under the Patent Cooperation Treaty (“PCT”) directed to methods of using ATI-2138, which if issued, would expire in 2043, subject to any applicable adjustment or extension.
We also own a pending PCT application directed to methods of using ATI-2138, which if issued, would expire in 2043, subject to any applicable adjustment or extension.
A key element of our strategy is to build and expand our pipeline of product candidates. To build our pipeline, we may seek to in-license or acquire additional product candidates, in addition to developing assets in-house. ● Pursue strategic alternatives for our product candidates.
A key element of our strategy is to build and expand our pipeline of product candidates. We may seek to in-license or acquire additional product candidates, in addition to developing assets in-house. ● Identify and consummate transactions with third-party partners for our product candidates.
In connection with the Biosion Agreement, we also entered into a collaboration agreement (the “CTTQ Agreement”) with Biosion and CTTQ, a licensee of bosakitug in Greater China. ​ Under the Biosion Agreement and CTTQ Agreement, we agreed to pay, in the aggregate, $30.0 million in upfront cash consideration, plus $4.5 million for the reimbursement of certain development costs.
In connection with the Biosion Agreement, we also entered into a collaboration agreement (the “CTTQ Agreement”, and together with the Biosion Agreement, the “Biosion Agreements”) with Biosion and CTTQ, a licensee of bosakitug in Greater China. 10 Table of Contents ​ Under the Biosion Agreements, we paid, in the aggregate, $30.0 million in upfront cash consideration, $4.5 million for the reimbursement of certain development costs, plus $6.2 million for the reimbursement of certain development costs and drug product material.
If the IND is allowed, we plan to initiate a Phase 1 single ascending dose and MAD trial of ATI-052. Other Investigational Product Candidates Lepzacitinib, an Investigational Topical “Soft” JAK 1/3 Inhibitor ​ Lepzacitinib (ATI-1777) is an investigational topical “soft” JAK 1/3 inhibitor for the potential treatment of atopic dermatitis and potentially other dermatologic conditions.
Other Investigational Product Candidates Lepzacitinib, an Investigational Topical “Soft” JAK 1/3 Inhibitor ​ Lepzacitinib (ATI-1777) is an investigational topical “soft” JAK 1/3 inhibitor for the potential treatment of atopic dermatitis and potentially other dermatologic conditions.
In particular, it may reduce the attractiveness of investment in small molecule and biologic innovation. ​ At the state level, legislatures have become increasingly active in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.
Congress may introduce and ultimately pass health care related legislation that could impact the drug approval process and make changes to the Medicare Drug Price Negotiation Program. ​ At the state level, legislatures have become increasingly active in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.
As a potential treatment for atopic dermatitis, there are several different types of therapies in the atopic dermatitis market, such as biologics, oral and topical corticosteroids, oral and topical calcineurin inhibitors, oral mycophenolate products, JAK inhibitors, other oral antibiotics and antihistamines and phototherapy.
For example, we are aware of Regeneron Pharmaceuticals and Sanofi (dupilumab), Sanofi (lunsekimig), Pfizer (PF-07264660), and KeyMed Biosciences (CM512). ​ With respect to bosakitug and ATI-052 as a potential treatment for atopic dermatitis, there are several different types of therapies in the atopic dermatitis market, such as biologics, oral and topical corticosteroids, oral and topical calcineurin inhibitors, oral mycophenolate products, JAK inhibitors, other oral antibiotics and antihistamines and phototherapy.
We also own pending PCT applications directed to crystal forms of ATI-2138 and to methods of synthesizing such ITK inhibitors, including ATI-2138, which if issued, would each expire in 2044, subject to any applicable adjustment or extension. ​ With respect to our bispecific antibody development program, we exclusively license a pending PCT application directed to such bispecific antibodies, including ATI-052, which, if issued, would naturally expire in 2043, subject to any applicable patent term adjustment or extension that may be available in a particular country. ​ With respect to our “soft” JAK inhibitor development program, we own numerous issued patents and pending applications in the United States and foreign countries to novel “soft” JAK inhibitors, various methods of use and synthesis that expire, or would expire, between 2038 and 2044, subject to any applicable patent term adjustment or extension that may be available in a particular country.
We also own provisional applications on novel JAK-sparing inhibitors of ITK, including ATI-9494, which if issued, would expire in 2046. ​ With respect to our bispecific antibody development program, we exclusively license pending applications in the United States, Europe and other foreign countries directed to such bispecific antibodies, including ATI-052, which, if issued, would naturally expire in 2043, subject to any applicable patent term adjustment or extension that may be available in a particular country. ​ Patents extend for varying periods according to the date of patent filing or grant and the legal term of patents in various countries where patent protection is obtained.
Our approach to achieve this goal includes the following key elements: ​ ● Research and development expertise. Our team of scientists and professionals has extensive experience in cell and molecular biology, biochemistry, enzymology, biomarker development, immunology, in vivo efficacy models, structure-based drug design (“SBDD”), and medicinal chemistry.
Our approach to achieving this goal includes the following key elements: ​ ● Leverage discovery, research and development expertise. We have state-of-the-art capabilities and expertise in small molecule and antibody development, including cell and molecular biology, biochemistry, enzymology, biomarker development, immunology, translational research, in vivo efficacy models, structure-based drug design (“SBDD”), and bioanalytical, computational, and medicinal chemistry.
(“CTTQ”) or its affiliates. ​ Bosakitug, an Investigational, Novel Anti-TSLP Monoclonal Antibody ​ Bosakitug (ATI-045) is an investigational, novel, humanized anti-TSLP monoclonal antibody that specifically binds to human TSLP with high affinity and long residence time, blocking its interaction with the receptor complex and disrupting signal transduction.
Our Key Product Candidate Pipeline ​ Our pipeline of key product candidates is summarized in the table below. ​ Bosakitug, an Investigational, Novel Anti-TSLP Monoclonal Antibody ​ Bosakitug (ATI-045) is an investigational, novel, humanized anti-TSLP monoclonal antibody that specifically binds to human TSLP, blocking its interaction with the receptor complex and disrupting signal transduction.
Patent and Trademark Office (“USPTO”) and its foreign counterparts. ​ With respect to our TSLP monoclonal antibody development program, we exclusively license pending applications in the United States, European Union, Japan and South Korea directed to TSLP monoclonal antibodies, including bosakitug, which, if issued, would naturally expire in 2040, subject to any applicable patent term adjustment or extension that may be available in a particular country.
Patent and Trademark Office (“USPTO”) and its foreign counterparts. ​ With respect to our TSLP monoclonal antibody development program, we exclusively license an issued patent and pending applications in the United States, European Union, Japan and South Korea directed to TSLP monoclonal 9 Table of Contents antibodies, including bosakitug.
Penalties for federal civil False Claims Act violations may include up to three times the actual damages sustained by the government, plus mandatory civil penalties for each separate false claim, the potential for exclusion from participation in federal health care programs, and, although the federal civil False Claims Act is a civil statute, False Claims Act violations may also implicate various federal criminal statutes. ​ 17 Table of Contents The federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) prohibits among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any health care benefit program, including private third-party payors, knowingly and willfully embezzling or stealing from a health care benefit program, willfully obstructing a criminal investigation of a health care offense, and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for health care benefits, items or services.
In addition, activities relating to the sale and marketing of products are subject to scrutiny under such laws. ​ The federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) prohibits among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any health care benefit program, including private third-party payors, knowingly and willfully embezzling or stealing from a health care benefit program, willfully obstructing a criminal investigation of a health care offense, and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for health care benefits, items or services.
In addition to identifying and developing our novel product candidates, we are pursuing strategic alternatives, including identifying and consummating transactions with third-party partners, to further develop, obtain marketing approval for and/or commercialize our novel product candidates.
We intend to identify and consummate transactions with third-party partners to further develop, obtain marketing approval for and/or commercialize our product candidates.
ATI-052 utilizes the same TSLP as bosakitug but is engineered to bind more tightly to the neonatal Fc receptor (“FcRn”), potentially extending its half-life. ATI-052 has the potential to treat a variety of atopic, immunologic and respiratory diseases. ​ We plan to submit an Investigational New Drug (“IND”) application for ATI-052 in the first quarter of 2025.
ATI-052 utilizes the same TSLP antigen-binding fragment (“Fab”) as bosakitug but is engineered to bind more tightly to the neonatal Fc receptor (“FcRn”), potentially extending its half-life. In addition, the AQQ mutation in the Fc limits effector functionality, reducing off-target binding and potential toxicity. ATI-052 has the potential to treat a variety of atopic, immunologic and respiratory diseases.
In addition, our team has broad experience in clinical development and strategy across atopic, respiratory and immunologic diseases. ● Develop innovative biologic product candidates targeting validated pathways. We are advancing biologics programs focused on well-characterized pathways in immuno-inflammatory diseases. Our approach leverages established biological targets while incorporating novel mechanisms and dual-targeting strategies to potentially enhance therapeutic outcomes.
In addition, our team of scientists and professionals has broad experience in clinical development and strategy across atopic, respiratory, inflammatory and immunologic diseases. ● Develop innovative biologic product candidates targeting validated pathways. We are advancing biologics programs comprising monoclonal and multispecific antibodies targeting well-characterized pathways in immuno-inflammatory diseases.
In addition, increasing emphasis on managed care in the United States will continue to put pressure on the pricing of pharmaceutical products. Cost control initiatives could decrease the price that our potential third-party partners could receive for any of our product candidates, if approved, and could adversely affect our profitability.
Cost control initiatives could decrease the price that our potential third-party partners could receive for any of 20 Table of Contents our product candidates, if approved, and could adversely affect our profitability.
We are exploring the kinome, a subset of the human genome that consists of a collection of 518 protein kinases, one of the largest of all human gene families, responsible for signal transduction controlling cellular responses. Classified into eight major groups based on their structural similarity to each other, kinases are key regulators of cell function in many cell processes.
We are exploring the kinome, a subset of the human genome and one of the largest of all human gene families, responsible for signal transduction controlling cellular responses. Kinases are key regulators of cell function in many cell processes. By transferring phosphates to other molecules, kinases can induce a cellular response to environmental cues.
Any such approved importation plans, if implemented, may result in lower drug prices for products covered by those programs. ​ 19 Table of Contents The Affordable Care Act, the IRA, as well as other federal and state health care reform measures that have been and may be adopted in the future, could harm our future revenue.
Any such importation plans, if implemented, may result in lower drug prices for products covered by those programs. ​ Existing and future federal and state health care reform measures could harm our future revenue. Additional legislative actions may be taken in the future which may change current regulations, guidance and interpretations.
Targeting kinase complexes with small molecule drugs designed to either stabilize (molecular glue) and/or generate inactive complexes provides several potential advantages over those designed against a single protein target including: (1) utilizing a more physiological translatable complex as the target, (2) providing novel protein interfaces devoid of competing endogenous ligands to target, and (3) identifying new chemical matter and modalities for difficult to drug kinase targets.
We then assess the function of the newly created compounds with physiologically relevant custom assays that effectively translate to human diseases. ​ Molecular Glue/Complex Targeted Inhibitors (small molecules that stabilize kinases in an inactive confirmation or ready them for degradation): Targeting kinase complexes with small molecule drugs designed to either stabilize (molecular glue) and/or generate inactive complexes provides several potential advantages over those designed against a single protein target including: (1) utilizing a more physiological translatable complex as the target, (2) providing novel protein interfaces devoid of competing endogenous ligands to target, and (3) identifying new chemical matter and 7 Table of Contents modalities for difficult to drug kinase targets. ​ Tissue Specific Inhibitors (small molecules that inhibit kinases in target tissues with minimal systemic exposure): Target-specific inhibitors are drugs, often small molecules, designed to block specific proteins (like kinases) or pathways driving diseases including immunologic and inflammatory disorders.
Our potential third-party partners’ arrangements with third-party payors, health care professionals and customers may expose them to broadly applicable fraud and abuse and other health care laws and regulations, including, without limitation, the federal Anti-Kickback Statute and the federal civil False Claims Act, that may constrain the business or financial arrangements and relationships through which they sell, market and distribute any product candidates for which marketing approval is obtained.
However, there is no guarantee that a product will be considered by the EEA’s regulatory authorities to be an NCE, and products may not qualify for data exclusivity. ​ Other Health Care Laws ​ Our current and future activities, as well as our potential third-party partners’ activities, may, directly or indirectly, expose us and them to broadly applicable fraud and abuse and other health care laws and regulations, including, without limitation, the federal Anti-Kickback Statute and the federal civil False Claims Act, that may constrain the business or financial arrangements and relationships through which any products for which marketing approval is obtained is sold, marketed and distributed.
By transferring phosphates to other molecules, kinases can induce a cellular response to environmental cues. Dysregulation and/or activating/blocking mutations in kinases can disrupt normal cell signaling and lead to diseases ranging from autoimmune diseases to diabetes and cancer, making them important targets for drug development.
Dysregulation and/or activating/blocking mutations in kinases can disrupt normal cell signaling and lead to diseases including autoimmune, cardiovascular, inflammatory, and metabolic disorders, making them important targets for drug development.
In addition, we are aware of a number of companies, including large pharmaceutical companies, such as Amgen (rocatinlimab), Eli Lilly (ucenprubart), LEO Pharma A/S (tralokinumab), Pfizer (PF-07264660; PF-07275315), KeyMed Biosciences (stapokibart), and Tavotek Biotherapeutics (TAVO101) developing and conducting clinical trials for investigational product candidates that could compete with bosakitug in each case if approved, for the treatment of atopic dermatitis.
In addition, we are aware of a number of companies developing and conducting clinical trials for investigational product candidates that could compete with bosakitug and ATI-052 in each case if approved, for the treatment of atopic dermatitis.
TSLP is a key mediator in various inflammatory conditions, making it an attractive therapeutic target. We are also advancing ATI-052, a novel bispecific antibody that simultaneously targets both TSLP and interleukin-4 receptor (“IL4R”), potentially offering enhanced efficacy through dual pathway inhibition.
We are also advancing ATI-052, a novel bispecific antibody that simultaneously targets both TSLP and interleukin-4 receptor (“IL-4R a ”), which blocks signaling of both IL-4 and IL-13, potentially offering enhanced efficacy through dual pathway inhibition.
Violations of this law are punishable by up to ten years in prison, and can also result in criminal fines, civil monetary penalties, administrative penalties and exclusion from participation in federal health care programs. ​ Additionally, the intent standard under the Anti-Kickback Statute was amended by the Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the “Affordable Care Act”), to a stricter standard such that a person or entity no longer needs to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.
Several courts have interpreted the statute’s intent requirement to mean that if any one purpose of an arrangement involving remuneration is to induce referrals of federal health care covered business, the Anti-Kickback Statute has been violated. ​ Additionally, the intent standard under the Anti-Kickback Statute was amended by the Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the “Affordable Care Act”), to a stricter standard such that a person or entity no longer needs to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.
We also provide contract research services to third parties enabled by our early-stage research and development expertise. ​ Our Approach ​ We are dedicated to developing a pipeline of novel product candidates to address the needs of patients with immuno-inflammatory diseases who lack satisfactory treatment options .
We are seeking to identify and consummate transactions with third-party partners to further develop, obtain marketing approval for and/or commercialize our novel product candidates. ​ Our Approach ​ We are dedicated to developing a pipeline of novel product candidates to address the needs of patients with immuno-inflammatory diseases who lack satisfactory treatment options .
This complementary approach to our small molecule programs enables us to pursue optimal therapeutic modalities for each target and indication of interest. ​ We intend to evaluate both internal and external development options, including strategic partnerships, for these assets. ​ Manufacturing and Supply ​ We do not have any manufacturing facilities.
This complementary approach to our small molecule programs enables us to pursue optimal therapeutic modalities for each target and indication of interest.
Our product candidates, if approved, will compete with existing treatments and new treatments that may become available in the future. ​ With respect to bosakitug, we are aware of a number of companies with monoclonal antibodies also targeting the TSLP ligand, and one company targeting the TSLP receptor, including Amgen and AstraZenaca (tezepelumab), KeyMed Biosciences (CM-326), Uniquity Bio (solrikitug), Windward Bio (WIN378), Tavotek Biotherapeutics (TAVO101), GlaxoSmithKline (“GSK”) (GSK5784283), and UpStream Bio (verekutig).
Our product candidates, if approved, will compete with existing treatments and new treatments that may become available in the future. ​ With respect to bosakitug, we are aware of a number of companies with monoclonal antibodies also targeting the TSLP ligand, and one company targeting the TSLP receptor, including Amgen and AstraZeneca (Tezepelumab, AMG-104), KeyMed Biosciences (CM326), Uniquity Bio (solrikitug), Windward Bio and Harbour BioMed and Kelun-Biotech (WIN378/HBM9378), GlaxoSmithKline (“GSK”) (GSK5784283), Generate Biomedicines (GB-0895), Qyuns 8 Table of Contents Therapeutics (QX008N), and UpStream Bio (verekutig). ​ With respect to ATI-052, our primary competitors include those developing multi-specific antibodies designed to inhibit both TSLP and IL-4Rα activity, such as Innovent Biologics (IBI3002) and Pfizer (PF-07275315). ​ Competitors for ATI-052 may also include those developing or commercializing multi-specific antibodies targeting two or more of TSLP, IL-4, and IL-13.
All of our employees are located in the United States. None of our employees are represented by a labor union or covered by a collective bargaining agreement. We consider our relationship with our employees to be good. ​ Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing and integrating our existing and new employees, advisors and consultants.
None of our employees are represented by a labor union or covered by a collective bargaining agreement. We consider our relationship with our employees to be good.
Item 1. Business ​ Overview ​ We are a clinical-stage biopharmaceutical company focused on developing novel small and large molecule product candidates for immuno-inflammatory diseases. Our proprietary KINect drug discovery platform combined with our preclinical development capabilities allows us to identify and advance potential product candidates that we may develop independently or in collaboration with third parties.
Item 1. Business ​ Overview ​ We are a clinical-stage biopharmaceutical company focused on discovering and developing novel small and large molecule product candidates for immuno-inflammatory diseases.
We also own pending applications in the United States and foreign countries directed to crystal forms of lepzacitinib and directed to methods of using lepzacitinib and topical formulations, which, if issued, would expire in 2041 and 2042, respectively, subject to any applicable adjustment or extension.
We also own pending PCT applications directed to crystal forms of ATI-2138 and to methods of synthesizing such ITK inhibitors, including ATI-2138, which if issued, would expire in 2044, and to methods of using ATI-2138 for treating atopic dermatitis, which if issued, would expire in 2045, in each case subject to any applicable adjustment or extension.
These novel approaches are currently being utilized to prosecute additional validated, difficult to drug kinase targets with the goal of demonstrating potential platform utility. ​ Reversible and Irreversible Covalent Inhibitors: Central to the KINect platform is our novel chemical library of several hundred compounds specifically designed to target non-catalytic cysteine residues near the adenosine triphosphate (“ATP”) binding site of more than 300 kinases.
Our small molecule discovery efforts center on targeting kinases that play pivotal roles in various inflammatory and autoimmune pathways. ​ Reversible and Irreversible Covalent Inhibitors (small molecules inhibiting kinases by forming irreversible bonds with a cysteine at the active site): Central to the KINect platform is our novel chemical library of several hundred compounds specifically designed to target non-catalytic cysteine residues near the adenosine triphosphate (“ATP”) binding site of more than 300 kinases.
With respect to bosakitug as a potential treatment for asthma, existing therapeutics for asthma include controller medications, reliever medications and more recently, biologics from Genentech and Novartis (omalizumab), Sanofi and Regeneron (dupilumab), GSK (mepolizumab), and AstraZeneca (benralizumab), with other products in development, including by UpStream Bio (verekutig), Amgen and AstraZeneca (tezepelumab), KeyMed Biosciences (CM-326), Uniquity Bio (solrikitug), Sanofi (rilzabrutinib), GSK (GSK5784283), and Windward Bio (WIN378).
With respect to ATI-052 as a potential treatment for asthma, existing therapeutics for asthma include controller medications, reliever medications, as well as biologics from Genentech and Novartis (omalizumab), Sanofi and Regeneron (dupilumab), GSK (mepolizumab, depemokimab), Amgen and AstraZeneca (tezepelumab), and AstraZeneca (benralizumab), with other products in development. ​ With respect to ATI-2138, there are several companies that are developing or have approved drugs that target either ITK or JAK that could compete with ATI-2138, if approved.
Through our integrated discovery platform, we can progress biologics candidates from concept through lead optimization, employing robust screening cascades and protein characterization techniques to identify molecules with desired therapeutic properties.
Through our integrated discovery approach, we can progress product candidates from concept through lead optimization, employing robust screening cascades and protein characterization techniques to identify molecules with desired therapeutic properties. ​ Our KINect platform allows us to address challenges associated with difficult to drug kinases including selectivity and biochemical efficiency, through a unique combination of our proprietary chemical library of kinase inhibitors, our novel approaches to inhibitor modalities, our expertise in SBDD, and our custom kinase assays.
Failure to submit timely, accurately and completely the required information for all payments, transfers of value and ownership or investment interests may result in civil monetary penalties for “knowing failures.” Certain states also mandate implementation of compliance programs, impose restrictions on drug manufacturer marketing practices, require registration of certain employees engaged in marketing activities in the location, and/or require the tracking and reporting of gifts, compensation and other remuneration to health care professionals, including physicians. ​ We have developed a comprehensive compliance program that establishes internal controls to facilitate adherence to the rules and program requirements to which we are subject.
Certain states also mandate implementation of compliance programs, impose restrictions on drug manufacturer marketing practices, require registration of certain employees engaged in marketing activities in the location, and/or require the tracking and reporting of gifts, compensation and other remuneration to health care professionals, including physicians. ​ 17 Table of Contents We may also be subject to data privacy and security regulation by both the federal government and the states in which we conduct our business.
Our approach involves the following mechanisms: (1) reversible and irreversible covalent inhibitors, (2) molecular glue/complex targeted inhibitors and (3) targeted protein degraders.
Our approach involves the following mechanisms: (1) reversible and irreversible covalent inhibitors, (2) molecular glue/complex targeted inhibitors, (3) tissue specific inhibitors, and (4) targeted protein degraders. These novel approaches are currently being utilized to prosecute additional validated, difficult to drug kinase targets with the goal of demonstrating broad target utility.
We plan to initiate a Phase 2b trial of bosakitug in patients with moderate to severe atopic dermatitis in the first half of 2025. 5 Table of Contents Bosakitug is also currently being evaluated in multiple Phase 2 trials in severe asthma, chronic rhinosinusitis with nasal polyps (“CRSwNP”) and moderate to severe chronic obstructive pulmonary disease (“COPD”) in China by CTTQ.
Bosakitug is also currently being studied in severe asthma, chronic rhinosinusitis with nasal polyps and moderate to severe chronic obstructive pulmonary disease in China by CTTQ. CTTQ licenses bosakitug from Biosion in Greater China.
It is unclear how such challenges and any additional health care reform measures of the second Trump administration will impact the Affordable Care Act and our business. ​ In addition, other legislative changes have been proposed and adopted since the Affordable Care Act was enacted.
We expect that additional United States federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that the federal government will pay for healthcare products and services. ​ In addition, other legislative changes have been proposed and adopted since the Affordable Care Act was enacted.
The biologics market has grown significantly, with monoclonal antibodies representing a major segment of U.S. Food and Drug Administration (“FDA”) approved therapeutics. Our biologics pipeline includes bosakitug (ATI-045), an anti-thymic stromal lymphopoietin (“TSLP”) monoclonal antibody which has unique differentiation demonstrated by its slow dissociation rate, high residence time and high potency.
Our biologics pipeline includes bosakitug (ATI-045), an anti-thymic stromal lymphopoietin (“TSLP”) monoclonal antibody which has unique differentiation demonstrated by its low dissociation rate, long residence time and high potency. TSLP, a master regulator of type 2 (“Th2”) immune responses, is a broadly active key mediator in various inflammatory conditions, making it an attractive therapeutic target.
This mechanism prevents a broad range of immune cells targeted by TSLP from releasing proinflammatory cytokines. Bosakitug has the potential to treat a variety of atopic, immunologic and respiratory diseases. We exclusively license global rights (excluding Greater China) to bosakitug from Biosion, Inc. (“Biosion”).
The high affinity and low dissociation observed with bosakitug may be the result of unique biparatopic binding to both the N- and C-terminus of TSLP. Bosakitug has the potential to treat a variety of atopic, immunologic and respiratory diseases. We exclusively license global rights (excluding Mainland China, Macau, Hong Kong and Taiwan (“Greater China”)) to bosakitug from Biosion, Inc. (“Biosion”).
HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act (“HITECH”) and their implementing regulations, including the final omnibus rule published on January 25, 2013, mandates, among other things, the adoption of uniform standards for the electronic exchange of information in common health care transactions, as well as standards relating to the privacy and security of individually identifiable health information, which require the adoption of administrative, physical and technical safeguards to protect such information.
HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act (“HITECH”) and their implementing regulations, among other things, imposes standards relating to the privacy and security of individually identifiable health information on HIPAA covered entities, which include certain healthcare providers, healthcare clearing houses and health plans, and individuals and entities that provide services on their behalf that involve individually identifiable health information, known as business associates, as well as their covered subcontractors.
For example, the IRA, among other things, (1) directs HHS to negotiate the price of certain single-source drugs and biologics that have been on the market for at least 7 years covered under Medicare, and (2) imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation.
HHS has also been empowered to negotiate the price of certain single-source drugs that have been on the market for at least seven (7) years covered under Medicare as part of the Medicare Drug Price Negotiation Program. Each year up to twenty (20) products will be selected by HHS for the Medicare Drug Price Negotiation Program.
Secondary endpoints include EASI response (EASI-50, EASI-75, EASI-90), validated IGA response, body surface area response and other pertinent efficacy related measures. We expect to announce top-line data in the first half of 2025. We are also exploring the potential of ATI-2138 in additional indications that are relevant to the mechanism of action, including alopecia areata and vitiligo.
Secondary endpoints at week 24 include EASI response (EASI-50, EASI-75, EASI-90), validated IGA response, body surface area (“BSA”) response, and Peak Pruritus Numerical Rating Scale (“PP-NRS”) score, relative to baseline. We expect to announce top-line data in the second half of 2026.
“Soft” JAK inhibitors are designed to be topically applied and active in the skin, but rapidly metabolized and inactivated when they enter the bloodstream, which may result in low systemic exposure. ​ In January 2024, we announced positive top-line results from our Phase 2b multicenter, randomized, double-blind, vehicle-controlled, parallel-group trial of lepzacitinib in patients with mild to severe atopic dermatitis.
“Soft” JAK inhibitors are designed to be topically applied and active in the skin, but rapidly metabolized and inactivated when they enter the bloodstream, which may result in low systemic exposure. We are currently seeking a global development and commercialization partner for this program (excluding Greater China). In 2022, we granted Pediatrix Therapeutics, Inc.
Further, we own one U.S. patent and a pending patent application in the United States directed to certain methods of manufacturing zunsemetinib, as well as pending applications in the United States and Japan to crystal forms of zunsemetinib, which, if issued, would each expire in 2041, subject to any applicable adjustment or extension.
Our issued U.S. patent expires in 2043 with its patent term adjustment, and the pending applications in the United States and foreign countries, if issued, would naturally expire in 2040, subject to any applicable patent term adjustment or extension that may be available in a particular country.
We are conducting a Phase 2a open-label trial to investigate the safety, tolerability, PK, efficacy, and PD of ATI-2138 administered over 12 weeks in approximately 15 patients in the United States with moderate to severe atopic dermatitis. The primary endpoints are safety related parameters.
The trial met the primary and key secondary endpoints. The trial was designed to investigate the safety, tolerability, PK, efficacy, and PD of 10 mg of ATI-2138 administered twice daily (“BID”) for 12 weeks. The trial enrolled 14 patients in the United States, with 12 patients completing treatment and up to 10 patients available for the per protocol analysis.

… 94 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

139 edited+53 added−31 removed298 unchanged
Biggest changeThe results from an open-label trial may not be predictive of future clinical trial results of a product candidate when studied in a controlled environment with a placebo or active control. ​ We may experience numerous unforeseen events during or as a result of clinical trials that could delay or prevent our ability to pursue strategic alternatives, including identifying and consummating transactions with third-party partners, to further develop, obtain marketing approval for and/or commercialize our product candidates, including: ​ ● regulators or IRBs may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site; ● we may experience delays in reaching, or fail to reach, agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites or prospective contract research organizations (“CROs”), the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; ● clinical trials of our product candidates may produce negative or inconclusive results, including failure to demonstrate statistical significance, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon drug development programs; ● the number of patients required for clinical trials of our product candidates may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate, or participants may drop out of these clinical trials or fail to return for post-treatment follow-up at a higher rate than we anticipate; ● patients or clinical trial investigators may not comply with or may deviate from the clinical trial protocol, including failing to follow specified testing procedures, schedules, or other protocol requirements, which could impact the integrity of clinical trial data and potentially jeopardize the trial; ● while a product candidate may show evidence of clinical activity, we may experience a high placebo effect which will make it difficult to show a statistically significant effect of the product candidate as compared to the control arm; 28 Table of Contents ● our product candidates may have undesirable side effects or other unexpected characteristics, causing us or our investigators, regulators or IRBs to suspend or terminate the trials; ● our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; ● regulators or IRBs may require that we or our investigators suspend or terminate clinical development for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks; ● the cost of clinical trials of our product candidates may be greater than we anticipate; and ● the supply or quality of our product candidates or other materials necessary to conduct clinical trials of our product candidates may be insufficient or inadequate. ​ We could also encounter delays if a clinical trial is suspended or terminated by us, by the IRBs of the institutions in which such trials are being conducted, by a data safety monitoring board for such trial or by the FDA or other regulatory authorities.
Biggest changeThe results from an open-label trial may not be predictive of future clinical trial results of a product candidate when studied in a controlled environment with a placebo or active control. ​ We may experience numerous unforeseen events during or as a result of clinical trials that could delay or prevent our ability to identify and consummate transactions with third-party partners to further develop, obtain marketing approval for and/or commercialize our product candidates, including: ​ ● regulators or IRBs may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site; ● we may experience delays in reaching, or fail to reach, agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites or prospective contract research organizations (“CROs”), the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; ● clinical trials of our product candidates may produce negative or inconclusive results, including failure to demonstrate statistical significance, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon drug development programs; ● early-stage clinical trial results may be subject to variability due to small sample size and may not be indicative of results from future clinical trials; ● the number of patients required for clinical trials of our product candidates may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate, or participants may drop out of these clinical trials or fail to return for post-treatment follow-up at a higher rate than we anticipate; ● patients or clinical trial investigators may not comply with or may deviate from the clinical trial protocol, including failing to follow specified testing procedures, schedules, or other protocol requirements, which could impact the integrity of clinical trial data and potentially jeopardize the trial; ● while a product candidate may show evidence of clinical activity, we may experience a high placebo effect which will make it difficult to show a statistically significant effect of the product candidate as compared to the control arm; ● our product candidates may have undesirable side effects or other unexpected characteristics, causing us or our investigators, regulators or IRBs to suspend or terminate the trials; ● third parties conducting clinical trials using our product candidates may produce issues such as poor data integrity, safety concerns, protocol violations, or failure to meet endpoints in these third-party trials, which could adversely impact the development timeline and regulatory approval process for those product candidates in other indications or territories, require additional studies, create negative market perception affecting future commercial potential, result in increased regulatory scrutiny, or impact our ability to identify and consummate transactions with third-party partners to further develop, obtain marketing approval for and/or commercialize such product candidates; ● our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; ● regulators or IRBs may require that we or our investigators suspend or terminate clinical development for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks; ● the cost of clinical trials of our product candidates may be greater than we anticipate; and ● the supply or quality of our product candidates or other materials necessary to conduct clinical trials of our product candidates may be insufficient or inadequate. ​ We could also encounter delays if a clinical trial is suspended or terminated by us, by the IRBs of the institutions in which such trials are being conducted, by a data safety monitoring board for such trial or by the FDA or other regulatory authorities.
Our ability to earn revenue from these arrangements will depend on our partners’ abilities to successfully perform the functions assigned to them in these arrangements. ​ Partnerships involving our product candidates would pose the following risks to us: ​ ● partners have significant discretion in determining the efforts and resources that they will apply to these arrangements; ● partners may not perform their obligations as expected; ● partners may not pursue development, marketing approval or commercialization of any product candidates that achieve marketing approval or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the partners’ strategic focus or available funding, or external factors, such as an acquisition, that divert resources or create competing priorities; ● partners may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing; ● partners could independently develop, or develop with third parties, products that compete directly or indirectly with our product candidates if the partners believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours; 37 Table of Contents ● product candidates discovered in collaboration with us may be viewed by our collaborators as competitive with their own products or product candidates, which may cause our partners to cease to devote resources to the development and/or commercialization of our product candidates, if approved; ● a partner with marketing and distribution rights to one or more of our product candidates that achieve marketing approval may not commit sufficient resources to the marketing and distribution of such product candidates; ● disagreements with partners, including disagreements over proprietary rights, contract interpretation or the preferred course of development or commercialization, might cause delays or termination of the research, development or commercialization of product candidates, might lead to additional responsibilities for us with respect to product candidates, or might result in litigation or arbitration, any of which would be time-consuming and expensive; ● partners may not properly maintain or defend our or their intellectual property rights or may use our or their proprietary information in such a way as to invite litigation that could jeopardize or invalidate such intellectual property or proprietary information or expose us to potential litigation; ● partners may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability; and ● partnerships may be terminated for the convenience of the partner and, if terminated, we could be required to raise additional capital to pursue further development and/or commercialization of the applicable product candidates. ​ Partnership agreements may not lead to development, marketing approval or commercialization of product candidates in the most efficient manner or at all.
Our ability to earn revenue from these arrangements will depend on our partners’ abilities to successfully perform the functions assigned to them in these arrangements. ​ Partnerships involving our product candidates would pose the following risks to us: ​ ● partners have significant discretion in determining the efforts and resources that they will apply to these arrangements; ● partners may not perform their obligations as expected; ● partners may not pursue development, marketing approval or commercialization of any product candidates that achieve marketing approval or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the partners’ strategic focus or available funding, or external factors, such as an acquisition, that divert resources or create competing priorities; ● partners may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing; ● partners could independently develop, or develop with third parties, products that compete directly or indirectly with our product candidates if the partners believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours; ● product candidates discovered in collaboration with us may be viewed by our collaborators as competitive with their own products or product candidates, which may cause our partners to cease to devote resources to the development and/or commercialization of our product candidates, if approved; ● a partner with marketing and distribution rights to one or more of our product candidates that achieve marketing approval may not commit sufficient resources to the marketing and distribution of such product candidates; ● disagreements with partners, including disagreements over proprietary rights, contract interpretation or the preferred course of development or commercialization, might cause delays or termination of the research, development or commercialization of product candidates, might lead to additional responsibilities for us with respect to product candidates, or might result in litigation or arbitration, any of which would be time-consuming and expensive; ● partners may not properly maintain or defend our or their intellectual property rights or may use our or their proprietary information in such a way as to invite litigation that could jeopardize or invalidate such intellectual property or proprietary information or expose us to potential litigation; ● partners may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability; and 37 Table of Contents ● partnerships may be terminated for the convenience of the partner and, if terminated, we could be required to raise additional capital to pursue further development and/or commercialization of the applicable product candidates. ​ Partnership agreements may not lead to development, marketing approval or commercialization of product candidates in the most efficient manner or at all.
We are pursuing additional patent protection for our product candidates, such as methods of use, polymorphs and methods of manufacture, that may extend the term of patent protection in select countries.
We are pursuing additional patent protection for our product candidates, such as additional methods of use, polymorphs and methods of manufacture, that may extend the term of patent protection in select countries.
Moreover, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act; ● federal civil and criminal false claims laws, including, without limitation, the federal civil False Claims Act (that can be enforced through civil whistleblower or qui tam actions), and the civil monetary penalties law, which impose criminal and civil penalties, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, including the Medicare and Medicaid programs, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government; ● federal HIPAA, which imposes criminal and civil liability for, among other things, executing a scheme to defraud any health care benefit program or making false statements relating to health care matters.
Moreover, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act; ● federal civil and criminal false claims laws, including, without limitation, the federal civil False Claims Act (that can be enforced through civil whistleblower or qui tam actions), and the civil monetary penalties law, which impose criminal and civil penalties, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, including the Medicare and Medicaid programs, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government; ● HIPAA, which imposes criminal and civil liability for, among other things, executing a scheme to defraud any health care benefit program or making false statements relating to health care matters.
The market price for our common stock may be influenced by many factors, including: ​ ● the commencement, enrollment and/or results of any preclinical studies and clinical trials we may conduct, or changes in the development status of our product candidates; ● any delay in our regulatory filings for any of our product candidates and any adverse development or perceived adverse development with respect to the applicable regulatory authority’s review of such filings, 55 Table of Contents including without limitation the FDA’s issuance of a “refusal to file” letter or a request for additional information; ● adverse results from, delays in or termination of clinical trials; ● adverse regulatory decisions, including failure of any of our product candidates to receive marketing approval; ● unanticipated serious safety concerns related to the use of any product candidate or previously sold commercial product; ● changes in financial estimates by us or by any securities analysts who might cover our stock; ● conditions or trends in our industry; ● changes in the structure of health care payment systems; ● changes in the market valuations of similar companies; ● stock market price and volume fluctuations of comparable companies and, in particular, those that operate in the biotechnology industry; ● publication of research reports about us or our industry or positive or negative recommendations or withdrawal of research coverage by securities analysts; ● announcements by us or our competitors of significant acquisitions, strategic partnerships or divestitures; ● announcements of investigations or regulatory scrutiny of our operations or lawsuits filed against us; ● investors’ general perception of our company and our business; ● recruitment or departure of key personnel; ● overall performance of the equity markets; ● trading volume of our common stock; ● disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technologies; ● significant lawsuits, including patent or stockholder litigation; ● general political and economic conditions; and ● other events or factors, many of which are beyond our control. ​ In the past, stockholders have initiated class action lawsuits against us and other pharmaceutical companies following periods of volatility in the market prices of these companies’ stock.
The market price for our common stock may be influenced by many factors, including: ​ ● the commencement, enrollment and/or results of any preclinical studies and clinical trials we may conduct, or changes in the development status of our product candidates; ● any delay in our regulatory filings for any of our product candidates and any adverse development or perceived adverse development with respect to the applicable regulatory authority’s review of such filings, including without limitation the FDA’s issuance of a “refusal to file” letter or a request for additional information; ● adverse results from, delays in or termination of clinical trials; ● adverse regulatory decisions, including failure of any of our product candidates to receive marketing approval; ● unanticipated serious safety concerns related to the use of any product candidate or previously sold commercial product; ● changes in financial estimates by us or by any securities analysts who might cover our stock; ● conditions or trends in our industry; ● changes in the structure of health care payment systems; 55 Table of Contents ● changes in the market valuations of similar companies; ● stock market price and volume fluctuations of comparable companies and, in particular, those that operate in the biotechnology industry; ● publication of research reports about us or our industry or positive or negative recommendations or withdrawal of research coverage by securities analysts; ● announcements by us or our competitors of significant acquisitions, strategic partnerships or divestitures; ● announcements of investigations or regulatory scrutiny of our operations or lawsuits filed against us; ● investors’ general perception of our company and our business; ● recruitment or departure of key personnel; ● overall performance of the equity markets; ● trading volume of our common stock; ● disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technologies; ● significant lawsuits, including patent or stockholder litigation; ● general political and economic conditions; and ● other events or factors, many of which are beyond our control. ​ In the past, stockholders have initiated class action lawsuits against us and other pharmaceutical companies following periods of volatility in the market prices of these companies’ stock.
Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation; ● HIPAA, as amended by HITECH, and their respective implementing regulations, which impose obligations on covered health care providers, health plans, and health care clearinghouses, as well as their business associates that create, receive, maintain or transmit individually identifiable health information for or on behalf of a covered entity and their subcontractors that use, disclose, access, or otherwise process protected health information, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; ● the federal Open Payments program, created under Section 6002 of the Affordable Care Act (commonly known as the Physician Payments Sunshine Act) and its implementing regulations, which requires specified manufacturers of drugs, devices, biologics or medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to CMS information related to “payments or other transfers of value” made to physicians, which is defined to include doctors, dentists, optometrists, podiatrists and chiropractors, other health care professionals (such as physician assistants and nurse practitioners), and teaching hospitals, and for applicable manufacturers to report annually to CMS information regarding ownership and investment interests held by physicians and their immediate family members; and ● analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, which may apply to sales or marketing arrangements and claims involving health care items or services reimbursed by non-governmental third-party payors, including private insurers; state and foreign laws that require 48 Table of Contents pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to health care providers; state, local and foreign laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other health care providers or marketing expenditures; state laws that require drug manufacturers to report pricing information regarding certain drugs; and/or that require registration of certain employees engaged in marketing activities in the location; and state and foreign laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts. ​ Efforts to ensure that our or our potential third-party partners’ business arrangements with third parties will comply with applicable health care laws and regulations may involve substantial costs.
Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation; ● HIPAA, as amended by HITECH, and their respective implementing regulations, which impose obligations on covered health care providers, health plans, and health care clearinghouses, as well as their business associates that create, receive, maintain or transmit individually identifiable health information for or on behalf of a covered entity and their subcontractors that use, disclose, access, or otherwise process protected health information, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; ● the federal Open Payments program, created under Section 6002 of the Affordable Care Act (commonly known as the Physician Payments Sunshine Act) and its implementing regulations, which requires specified manufacturers of drugs, devices, biologics or medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to CMS information related to “payments or other transfers of value” made to physicians, which is defined to include doctors, dentists, optometrists, podiatrists and chiropractors, other health care professionals (such as physician assistants and nurse practitioners), and teaching hospitals, and for applicable manufacturers to report annually to CMS information regarding ownership and investment interests held by physicians and their immediate family members; and ● analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, which may apply to sales or marketing arrangements and claims involving health care items or services reimbursed by non-governmental third-party payors, including private insurers; state and foreign laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to health care providers; state, local and foreign laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other health care providers or marketing expenditures; state laws that require drug manufacturers to report pricing information regarding certain drugs; and/or that require registration of certain employees engaged in marketing activities in the location; and state and foreign laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts. ​ Efforts to ensure that our or our potential third-party partners’ business arrangements with third parties will comply with applicable health care laws and regulations may involve substantial costs.
In addition, under Section 382 of the Internal Revenue Code of 1986, as amended, and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50% change, by value, in its equity ownership over a three-year period, the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change income may be limited.
In addition, under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50% change, by value, in its equity ownership over a three-year period, the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change income may be limited.
The following examples are illustrative: ​ ● we, our licensors or any potential third-party partners might not have been the first to make the inventions covered by the issued patents or pending patent applications that we own; ● we, our licensors or any potential third-party partners might not have been the first to file patent applications covering certain of our inventions; ● others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; ● it is possible that our pending patent applications will not lead to issued patents; ● issued patents that we own or exclusively license may not provide us with any competitive advantages, or may be held invalid or unenforceable as a result of legal challenges; ● our competitors might conduct research and development activities in the United States and other countries that provide a safe harbor from patent infringement claims for certain research and development activities, as well as in countries where we do not have patent rights, and then use the information learned from such activities to develop competitive products for sale in major commercial markets; and ● we may develop additional proprietary technologies that are not patentable. ​ Risks Related to Regulatory Approval of Our Product Candidates and Other Legal Compliance Matters ​ If our potential third-party partners are not able to obtain, or if there are delays in obtaining, required regulatory approvals, our product candidates will not be able to be commercialized, and our ability to earn revenue from arrangements with such third-party partners will be materially impaired. ​ Our product candidates and the activities associated with their development and commercialization, including their design, testing, manufacture, safety, efficacy, recordkeeping, labeling, storage, approval, advertising, promotion, sale and distribution, are subject to comprehensive regulation by the FDA, other regulatory agencies in the United States and similar regulatory authorities outside the United States.
The following examples are illustrative: ​ ● we, our licensors or any potential third-party partners might not have been the first to make the inventions covered by the issued patents or pending patent applications that we own; ● we, our licensors or any potential third-party partners might not have been the first to file patent applications covering certain of our inventions; ● others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; ● it is possible that our pending patent applications will not lead to issued patents; 44 Table of Contents ● issued patents that we own or exclusively license may not provide us with any competitive advantages, or may be held invalid or unenforceable as a result of legal challenges; ● our competitors might conduct research and development activities in the United States and other countries that provide a safe harbor from patent infringement claims for certain research and development activities, as well as in countries where we do not have patent rights, and then use the information learned from such activities to develop competitive products for sale in major commercial markets; and ● we may develop additional proprietary technologies that are not patentable. ​ Risks Related to Regulatory Approval of Our Product Candidates and Other Legal Compliance Matters ​ If our potential third-party partners are not able to obtain, or if there are delays in obtaining, required regulatory approvals, our product candidates will not be able to be commercialized, and our ability to earn revenue from arrangements with such third-party partners will be materially impaired. ​ Our product candidates and the activities associated with their development and commercialization, including their design, testing, manufacture, safety, efficacy, recordkeeping, labeling, storage, approval, advertising, promotion, sale and distribution, are subject to comprehensive regulation by the FDA, other regulatory agencies in the United States and similar regulatory authorities outside the United States.
Our actual or perceived failure (or that of the third parties with whom we work) to comply with such obligations could lead to regulatory investigations or actions; litigation (including class claims) and mass arbitration demands; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; and other adverse business consequences. ​ In the ordinary course of business, we collect, receive, store, process, generate, use, transfer, disclose, make accessible, protect, secure, dispose of, transmit, and share (collectively, “process”) personal data and other sensitive information, including proprietary and confidential business data, trade secrets, intellectual property, personnel data, data from participants in our clinical trials, and other sensitive third-party data (collectively, “sensitive data”).
Our actual or perceived failure (or that of the third parties with whom we work) to comply with such obligations could lead to regulatory investigations or actions; litigation (including class claims) and mass arbitration demands; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; and other adverse business consequences. ​ In the ordinary course of business, we collect, receive, store, process, generate, use, transfer, disclose, make accessible, protect, secure, dispose of, transmit, and share (collectively, “process”) personal data and other sensitive information, including proprietary and confidential business data, trade secrets, intellectual property, data about our personnel, data about participants in our clinical trials, and other sensitive third-party data (collectively, “sensitive data”).
The FDA or an IRB may also require that we suspend, discontinue, or limit our clinical trials based on safety information. Such findings could further result in regulatory authorities failing to provide marketing authorization for our product candidates.
The FDA or an IRB may also require that we suspend, discontinue, or limit our clinical trials based on nonclinical or clinical safety information. Such findings could further result in regulatory authorities failing to provide marketing authorization for our product candidates.
Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”), or comparable foreign regulations; ● challenges enforcing contractual and intellectual property rights, especially in those foreign countries that do not respect and protect intellectual property rights to the same extent as the United States; ● production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; ● logistical challenges resulting from distributing our product candidates to foreign countries; and ● business interruptions resulting from geo-political actions, including war and terrorism. ​ These and other risks associated with international operations may compromise our ability to earn revenue from arrangements with potential third-party partners for our product candidates. ​ 46 Table of Contents Any product candidate for which our potential third-party partners obtain marketing approval could be subject to post-marketing restrictions or recall or withdrawal from the market, and our potential third-party partners may be subject to penalties if they fail to comply with regulatory requirements or if they experience unanticipated problems with our product candidates, when and if any of them are approved.
Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”), or comparable foreign regulations; ● challenges enforcing contractual and intellectual property rights, especially in those foreign countries that do not respect and protect intellectual property rights to the same extent as the United States; ● production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; ● logistical challenges resulting from distributing our product candidates to foreign countries; and ● business interruptions resulting from geo-political actions, including war and terrorism. ​ These and other risks associated with international operations may compromise our ability to earn revenue from arrangements with potential third-party partners for our product candidates. ​ Any product candidate for which our potential third-party partners obtain marketing approval could be subject to post-marketing restrictions or recall or withdrawal from the market, and our potential third-party partners may be subject to penalties if they fail to comply with regulatory requirements or if they experience unanticipated problems with our product candidates, when and if any of them are approved.
For example, the California Consumer Privacy Act of 2018 (“CCPA”), applies to personal data of consumers, business representatives, and employees who are California residents, and requires businesses to provide specific disclosures in privacy notices and honor requests of such individuals to exercise certain privacy rights.
For example, the California Consumer Privacy Act (“CCPA”), applies to personal data of consumers, business representatives, and employees who are California residents, and requires businesses to provide specific disclosures in privacy notices and honor requests of such individuals to exercise certain privacy rights.
Any similar new laws may result in additional reductions in Medicare and other health care funding, which could have a material adverse effect on our ability to earn revenue from arrangements with our potential third-party partners for our product candidates. ​ We expect that the Affordable Care Act, as well as other health care reform measures that may be adopted in the future, may result in more rigorous coverage criteria and in additional downward pressure on the price that our potential third-party partners receive for any approved product candidate.
Any similar new laws may result in additional reductions in Medicare and other health care funding, which could have a material adverse effect on our ability to earn revenue from arrangements with our potential third-party partners for our product candidates that receive marketing approval. ​ We expect that the Affordable Care Act, as well as other health care reform measures that may be adopted in the future, may result in more rigorous coverage criteria and in additional downward pressure on the price that our potential third-party partners receive for any approved product candidate.
Such threats are prevalent and continue to rise, are increasingly difficult to detect, and come from a variety of sources, including traditional computer “hackers,” threat actors, “hacktivists,” organized criminal threat actors, personnel (such as through theft or misuse), sophisticated nation states, and nation-state-supported actors. ​ Some actors now engage and are expected to continue to engage in cyber-attacks, including without limitation nation-state actors for geopolitical reasons and in conjunction with military conflicts and defense activities.
Such threats are prevalent and continue to increase, are increasingly difficult to detect, and come from a variety of sources, including traditional computer “hackers,” threat actors, “hacktivists,” organized criminal threat actors, personnel (such as through theft or misuse), sophisticated nation states, and nation-state-supported actors. ​ Some actors now engage and are expected to continue to engage in cyber-attacks, including without limitation nation-state actors for geopolitical reasons and in conjunction with military conflicts and defense activities.
The success of any product candidates that we develop will depend on several factors, including: ​ ● successful completion of preclinical studies and our clinical trials; ● successful development of manufacturing processes; ● receipt of timely approvals from applicable regulatory authorities; ● the identification and consummation of transactions with third-party partners to further develop, obtain marketing approval for and/or commercialize our product candidates; ● the commercial launch of our product candidates, if approved, by a potential third-party partner; ● our potential third-party partners’ ability to achieve acceptance of our product candidates, if approved, by patients, the medical community and third-party payors, and willingness of patients to pay out of pocket for our product candidates when third-party payor coverage and reimbursement is limited or unavailable; ● our potential third-party partners’ ability to achieve success in educating physicians and patients about the benefits, administration and use of our product candidates, if approved; ● the prevalence and severity of adverse events experienced with our product candidates; ● the availability, perceived advantages, cost, safety and efficacy of alternative treatments for the proposed indications of our product candidates; ● obtaining and maintaining patent, trademark and trade secret protection and regulatory exclusivity for our product candidates and otherwise protecting the intellectual property portfolio; ● maintaining compliance with regulatory requirements, including cGMPs; ● our potential third-party partners’ ability to compete effectively with other treatment procedures; and ● our potential third-party partners’ ability to maintain a continued acceptable safety, tolerability and efficacy profile of our product candidates following marketing approval. ​ Whether marketing approval will be granted is unpredictable and depends upon numerous factors, including the substantial discretion of the regulatory authorities.
The success of any product candidates that we develop will depend on several factors, including: ​ ● successful completion of preclinical studies and our clinical trials; ● successful development of manufacturing processes; ● receipt of timely approvals from applicable regulatory authorities; ● the identification and consummation of transactions with third-party partners to further develop, obtain marketing approval for and/or commercialize our product candidates; 26 Table of Contents ● the commercial launch of our product candidates, if approved, by a potential third-party partner; ● our potential third-party partners’ ability to achieve acceptance of our product candidates, if approved, by patients, the medical community and third-party payors, and willingness of patients to pay out of pocket for our product candidates when third-party payor coverage and reimbursement is limited or unavailable; ● our potential third-party partners’ ability to achieve success in educating physicians and patients about the benefits, administration and use of our product candidates, if approved; ● the prevalence and severity of adverse events experienced with our product candidates; ● the availability, perceived advantages, cost, safety and efficacy of alternative treatments for the proposed indications of our product candidates; ● obtaining and maintaining patent, trademark and trade secret protection and regulatory exclusivity for our product candidates and otherwise protecting the intellectual property portfolio; ● maintaining compliance with regulatory requirements, including cGMPs; ● our potential third-party partners’ ability to compete effectively with other treatments; and ● our potential third-party partners’ ability to maintain a continued acceptable safety, tolerability and efficacy profile of our product candidates following marketing approval. ​ Whether marketing approval will be granted is unpredictable and depends upon numerous factors, including the substantial discretion of the regulatory authorities.
Any marketing approval our potential third-party partners ultimately 45 Table of Contents obtain may be limited or subject to restrictions or post-approval commitments that render the approved drug not commercially viable. ​ If our potential third-party partners experience delays in obtaining approval or if they fail to obtain approval of our product candidates, the commercial prospects for our product candidates may be harmed and our ability to earn revenue from arrangements with such third-party partners will be materially impaired. ​ Failure to obtain marketing approval in international jurisdictions would prevent our product candidates from being marketed abroad. ​ In order to market and sell our product candidates in the European Union and any other jurisdictions outside the United States, our potential third-party partners must obtain separate marketing approvals and comply with numerous and varying regulatory requirements.
Any marketing approval our potential third-party partners ultimately obtain may be limited or subject to restrictions or post-approval commitments that render the approved drug not commercially viable. ​ If our potential third-party partners experience delays in obtaining approval or if they fail to obtain approval of our product candidates, the commercial prospects for our product candidates may be harmed and our ability to earn revenue from arrangements with such third-party partners will be materially impaired. ​ Failure to obtain marketing approval in international jurisdictions would prevent our product candidates from being marketed abroad. ​ In order to market and sell our product candidates in the European Union and any other jurisdictions outside the United States, our potential third-party partners must obtain separate marketing approvals and comply with numerous and varying regulatory requirements.
Such disclosures are costly, and the disclosure or the failure to comply with such requirements could lead to adverse consequences. ​ If we (or a third party upon whom we rely) experience a security incident or are perceived to have experienced a security incident, we may experience adverse consequences, such as government enforcement actions (for example, investigations, fines, penalties, audits, and inspections); additional reporting requirements and/or oversight; restrictions on processing sensitive data (including personal data); litigation (including class claims); indemnification obligations; negative publicity; reputational harm; monetary fund diversions; diversion of management attention; interruptions in our operations (including availability of data); financial loss; and other similar harms.
Such disclosures are costly, and the disclosure or the failure to comply with such requirements could lead to adverse consequences. ​ If we (or a third party with whom we work) experience a security incident or are perceived to have experienced a security incident, we may experience adverse consequences, such as government enforcement actions (for example, investigations, fines, penalties, audits, and inspections); additional reporting requirements and/or oversight; restrictions on processing sensitive data (including personal data); litigation (including class claims); indemnification obligations; negative publicity; reputational harm; monetary fund diversions; diversion of management attention; interruptions in our operations (including availability of data); financial loss; and other similar harms.
Failure to comply with export control and sanctions regulations may expose us or our potential third-party partners to government investigations and penalties. ​ If we are found to be in violation of U.S. sanctions or import or export control laws, it could result in civil and criminal, monetary and non-monetary penalties, including possible incarceration for those individuals responsible for the violations, the loss of export or import privileges and reputational harm. ​ We and our potential third-party partners are subject to anti-corruption and anti-money laundering laws with respect to our and their operations and non-compliance with such laws can subject us to criminal and/or civil liability and harm our business. ​ We and our potential third-party partners are subject to the FCPA, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S.
Failure to comply with export control and sanctions regulations may expose us or our potential third-party partners to government investigations and penalties. ​ 53 Table of Contents If we are found to be in violation of U.S. sanctions or import or export control laws, it could result in civil and criminal, monetary and non-monetary penalties, including possible incarceration for those individuals responsible for the violations, the loss of export or import privileges and reputational harm. ​ We and our potential third-party partners are subject to anti-corruption and anti-money laundering laws with respect to our and their operations and non-compliance with such laws can subject us to criminal and/or civil liability and harm our business. ​ We and our potential third-party partners are subject to the FCPA, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S.
Our business could be harmed if the prevailing party does not offer us a license on commercially reasonable terms. ​ Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. ​ We may not be able to protect our intellectual property rights throughout the world. ​ Filing, prosecuting and defending patents on our product candidates in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States can be less extensive than those in the United States.
Our business could be harmed if the prevailing party does not offer us a license on commercially reasonable terms. ​ 40 Table of Contents Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. ​ We may not be able to protect our intellectual property rights throughout the world. ​ Filing, prosecuting and defending patents on our product candidates in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States can be less extensive than those in the United States.
Even if we are able to establish agreements with third-party manufacturers, reliance on third-party manufacturers entails additional risks, including: ​ ● reliance on the third party for regulatory compliance and quality assurance; ● the possible breach of the manufacturing agreement by the third party; ● the possible misappropriation of our proprietary information, including our trade secrets and know-how; ● the possible increase in costs by our third-party suppliers for the active pharmaceutical ingredients for our 36 Table of Contents product candidates; and ● the possible termination or nonrenewal of the agreement by the third party at a time that is costly or inconvenient for us. ​ Third-party manufacturers may not be able to comply with cGMP regulations or similar regulatory requirements outside the United States.
Even if we are able to establish agreements with third-party manufacturers, reliance on third-party manufacturers entails additional risks, including: ​ ● reliance on the third party for regulatory compliance and quality assurance; ● the possible breach of the manufacturing agreement by the third party; ● the possible misappropriation of our proprietary information, including our trade secrets and know-how; ● the possible increase in costs by our third-party suppliers for the active pharmaceutical ingredients for our product candidates; and ● the possible termination or nonrenewal of the agreement by the third party at a time that is costly or inconvenient for us. ​ Third-party manufacturers may not be able to comply with cGMP regulations or similar regulatory requirements outside the United States.
If our partners do not timely inform us about the status of our product candidates that are the subject of the partnership, we may make operational and investment decisions that we would not have made had we been fully informed, which may have an adverse impact on our business, prospects, financial condition and results of operations. ​ We are dependent on third parties accurately generating and reporting data related to our product candidates, and their conduct could adversely affect our business . ​ We have and may in the future acquire or in-license our product candidates at various stages of development.
If our partners do not timely inform us about the status of our product candidates that are the subject of the partnership, we may make operational and investment decisions that we would not have made had we been fully informed, which may have an adverse impact on our business, prospects, financial condition and results of operations. ​ 38 Table of Contents We are dependent on third parties accurately generating and reporting data related to our product candidates, and their conduct could adversely affect our business . ​ We have and may in the future acquire or in-license our product candidates at various stages of development.
Our future capital requirements will depend on many factors, including: ​ ● the number and development requirements of the product candidates that we may pursue; ● the scope, progress, results and costs of preclinical development, laboratory testing and conducting preclinical and clinical trials for our product candidates; 24 Table of Contents ● the costs, timing and outcome of regulatory review of our product candidates; ● the extent to which we in-license or acquire product candidates and technologies; ● the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims; ● our ability to identify and consummate transactions with third-party partners to further develop, obtain marketing approval for and/or commercialize our product candidates; and ● our ability to earn revenue from licenses to, or partnerships or other arrangements with, third parties. ​ We will require additional capital to develop our product candidates and to support our discovery efforts.
Our future capital requirements will depend on many factors, including: ​ ● the number and development requirements of the product candidates that we may pursue; ● the scope, progress, results and costs of preclinical development, laboratory testing and conducting preclinical and clinical studies for our product candidates; ● the costs, timing and outcome of regulatory review of our product candidates; ● the extent to which we in-license or acquire product candidates and technologies; 23 Table of Contents ● the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims; ● our ability to identify and consummate transactions with third-party partners to further develop, obtain marketing approval for and/or commercialize our product candidates; and ● our ability to earn revenue from licenses to, or partnerships or other arrangements with, third parties. ​ We will require additional capital to develop our product candidates and to support our discovery efforts.
Changes in corporate tax rates, the realization of net deferred tax assets relating to our operations, the taxation of foreign earnings, and the deductibility of expenses could have a material impact on the value of our deferred tax assets, could result in significant one-time charges, and could increase our future U.S. tax expense. ​ We incur significant costs and demands upon management as a result of being a public company. ​ As a public company listed in the United States, we incur, and will continue to incur, particularly if we cease to qualify as a “smaller reporting company,” significant legal, accounting and other costs.
Changes in corporate tax rates, the realization of net deferred tax assets relating to our operations, the taxation of foreign earnings, and the deductibility of expenses could have a material impact 62 Table of Contents on the value of our deferred tax assets, could result in significant one-time charges, and could increase our future U.S. tax expense. ​ We incur significant costs and demands upon management as a result of being a public company. ​ As a public company listed in the United States, we incur, and will continue to incur, particularly if we cease to qualify as a “smaller reporting company,” significant legal, accounting and other costs.
Additionally, certain data privacy and security obligations has required and may in the future require us to implement and maintain specific security measures or industry-standard or reasonable security measures to protect our information technology systems and sensitive data. ​ Applicable data privacy and security obligations may require us to notify relevant stakeholders, including affected individuals, customers, regulators, and investors, of security incidents.
Additionally, certain data privacy and security obligations have required and may in the future require us to implement and maintain specific security measures or industry-standard or reasonable security measures to protect our information technology systems and sensitive data. ​ Applicable data privacy and security obligations may require us to notify relevant stakeholders, including affected individuals, customers, regulators, and investors, of security incidents.
For example, issues such as poor data integrity, safety concerns, protocol violations, or failure to meet endpoints in these third-party trials could adversely impact the development timeline and regulatory approval process for those product candidates in other indications or territories, require additional studies, create negative market perception affecting future commercial potential, impact our ability to pursue strategic alternatives for such product candidates, or result in increased regulatory scrutiny across our programs. ​ Risks Related to Our Intellectual Property ​ If we are unable to obtain and maintain patent protection for our product candidates, or if the scope of the patent protection obtained is not sufficiently broad, our competitors could develop and commercialize technology and drugs similar or identical to ours, and ability to successfully identify a potential third-party partner to commercialize our technology and product candidates may be impaired . ​ Our success depends in large part on our ability to obtain and maintain patent protection in the United States and other countries with respect to our product candidates.
For example, issues such as poor data integrity, safety concerns, protocol violations, or failure to meet endpoints in these third-party trials could adversely impact the development timeline and regulatory approval process for those product candidates in other indications or territories, require additional studies, create negative market perception affecting future commercial potential, impact our ability to identify and consummate transactions for such product candidates, or result in increased regulatory scrutiny across our programs. ​ Risks Related to Our Intellectual Property ​ If we are unable to obtain and maintain patent protection for our product candidates, or if the scope of the patent protection obtained is not sufficiently broad, our competitors could develop and commercialize technology and drugs similar or identical to ours, and ability to successfully identify a potential third-party partner to commercialize our technology and product candidates may be impaired . ​ Our success depends in large part on our ability to obtain and maintain patent protection in the United States and other countries with respect to our product candidates.
In addition, the delisting of our common stock from a national exchange could have a material adverse effect on our access to capital markets, and any limitation on market liquidity or reduction in the price of our common stock as a result of that delisting could adversely affect our ability to raise capital on terms acceptable to us, or at all. ​ 56 Table of Contents Sales of a substantial number of shares of our common stock into the market could cause the market price of our common stock to drop significantly, even if our business is doing well. ​ Sales of a substantial number of shares of our common stock in the public market could occur at any time.
In addition, the delisting of our common stock from a national exchange could have a material adverse effect on our access to capital markets, and any limitation on market liquidity or reduction in the price of our common stock as a result of that delisting could adversely affect our ability to raise capital on terms acceptable to us, or at all. ​ Sales of a substantial number of shares of our common stock into the market could cause the market price of our common stock to drop significantly, even if our business is doing well. ​ Sales of a substantial number of shares of our common stock in the public market could occur at any time.
This may require significant additional costs associated with resolving such action in other jurisdictions and there can be no assurance that the provisions will be enforced by a court in those other jurisdictions. ​ Our amended and restated certificate of incorporation and amended and restated bylaws further provide any person or entity purchasing or otherwise acquiring any interest in shares of our common stock is deemed to have notice of and consented to the foregoing provisions.
This may require significant additional costs associated with resolving such action in other jurisdictions and there can be no assurance that the provisions will be enforced by a court in those other jurisdictions. ​ Our amended and restated certificate of incorporation and amended and restated bylaws further provide any person or entity purchasing or otherwise acquiring any interest in shares of our common stock is deemed to have notice of 58 Table of Contents and consented to the foregoing provisions.
In cases where data from foreign clinical trials are intended to serve as the basis for marketing approval in the United States, the FDA will generally not approve the application on the basis of foreign data alone unless the data are applicable to the U.S. population and U.S. medical practice, the trials were performed by clinical investigators of recognized competence and pursuant to GCP regulations, and the FDA can validate the data through on-site inspections or other appropriate means.
In cases where data from foreign clinical and nonclinical studies are intended to serve as the basis for marketing approval in the United States, the FDA will generally not approve the application on the basis of foreign data alone unless the data are applicable to the U.S. population and U.S. medical practice, the studies were performed by clinical investigators of recognized competence and pursuant to GCP regulations, and the FDA can validate the data through on-site inspections or other appropriate means.
If we are unable to raise sufficient additional capital or generate revenue from transactions with potential third-party partners for the development and/or commercialization of our product candidates , we could be forced to curtail our planned operations. ​ Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies, intellectual property, potential future revenue streams or product candidates. ​ Until such time, if ever, as we can earn substantial revenue, we expect to finance our cash needs through a combination of equity offerings, debt financings and license and partnership agreements.
If we are unable to raise sufficient additional capital or generate revenue from transactions with potential third-party partners for the development and/or commercialization of our product candidates , we could be forced to curtail our planned operations. ​ Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies, intellectual property, potential future revenue streams or product candidates. ​ Until such time, if ever, as we can earn substantial revenue, we expect to finance our cash needs through a combination of equity offerings, debt financings and license and partnership agreements or other non-dilutive financing.
We cannot predict how pending and future health care legislation will impact our business, and any changes in coverage and reimbursement that further restricts coverage of our product candidates could harm our business. ​ Foreign governments also have their own healthcare reimbursement systems, which vary significantly by country and region, and we cannot be sure that coverage and adequate reimbursement will be made available with respect to our product candidates, if approved, under any foreign reimbursement system.
We cannot predict how pending and future health care 33 Table of Contents legislation will impact our business, and any changes in coverage and reimbursement that further restricts coverage of our product candidates could harm our business. ​ Foreign governments also have their own healthcare reimbursement systems, which vary significantly by country and region, and we cannot be sure that coverage and adequate reimbursement will be made available with respect to our product candidates, if approved, under any foreign reimbursement system.
In addition, the information we choose to publicly disclose regarding a particular study or clinical trial is derived from information that is typically extensive, and you or others may not agree with what we determine is material or otherwise appropriate information to include in our disclosure, and any information we determine not to disclose may ultimately be deemed significant with respect to future decisions, conclusions, views, activities or otherwise regarding a particular program, product candidate or our business. ​ If the interim, topline or preliminary data that we report differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to pursue strategic alternatives, including identifying and consummating transactions with third-party partners, to further develop, obtain marketing approval for and/or commercialize our product candidates may be harmed, which could harm our business, operating results, prospects or financial condition. ​ Changes in methods of product candidate manufacturing or formulation may result in additional costs or delay. ​ As product candidates are developed through preclinical studies to late-stage clinical trials towards approval and commercialization, it is common that various aspects of the development program, such as manufacturing methods and formulation, are altered along the way in an effort to optimize processes and results.
In addition, the information we choose to publicly disclose regarding a particular study or clinical trial is derived from information that is typically extensive, and you or others may not agree with what we determine is material or otherwise appropriate information to include in our disclosure, and any information we determine not to disclose may ultimately be deemed significant with respect to future decisions, conclusions, views, activities or otherwise regarding a particular program, product candidate or our business. ​ If the interim, topline or preliminary data that we report differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to identify and consummate transactions with third-party partners to further develop, obtain marketing approval for and/or commercialize our product candidates may be harmed, which could harm our business, operating results, prospects or financial condition. ​ Changes in methods of product candidate manufacturing or formulation may result in additional costs or delay. ​ As product candidates are developed through preclinical studies to late-stage clinical trials towards approval and commercialization, it is common that various aspects of the development program, such as manufacturing methods and formulation, are altered along the way in an effort to optimize processes and results.
If we cannot obtain exclusivity for bosakitug and ATI-052 under the BPCIA, we could face competition sooner than anticipated, which could harm our business. ​ Governments outside the United States tend to impose strict price controls, which may adversely affect our revenue. ​ In some countries, particularly the countries of the European Union, the pricing of prescription pharmaceuticals is subject to governmental control.
If we cannot obtain exclusivity for bosakitug and ATI-052 under the BPCIA, we could face competition sooner than anticipated, which could harm our business. ​ 50 Table of Contents Governments outside the United States tend to impose strict price controls, which may adversely affect our revenue. ​ In some countries, particularly the countries of the European Union, the pricing of prescription pharmaceuticals is subject to governmental control.
To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our amended and restated bylaws provide the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities 58 Table of Contents Act.
To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our amended and restated bylaws provide the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act.
Market opportunity estimates and growth forecasts included in this Annual Report and the other documents that we file with the SEC are subject to significant uncertainty and are based on assumptions and estimates. These estimates, which have been derived from a variety of sources, including scientific literature and market 25 Table of Contents research, may prove to be incorrect.
Market opportunity estimates and growth forecasts included in this Annual Report and the other documents that we file with the SEC are subject to significant uncertainty and are based on assumptions and estimates. These estimates, which have been derived from a variety of sources, including scientific literature and market research, may prove to be incorrect.
Additionally, the loss of or damage to our cell banks maintained at these third-party manufacturers could significantly delay our development efforts, as establishing and qualifying new cell banks would require substantial time and resources. ​ If our current contract manufacturers cannot perform as agreed, we may be required to replace such manufacturers.
Additionally, the loss of or damage to our cell banks maintained at these third-party manufacturers could significantly delay our development efforts, as establishing and qualifying new cell banks would require substantial time and resources. 36 Table of Contents ​ If our current contract manufacturers cannot perform as agreed, we may be required to replace such manufacturers.
Actions taken by us or the third parties with whom we work to detect, investigate, mitigate, contain, and remediate a security incident could result in outages, data losses, and disruptions of our business. Threat actors may also gain access to other networks and systems after a compromise of our networks and 60 Table of Contents systems.
Actions taken by us or the third parties with whom we work to detect, investigate, mitigate, contain, and remediate a security incident could result in outages, data losses, and disruptions of our business. Threat actors may also gain access to other networks and systems after a compromise of our networks and systems.
Clinical trials often fail to demonstrate safety and efficacy of the product candidate studied for the target indication. ​ Additionally, if we or others identify undesirable side effects caused by our product candidates, a number of potentially significant negative consequences could result, including: ​ ● we may need to abandon the development or limit the further development of our product candidates, including in various populations and for certain indications; ● regulatory authorities may withdraw approval to market such product; ● regulatory authorities may require additional warnings on the labels; ● a medication guide outlining the risks of such side effects for distribution to patients may be required; ● we could be sued and held liable for harm caused to patients; ● our reputation and physician or patient acceptance of our product candidates, if approved, may suffer; and ● our ability to pursue strategic alternatives, including identifying and consummating transactions with third-party partners, to further develop, obtain marketing approval for and/or commercialize our product candidates would be harmed. ​ 30 Table of Contents Any of these events could prevent us from pursuing strategic alternatives, including identifying and consummating transactions with third-party partners, to further develop, obtain marketing approval for and/or commercialize the particular product candidate and could significantly harm our business, results of operations and prospects. ​ Interim, topline and preliminary data from our clinical trials that we announce or publish from time to time may change as more subject data become available and are subject to audit and verification procedures that could result in material changes in the final data. ​ From time to time, we may publicly disclose interim, topline or preliminary data from our clinical trials, which are based on a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change following a full analysis of all data related to the particular trial.
Clinical trials often fail to demonstrate safety and efficacy of the product candidate studied for the target indication. ​ Additionally, if we or others identify undesirable side effects or unfavorable nonclinical safety findings caused by our product candidates, a number of potentially significant negative consequences could result, including: ​ ● we may need to abandon the development or limit the further development of our product candidates, including in various populations and for certain indications; ● regulatory authorities may withdraw approval to market such product; ● regulatory authorities may require additional warnings on the labels; ● a medication guide outlining the risks of such side effects for distribution to patients may be required; ● we could be sued and held liable for harm caused to patients; ● our reputation and physician or patient acceptance of our product candidates, if approved, may suffer; and ● our ability to identify and consummate with third-party partners to further develop, obtain marketing approval for and/or commercialize our product candidates would be harmed. ​ Any of these events could prevent us from identifying and consummating transactions with third-party partners to further develop, obtain marketing approval for and/or commercialize the particular product candidate and could significantly harm our business, results of operations and prospects. ​ Interim, topline and preliminary data from our clinical trials that we announce or publish from time to time may change as more subject data become available and are subject to audit and verification procedures that could result in material changes in the final data. ​ From time to time, we may publicly disclose interim, topline or preliminary data from our clinical trials, which are based on a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change following a full analysis of all data related to the particular trial.
We may not be able to initiate or 29 Table of Contents continue clinical trials for our product candidates if we are unable to locate and enroll a sufficient number of eligible patients to participate in these trials as required by the FDA or similar regulatory authorities outside the United States.
We may not be able to initiate or continue clinical trials for our product candidates if we are unable to locate and enroll a sufficient number of eligible patients to participate in these trials as required by the FDA or similar regulatory authorities outside the United States.
An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate, our patent rights, allow third parties to commercialize our technology or product candidates and compete directly with us, without payment to us, or result in the inability of our potential third-party partners to manufacture or commercialize our product candidates without infringing third-party patent rights.
An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate, our patent rights, allow third parties to commercialize our technology or product candidates and compete directly with us, without payment 39 Table of Contents to us, or result in the inability of our potential third-party partners to manufacture or commercialize our product candidates without infringing third-party patent rights.
Our ability to raise additional capital may be adversely impacted by potential worsening global economic conditions caused by a variety of factors including geopolitical tensions and inflationary pressures.
Our ability to raise additional capital may be adversely impacted by potential worsening global economic conditions caused by a variety of factors including geopolitical tensions, tariff policies, and inflationary pressures.
Additionally, companies that transfer personal data out of the EEA and UK to other jurisdictions, particularly to the United States, are subject to increased scrutiny from regulators, individual litigants, and activities groups.
Additionally, companies that transfer personal data out of the EEA and UK to other jurisdictions, particularly to the United States, are subject to increased scrutiny from regulators, individual litigants, and activist groups.
If we are unable to continue to attract and retain high quality personnel, our ability to pursue our growth strategy will be limited. ​ Our employees, independent contractors, consultants, third-party partners, principal investigators, CROs and vendors may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements. ​ We are exposed to the risk that our employees, independent contractors, consultants, third-party partners, principal investigators, CROs and vendors may engage in fraudulent conduct or other illegal activity.
If we are unable to continue to attract and retain high quality personnel, our ability to pursue our growth strategy will be limited. ​ ​ 54 Table of Contents Our employees, independent contractors, consultants, third-party partners, principal investigators, CROs and vendors may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements. ​ We are exposed to the risk that our employees, independent contractors, consultants, third-party partners, principal investigators, CROs and vendors may engage in fraudulent conduct or other illegal activity.
There can be no assurance that the FDA, EMA or any comparable foreign regulatory authority will accept data from trials conducted outside of the United States or the applicable jurisdiction.
There can be no assurance that the FDA, EMA or any comparable foreign regulatory authority will accept data from studies conducted outside of the United States or the applicable jurisdiction.
Consequently, our results of operations and the commercial prospects for our product candidates would be harmed, our costs could increase substantially and our ability to earn revenue from those partnerships could be delayed significantly. ​ Switching or adding CROs involves substantial cost and requires management time and focus.
Consequently, our results 34 Table of Contents of operations and the commercial prospects for our product candidates would be harmed, our costs could increase substantially and our ability to earn revenue from those partnerships could be delayed significantly. ​ Switching or adding CROs involves substantial cost and requires management time and focus.
Shares registered under these registration statements are available for sale in the public market subject to vesting arrangements and exercise of options. ​ Further, we have in the past and may in the future issue equity securities in connection with financings, acquisitions or other strategic investments.
Shares registered under these registration statements are available for sale in the public market subject to vesting arrangements and exercise of options. 56 Table of Contents ​ Further, we have in the past and may in the future issue equity securities in connection with financings, acquisitions or other strategic investments.
This requires that we incur substantial additional professional fees and internal costs to expand our accounting and finance functions and that we expend significant management efforts. ​ 57 Table of Contents We may identify weaknesses in our system of internal financial and accounting controls and procedures that could result in a material misstatement of our consolidated financial statements.
This requires that we incur substantial additional professional fees and internal costs to expand our accounting and finance functions and that we expend significant management efforts. ​ We may identify weaknesses in our system of internal financial and accounting controls and procedures that could result in a material misstatement of our consolidated financial statements.
If the FDA, EMA or any comparable regulatory authority does not accept such data, it would result in the need for additional trials, which would be costly and time-consuming and delay aspects of our business plan, and which may result in our product candidates not receiving approval or clearance for commercialization in the applicable jurisdiction. ​ In addition, any escalation of political tensions, economic instability, military activity or civil hostilities outside the United States could disrupt our ability to conduct trials outside of the United States, or delay or adversely affect the timeliness of such trials.
If the FDA, EMA or any comparable regulatory authority does not accept such data, it would result in the need for additional studies, which would be costly and time-consuming and delay aspects of our business plan, and which may result in our product candidates not receiving approval or clearance for commercialization in the applicable jurisdiction. ​ 31 Table of Contents In addition, any escalation of political tensions, economic instability, military activity or civil hostilities outside the United States could disrupt our ability to conduct studies outside of the United States, or delay or adversely affect the timeliness of such studies.
Regardless of merit or eventual outcome, product liability claims may result in: ​ ● decreased demand for any product candidates that we may develop and, if approved, are commercialized by our potential third-party partners; ● injury to our reputation and significant negative media attention; ● withdrawal of clinical trial participants; ● significant costs to defend the related litigation; ● substantial monetary awards paid to trial participants or patients; ● loss of revenue; ● reduced resources of our management to pursue our business strategy; and ● our inability to pursue strategic alternatives, including identifying and consummating transactions with third-party partners, to further develop, obtain marketing approval for and/or commercialize our product candidates. ​ We currently hold $10 million in product liability insurance coverage in the aggregate, with a per incident limit of $10 million, which may not be adequate to cover all liabilities that we may incur.
Regardless of merit or eventual outcome, product liability claims may result in: ​ ● decreased demand for any product candidates that we may develop and, if approved, are commercialized by our potential third-party partners; ● injury to our reputation and significant negative media attention; ● withdrawal of clinical trial participants; ● significant costs to defend the related litigation; ● substantial monetary awards paid to trial participants or patients; ● loss of revenue; ● reduced resources of our management to pursue our business strategy; and ● our inability to identify and consummate transactions with third-party partners to further develop, obtain marketing approval for and/or commercialize our product candidates. ​ We currently hold $10 million in product liability insurance coverage in the aggregate, with a per incident limit of $10 million, which may not be adequate to cover all liabilities that we may incur.
If we or any of our CROs fail to comply with applicable GCPs, the clinical data generated in our clinical trials may be deemed unreliable and the FDA or comparable foreign regulatory authorities may require us to perform additional clinical trials before approving 35 Table of Contents marketing applications.
If we or any of our CROs fail to comply with applicable GCPs, the clinical data generated in our clinical trials may be deemed unreliable and the FDA or comparable foreign regulatory authorities may require us to perform additional clinical trials before approving marketing applications.
In addition, the laws of foreign countries may not protect our rights to the same extent as the laws of the United States or vice versa. For example, 39 Table of Contents European patent law restricts the patentability of methods of treatment of the human body more than U.S. law does.
In addition, the laws of foreign countries may not protect our rights to the same extent as the laws of the United States or vice versa. For example, European patent law restricts the patentability of methods of treatment of the human body more than U.S. law does.
In addition, there could be public announcements of the results of hearings, motions or other interim 42 Table of Contents proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock.
In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock.
We may not be granted an extension because of, for example, failing to apply within applicable deadlines, failing to apply prior to expiration of relevant patents or otherwise failing to satisfy applicable requirements. Moreover, the applicable time period or the scope of patent protection afforded could be less than we request.
We may not be granted an extension because of, for example, failing to apply within applicable deadlines, failing to apply prior to expiration of relevant patents or otherwise failing to satisfy applicable requirements. Moreover, the applicable time period or the scope of patent 43 Table of Contents protection afforded could be less than we request.
Significant preclinical study or clinical trial delays also could shorten any periods during which our potential third-party partners may have the exclusive right to commercialize our product candidates or allow competitors to bring drugs to market before such third-party partners do, which would impact our ability to successfully identify and consummate transactions with third-party partners to further develop, obtain marketing approval for and/or commercialize our product candidates. ​ If we experience delays or difficulties in the enrollment of subjects in clinical trials, our ability to pursue strategic alternatives, including identifying and consummating transactions with third-party partners, to further develop, obtain marketing approval for and/or commercialize our product candidates could be delayed or prevented. ​ Successful and timely completion of clinical trials will require that we enroll a sufficient number of subjects.
Significant preclinical study or clinical trial delays also could shorten any periods during which our potential third-party partners may have the exclusive right to commercialize our product candidates or allow competitors to bring drugs to market before such third-party partners do, which would impact our ability to successfully identify and consummate transactions with third-party partners to further develop, obtain marketing approval for and/or commercialize our product candidates. ​ If we experience delays or difficulties in the enrollment of subjects in clinical trials, our ability to identify and consummate transactions with third-party partners to further develop, obtain marketing approval for and/or commercialize our product candidates could be delayed or prevented. ​ Successful and timely completion of clinical trials will require that we enroll a sufficient number of subjects.
Furthermore, 54 Table of Contents replacing executive officers and key employees may be difficult and may take an extended period of time because of the limited number of individuals in our industry with the breadth of skills and experience required to successfully develop and partner product candidates.
Furthermore, replacing executive officers and key employees may be difficult and may take an extended period of time because of the limited number of individuals in our industry with the breadth of skills and experience required to successfully develop and partner product candidates.
These changes included aggregate reductions to Medicare payments to providers of 2% per fiscal year that became effective on April 1, 2013 and, due to subsequent legislative amendments to the statute, including the BBA and the Infrastructure Investment and Jobs Act, will stay in effect through 2032 unless additional Congressional action is taken.
These changes included aggregate reductions to Medicare payments to providers of 2% per fiscal year that became effective on April 1, 2013 and, due to subsequent legislative amendments to the statute, including the Bipartisan Budget Act of 2018 and the Infrastructure Investment and Jobs Act, will stay in effect through 2032 unless additional Congressional action is taken.
The intent standard was further amended by the Affordable Care Act, to a stricter standard such that a person or entity no longer needs to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.
The intent standard was 47 Table of Contents further amended by the Affordable Care Act, to a stricter standard such that a person or entity no longer needs to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.
The impact of these events could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, on committees of our board of directors or as members of senior management. ​ Artificial intelligence presents risks and challenges that can impact our business including by posing security risks to our confidential information, proprietary information, and personal data. ​ Issues in the development and use of artificial intelligence, combined with an uncertain regulatory environment, 62 Table of Contents may result in reputational harm, liability, or other adverse consequences to our business operations.
The impact of these events could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, on committees of our board of directors or as members of senior management. ​ Artificial intelligence presents risks and challenges that can impact our business including by posing security risks to our confidential information, proprietary information, and personal data, and may subject us to evolving regulatory requirements. ​ Issues in the development and use of artificial intelligence, combined with an uncertain regulatory environment, may result in reputational harm, liability, or other adverse consequences to our business operations.
If we are required to conduct additional clinical trials or other testing of our product candidates beyond those that we currently contemplate, if we are unable to successfully complete clinical trials of our product candidates or other testing, if the results of these trials or tests are not favorable or if there are safety concerns, we may not be able to pursue strategic alternatives, including identifying and consummating transactions with third-party partners, to further develop, obtain marketing approval for and/or commercialize our product candidates, and our potential third-party partners may: ​ ● be delayed in obtaining marketing approval for our product candidates; ● not obtain marketing approval at all; ● obtain marketing approval for indications or patient populations that are not as broad as intended or desired; ● obtain marketing approval with labeling that includes significant use or distribution restrictions or safety warnings; ● be subject to additional post-marketing testing requirements; or ● have the drug removed from the market after obtaining marketing approval. ​ Our drug development costs will also increase if we experience delays in testing.
If we are required to conduct additional clinical trials or other testing of our product candidates beyond those that we currently contemplate, if we are unable to successfully complete clinical trials of our product candidates or other testing, if the results of these trials or tests are not favorable or if there are safety concerns, we may not be able to identify and consummate transactions with third-party partners to further develop, obtain marketing approval for and/or commercialize our product candidates, and our potential third-party partners may: ​ ● be delayed in obtaining marketing approval for our product candidates; ● not obtain marketing approval at all; ● obtain marketing approval for indications or patient populations that are not as broad as intended or desired; ● obtain marketing approval with labeling that includes significant use or distribution restrictions or safety warnings; ● be subject to additional post-marketing testing requirements; or ● have the drug removed from the market after obtaining marketing approval. ​ Our drug development costs will also increase if we experience delays in testing.
For example, we are relying on CTTQ, our partner in China, to share information about its Phase 2 trials of bosakitug in respiratory diseases.
For example, we are relying on CTTQ, our partner in China, to share information about its trials of bosakitug in respiratory diseases.
Our failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions. ​ ​ 51 Table of Contents We and the third parties with whom we work are subject to stringent and evolving U.S. and foreign laws, regulations, and rules, contractual obligations, industry standards, policies and other obligations related to data privacy and security.
Our failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions. ​ We and the third parties with whom we work are subject to stringent and evolving U.S. and foreign laws, regulations, and rules, contractual obligations, industry standards, policies and other obligations related to data privacy and security.
During times of war and other major conflicts, we and the third parties upon which we rely may be vulnerable to a heightened risk of these attacks, including retaliatory cyber-attacks, that could materially disrupt our systems and operations, supply chain, and ability to develop our product candidates and provide our services. ​ We and the third parties upon which we rely are subject to a variety of evolving threats, including but not limited to social-engineering attacks (including through deep fakes, which may be increasingly more difficult to identify as fake, and phishing attacks), malicious code (such as viruses and worms), malware (including as a result of advanced persistent threat intrusions), denial-of-service attacks, credential stuffing, credential harvesting, personnel misconduct or error, ransomware attacks, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data or other information technology assets, adware, attacks enhanced or facilitated by AI, telecommunications failures, earthquakes, fires, floods, and other similar threats. ​ In particular, severe ransomware attacks are becoming increasingly prevalent and can lead to significant interruptions in our operations, ability to develop our product candidates or provide our services, loss of sensitive data and income, reputational harm, and diversion of funds.
During times of war and other major conflicts, we and the third parties with whom we work may be vulnerable to a heightened risk of 59 Table of Contents these attacks, including retaliatory cyber-attacks, that could materially disrupt our systems and operations, supply chain, and ability to develop our product candidates and provide our services. ​ We and the third parties with whom we work are subject to a variety of evolving threats, including but not limited to social-engineering attacks (including through deepfakes, which may be increasingly more difficult to identify as fake, and phishing attacks), malicious code (such as viruses and worms), malware (including as a result of advanced persistent threat intrusions), denial-of-service attacks, credential stuffing attacks, credential harvesting, personnel misconduct or error, ransomware attacks, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data or other information technology assets, adware, attacks enhanced or facilitated by AI, telecommunications failures, earthquakes, fires, floods, and other similar threats. ​ In particular, severe ransomware attacks are becoming increasingly prevalent and can lead to significant interruptions in our operations, ability to develop our product candidates or provide our services, loss of sensitive data and income, reputational harm, and diversion of funds.
If we are unable to raise capital when needed, we could be forced to curtail our planned operations. ● We have a limited history as a clinical-stage biopharmaceutical company developing and partnering our product candidates, which may make it difficult to evaluate the success of our business to date and to assess our future viability. ● If we are unable to successfully develop our product candidates and to pursue strategic alternatives, including identifying and consummating transactions with third-party partners, to further develop, obtain marketing approval for and/or commercialize our product candidates, or experience significant delays in doing so, our business will be harmed. ● Our future success depends on our ability to retain key executives and to attract, retain and motivate qualified personnel. ● We rely heavily on third parties for clinical trials, manufacturing, and development support.
If we are unable to raise capital when needed, we could be forced to curtail our planned operations. ● We have a limited history as a clinical-stage biopharmaceutical company developing and partnering our product candidates, which may make it difficult to evaluate the success of our business to date and to assess our future viability. ● If we are unable to successfully develop our product candidates and identify and consummate transactions with third-party partners to further develop, obtain marketing approval for and/or commercialize our product candidates, or experience significant delays in doing so, our business will be harmed. ● Our future success depends on our ability to retain key executives and to attract, retain and motivate qualified personnel. ● We rely heavily on third parties for clinical trials, manufacturing, and development support.
However, we or our potential third-party partners may not be able to obtain any required license on commercially reasonable terms or at all. Even if we or our potential third-party partner were able to obtain a license, it could be non-exclusive, thereby giving competitors access to the same technologies licensed to us or our partner.
However, we or our potential third-party partners may not be able to obtain any 41 Table of Contents required license on commercially reasonable terms or at all. Even if we or our potential third-party partner were able to obtain a license, it could be non-exclusive, thereby giving competitors access to the same technologies licensed to us or our partner.
Many product candidates that initially showed promise in early-stage testing have later been found to cause side effects that prevented further development of the product candidate. ​ Before any potential third-party partners can obtain marketing approvals for the commercial sale of our product candidates, we must demonstrate through lengthy, complex and expensive preclinical testing and clinical trials that our product candidates are both safe and effective for use in each target indication, and failures can occur at any stage of testing.
Many product candidates that initially showed promise in early-stage testing have later been found to cause side effects or exhibit toxicological profiles in animal models that prevented further development of the product candidate. ​ Before any potential third-party partners can obtain marketing approvals for the commercial sale of our product candidates, we must demonstrate through lengthy, complex and expensive preclinical testing and clinical trials that our product candidates are both safe and effective for use in each target indication, and failures can occur at any stage of testing.
The FDA, EMA or comparable foreign regulatory authorities may not accept data from such trials. ​ We have conducted and may in the future conduct clinical trials for our product candidates outside the United States.
The FDA, EMA or comparable foreign regulatory authorities may not accept data from such studies. ​ We have conducted and may in the future conduct clinical and nonclinical studies for our product candidates outside the United States.
Although there are currently various mechanisms that may be used to transfer personal data from the EEA and UK to the United States in 52 Table of Contents compliance with law, such as the EEA’s standard contractual clauses, the UK’s International Data Transfer Agreement / Addendum, and the EU-U.S.
Although there are currently various mechanisms that may be used to transfer personal data from the EEA and UK to the United States in compliance with law, such as the EEA’s standard contractual clauses, the UK’s International Data Transfer Agreement / Addendum, and the EU-U.S.
Their performance impacts our timelines and success. ● If we are unable to obtain and maintain patent protection for our product candidates, or if the scope of the patent protection obtained is not sufficiently broad, our competitors could develop and commercialize technology and drugs similar or identical to ours, and our ability to successfully pursue strategic alternatives, including identifying and consummating transactions with potential third-party partners, to commercialize our technology and product candidates may be impaired. ● We face substantial competition, which may result in others discovering, developing or commercializing drugs before or more successfully than we do. ​ Risks Related to Our Business, Our Financial Position and Capital Needs ​ We have incurred significant losses since our inception.
Their performance impacts our timelines and success. ● If we are unable to obtain and maintain patent protection for our product candidates, or if the scope of the patent protection obtained is not sufficiently broad, our competitors could develop and commercialize technology and drugs similar or identical to ours, and our ability to successfully identify and consummate transactions with potential third-party partners, to commercialize our technology and product candidates may be impaired. ● We face substantial competition, which may result in others discovering, developing or commercializing drugs before or more successfully than we do. ​ Risks Related to Our Business, Our Financial Position and Capital Needs ​ We have incurred significant losses since our inception.
With respect to the validity question, for example, we cannot be certain that there is no 40 Table of Contents invalidating prior art of which we and the patent examiner were unaware during prosecution.
With respect to the validity question, for example, we cannot be certain that there is no invalidating prior art of which we and the patent examiner were unaware during prosecution.
Furthermore, we rely on and expect to continue to rely on CROs and clinical trial sites to ensure the proper and timely conduct of our clinical trials and we will have limited influence over their performance.
Furthermore, we rely on and expect to continue to rely on CROs and clinical trial sites to ensure the proper and timely conduct of our clinical trials and we will have limited influence over 29 Table of Contents their performance.
Such authorities may impose such a suspension or termination due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA or other regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a drug, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial. ​ If we experience delays in the completion of, or termination of, any clinical trial of our product candidates, our costs will increase, our product candidate development process will be slowed, the commercial prospects of our product candidates will be harmed, and our ability to pursue strategic alternatives, including identifying and consummating transactions with third-party partners, to further develop, obtain marketing approval for and/or commercialize our product candidates will be delayed.
Such authorities may impose such a suspension or termination due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA or other regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a drug, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial. 28 Table of Contents ​ If we experience delays in the completion of, or termination of, any clinical trial of our product candidates, our costs will increase, our product candidate development process will be slowed, the commercial prospects of our product candidates will be harmed, and our ability to identify and consummate transactions with third-party partners to further develop, obtain marketing approval for and/or commercialize our product candidates will be delayed.
Open-label clinical trials may be subject to a “patient bias” where patients perceive their symptoms to have improved merely due to their awareness of receiving an experimental treatment.
Open-label clinical trials may 27 Table of Contents be subject to a “patient bias” where patients perceive their symptoms to have improved merely due to their awareness of receiving an experimental treatment.
If such third-party partners fail to obtain an adequate level of acceptance for our product candidates, we may not earn significant 32 Table of Contents revenue and we may not become profitable.
If such third-party partners fail to obtain an adequate level of acceptance for our product candidates, we may not earn significant revenue and we may not become profitable.
We expect to continue to incur significant expenses and operating losses in the near term as we: ​ ● pursue strategic alternatives, including identifying and seeking to consummate transactions with third-party partners, to further develop, obtain marketing approval for and/or commercialize our product candidates; ● continue to develop our product candidates; ● continue to discover and develop additional product candidates; ● maintain, expand and protect our intellectual property portfolio; and ● incur legal, accounting, investor relations and other administrative expenses in operating as a public company. ​ 23 Table of Contents To become and remain profitable, we must succeed in a range of challenging activities, including completing preclinical testing and clinical trials of our product candidates and pursuing strategic alternatives, including identifying and consummating transactions with third-party partners, for the further development and/or commercialization of our product candidates, as well as discovering and developing additional product candidates.
We expect to continue to incur significant expenses and operating losses in the near term as we: ​ ● seek to identify and consummate transactions with third-party partners to further develop, obtain marketing approval for and/or commercialize our product candidates; ● continue to develop our product candidates; ● continue to discover and develop additional product candidates; ● maintain, expand and protect our intellectual property portfolio; and ● incur legal, accounting, investor relations and other administrative expenses in operating as a public company. ​ To become and remain profitable, we must succeed in a range of challenging activities, including completing preclinical testing and clinical trials of our product candidates and identifying and consummating transactions with third- 22 Table of Contents party partners for the further development and/or commercialization of our product candidates, as well as discovering and developing additional product candidates.
If we do not have sufficient funds, we may not be able to further develop our product candidates or bring them to market and generate revenue. 38 Table of Contents We may not have access to all information regarding our product candidates that are subject to partnership agreements.
If we do not have sufficient funds, we may not be able to further develop our product candidates or bring them to market and generate revenue. We may not have access to all information regarding our product candidates that are subject to partnership agreements.
The FDA closely regulates the post-approval marketing and promotion of drugs to ensure drugs are marketed only for the approved indications and in accordance with the provisions of the approved labeling.
The FDA closely regulates the post-approval marketing and promotion of drugs to ensure drugs are marketed only for the approved indications and in accordance with the provisions of the approved 46 Table of Contents labeling.
While these laws in other states, like the CCPA, exempt some data processed in the context of clinical trials, these developments may further complicate compliance efforts, and increase legal risk and compliance costs for us and the third parties upon whom we rely. ​ In addition to “comprehensive” state privacy laws like CCPA, we are currently and may become in the future subject to new state laws governing the privacy of consumer health data.
While these laws in other states, like the CCPA, exempt some data processed in the context of clinical trials, these developments may further complicate compliance efforts, and increase legal risk and compliance costs for us and the third parties with whom we work. ​ In addition to “comprehensive” state privacy laws like CCPA, we are currently or may become in the future subject to state laws governing the privacy of consumer health data.
Moreover, despite our efforts, our personnel or third parties on whom we rely may fail to comply with such obligations, which could negatively impact our business operations.
Moreover, despite our efforts, our personnel or third parties with whom we work may fail to comply with such obligations, which could negatively impact our business operations.
If we or our potential third-party partners are not able to obtain a license from these third parties on commercially reasonable terms, our business could be harmed, possibly materially, and even if we or they are able to, it may result in the reduction of revenue we earn from such partner as a result of payment obligations to the licensor. 41 Table of Contents ​ Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the outcome of which would be uncertain and could have a material adverse effect on the success of our business. ​ Our success depends upon our ability to pursue strategic alternatives, including identifying and consummating transactions with potential third-party partners, to develop, obtain marketing approval for and/or commercialize our product candidates and earn revenue from those partnerships, and for our proprietary technologies to be used without infringing the proprietary rights of third parties.
If we or our potential third-party partners are not able to obtain a license from these third parties on commercially reasonable terms, our business could be harmed, possibly materially, and even if we or they are able to, it may result in the reduction of revenue we earn from such partner as a result of payment obligations to the licensor. ​ Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the outcome of which would be uncertain and could have a material adverse effect on the success of our business. ​ Our success depends upon our ability to identify and consummate transactions with potential third-party partners, to develop, obtain marketing approval for and/or commercialize our product candidates and earn revenue from those partnerships, and for our proprietary technologies to be used without infringing the proprietary rights of third parties.
If we cannot successfully defend ourselves against claims that our commercial products that we have previously 34 Table of Contents sold or are being sold by third-party partners, or product candidates, caused injuries, we will incur substantial liabilities.
If we cannot successfully defend ourselves against claims that our commercial products that we have previously sold or are being sold by third-party partners, or product candidates, caused injuries, we will incur substantial liabilities.
In addition, the uncertainties associated with litigation could compromise our ability to compete in the marketplace, including compromising our ability to raise the funds necessary to continue our clinical trials, continue our internal research programs, or pursue strategic alternatives, including identifying and consummating transactions with third-party partners, to further develop, obtain marketing approval for and/or commercialize our product candidates. ​ If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed. ​ In addition to seeking and maintaining patents for our product candidates, we also rely on trade secrets, including unpatented know-how, technology and other proprietary information, to maintain our competitive position.
In addition, the uncertainties associated with litigation could compromise our ability to compete in the marketplace, including compromising our ability to raise the funds necessary to continue our clinical trials, continue our internal research programs, or identify and consummate transactions with third-party partners to further develop, obtain marketing approval for and/or commercialize our product candidates. ​ 42 Table of Contents If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed. ​ In addition to seeking and maintaining patents for our product candidates, we also rely on trade secrets, including unpatented know-how, technology and other proprietary information, to maintain our competitive position.

… 143 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

7 edited+0 added−0 removed12 unchanged
Biggest changeWe identify, assess, and manage such threats by, among other things, monitoring the threat environment using manual and automated tools, subscribing to reports and services that identify cybersecurity threats, conducting scans of the threat environment, and conducting vulnerability assessments.
Biggest changeWe identify, assess, and manage such threats by, among other things, monitoring the threat environment using manual and automated tools, subscribing to reports and services that identify cybersecurity threats, analyzing reports of threats and threat actors, conducting scans of the threat environment, conducting vulnerability assessments, conducting audits, and conducting threat assessments for internal and external threats.
Our cybersecurity incident response process involves members of management who also participate in our disclosure controls and procedures. ​ Our cybersecurity incident response plan and information security incidence response procedures are designed to escalate certain cybersecurity incidents to members of finance and legal, depending on the circumstances, who report to the Chief Financial Officer and the General Counsel.
Our cybersecurity incident response process involves members of management who also participate in our disclosure controls and procedures. ​ Our cybersecurity incident response plan and information security incidence response procedures are designed to escalate certain cybersecurity incidents to members of IT, finance and legal, depending on the circumstances, who report to the Chief Financial Officer and the General Counsel.
Risk factors” in this Annual Report, including “If our information technology systems, those of third parties upon which we rely, or our data are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; and other adverse consequences.” ​ Governance ​ Our board of directors, through its Audit Committee, is responsible for overseeing the Company’s risk management strategy with respect to cybersecurity threats.
Risk factors” in this Annual Report, including “If our information technology systems or data, or those of the third parties with whom we work, are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; and other adverse consequences.” ​ Governance ​ Our board of directors, through its Audit Committee, is responsible for overseeing the Company’s risk management strategy with respect to cybersecurity threats.
For example, the IT department works with management to prioritize our risk management processes and mitigate cybersecurity threats that are more likely to lead to a material impact to our business. ​ We work with third parties from time to time that assist us to identify, assess, and manage material risks from cybersecurity threats, including, for example, professional services firms (including legal counsel), threat intelligence service providers, cybersecurity software providers, managed cybersecurity service providers, forensic investigators, and penetration testing firms. ​ For a description of the risks from cybersecurity threats that may materially affect us and how they may do so, refer to “Item 1A.
For example, the IT department works with management to prioritize our risk management processes and mitigate cybersecurity threats that are more likely to lead to a material impact to our business. ​ 64 Table of Contents We work with third parties from time to time that assist us to identify, assess, and manage material risks from cybersecurity threats, including, for example, professional services firms (including legal counsel), threat intelligence service providers, cybersecurity consultants, cybersecurity software providers, managed cybersecurity service providers, and penetration testing firms. ​ For a description of the risks from cybersecurity threats that may materially affect us and how they may do so, refer to “Item 1A.
We also engage third parties to conduct annual penetrations tests, as well as to provide threat and security risk assessments and intelligence feeds. ​ Based on our assessment process and depending on the environment, we implement and maintain various technical, physical and organizational measures, processes, standards and policies designed to manage and mitigate such risks and potential material impacts.
We also engage third parties to conduct annual penetration tests and tabletop incident response exercises, as well as to provide threat and security risk assessments and intelligence feeds. ​ Based on our assessment process and depending on the environment, we implement and maintain various technical, physical and organizational measures, processes, standards and policies designed to manage and mitigate such risks and potential material impacts.
These measures we implement for certain of our Information Assets include: policies and procedures designed to address cybersecurity threats, including an incident response plan; incident detection and response; risk assessments; background checks on our personnel; encryption of data; network security controls; data segregation; access controls; physical security; asset management, tracking and disposal; employee security training; penetration testing; and cyber insurance. ​ 63 Table of Contents Our assessment and management of material risks from cybersecurity threats are integrated into our overall risk management processes.
These measures we implement for certain of our Information Assets include: policies and procedures designed to address cybersecurity threats, including an incident response plan; incident detection and response; risk assessments; background checks on our personnel; encryption of data; network security controls; data segregation; access controls; physical security; asset management, tracking and disposal; systems monitoring; employee security training; penetration testing; cyber insurance; and, as appropriate, inclusion of cybersecurity requirements in our contracts. ​ Our assessment and management of material risks from cybersecurity threats are integrated into our overall risk management processes.
To operate our business, we also utilize certain third-party service providers to perform a variety of functions, such as professional services, SaaS platforms, managed services, cloud-based infrastructure, encryption and authentication technology, corporate productivity services, and other functions.
To operate our business, we also utilize certain third-party service providers to perform a variety of functions, such as professional services, SaaS platforms, managed services, cloud-based infrastructure, encryption and authentication technology, corporate productivity services, contract research organizations, application providers, supply chain resources, and other functions.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed0 unchanged
Biggest changeItem 2. Properties ​ We lease 11,564 square feet of space for our headquarters in Wayne, Pennsylvania, which we use for our therapeutics business. The lease has a term through February 2029. 64 Table of Contents ​ We also sublease 20,433 square feet of office and laboratory space in St.
Biggest changeItem 2. Properties ​ We lease 11,564 square feet of office space for our headquarters in Wayne, Pennsylvania, under a lease agreement which has a term through February 2029. ​ We also sublease 20,433 square feet of office and laboratory space in St. Louis, Missouri, under a sublease agreement which has an initial term through May 2029.
Louis, Missouri, which we use for our therapeutics and contract research businesses. The sublease has an initial term through May 2029. We have the option to extend the initial term for two additional five-year periods. ​ We believe that our facilities are suitable and adequate to meet our current needs. ​ ​
We have the option to extend the initial term for two additional five-year periods. ​ 65 Table of Contents We believe that our facilities are suitable and adequate to meet our current needs. ​

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed1 unchanged
Biggest changeWe are not currently a party to any material legal proceedings and we are not aware of any other pending or threatened legal proceeding against us that we believe could have a material adverse effect on our business, operating results, cash flows or financial condition. ​ ​
Biggest changeWe are not currently a party to any material legal proceedings and we are not aware of any other pending or threatened legal proceedings against us that we believe could have a material adverse effect on our business, operating results, cash flows or financial condition. ​

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

1 edited+0 added−0 removed3 unchanged
Biggest changeWe anticipate that we will retain all of our future earnings, if any, for use in the operation and expansion of our business and do not anticipate paying cash dividends in the foreseeable future. ​ Stockholders ​ As of January 31, 2025, we had 107,918,821 shares of common stock outstanding held by 54 holders of record.
Biggest changeWe anticipate that we will retain all of our future earnings, if any, for use in the operation and expansion of our business and do not anticipate paying cash dividends in the foreseeable future. ​ Stockholders ​ As of January 30, 2026, we had 120,595,189 shares of common stock outstanding held by 46 holders of record.

Item 7. Management's Discussion & Analysis

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

58 edited+12 added−24 removed34 unchanged
Biggest changeWe use an expected dividend yield of zero because we have not paid cash dividends to date and have no intention of paying cash dividends in the future. ​ The fair value of each RSU is measured using the closing price of our common stock on the date of grant. ​ 73 Table of Contents Results of Operations ​ Comparison of Years Ended December 31, 2024 and 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ (In thousands) 2024 2023 Change Revenues: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Contract research ​ $ 2,541 ​ $ 3,035 ​ $ (494) ​ Licensing ​ ​ 16,179 ​ ​ 28,214 ​ ​ (12,035) ​ Total revenue ​ ​ 18,720 ​ ​ 31,249 ​ ​ (12,529) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Costs and expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of revenue ​ ​ 2,792 ​ ​ 3,423 ​ ​ (631) ​ Research and development ​ 33,586 ​ 98,384 ​ (64,798) ​ General and administrative ​ 22,203 ​ 32,412 ​ (10,209) ​ Licensing ​ ​ 12,666 ​ ​ 14,658 ​ ​ (1,992) ​ Revaluation of contingent consideration ​ ​ 2,500 ​ ​ (26,900) ​ ​ 29,400 ​ In-process research and development ​ ​ 86,905 ​ ​ 6,629 ​ ​ 80,276 ​ Total costs and expenses ​ 160,652 ​ 128,606 ​ 32,046 ​ Loss from operations ​ (141,932) ​ (97,357) ​ (44,575) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest income ​ 7,953 ​ 8,509 ​ (556) ​ Non-cash royalty income ​ ​ 1,914 ​ ​ — ​ ​ 1,914 ​ Total other income ​ ​ 9,867 ​ ​ 8,509 ​ ​ 1,358 ​ Loss before income taxes ​ ​ (132,065) ​ ​ (88,848) ​ ​ (43,217) ​ Income tax benefit ​ ​ — ​ ​ (367) ​ ​ 367 ​ Net loss ​ $ (132,065) ​ $ (88,481) ​ $ (43,584) ​ ​ Revenue ​ Contract Research ​ Contract research revenue was $2.5 million and $3.0 million for the years ended December 31, 2024 and 2023, respectively, and was comprised of fees earned from the provision of laboratory services to our clients.
Biggest changeWe use an expected dividend yield of zero because we have not paid cash dividends to date and have no intention of paying cash dividends in the future. ​ The fair value of each RSU is measured using the closing price of our common stock on the date of grant. ​ Results of Operations ​ Comparison of Years Ended December 31, 2025 and 2024 ​ s ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ (In thousands) ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ Change Revenues: ​ ​ ​ ​ ​ ​ ​ ​ ​ Contract research ​ $ 1,872 ​ $ 2,541 ​ $ (669) Licensing ​ ​ 5,954 ​ ​ 16,179 ​ ​ (10,225) Total revenue ​ ​ 7,826 ​ ​ 18,720 ​ ​ (10,894) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Costs and expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of revenue ​ ​ 2,091 ​ ​ 2,792 ​ ​ (701) Research and development ​ 52,645 ​ 33,586 ​ 19,059 General and administrative ​ 21,972 ​ 22,203 ​ (231) Licensing ​ ​ 5,193 ​ ​ 12,666 ​ ​ (7,473) Revaluation of contingent consideration ​ ​ 2,300 ​ ​ 2,500 ​ ​ (200) In-process research and development ​ ​ — ​ ​ 86,905 ​ ​ (86,905) Total costs and expenses ​ 84,201 ​ 160,652 ​ (76,451) Loss from operations ​ (76,375) ​ (141,932) ​ 65,557 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other income: ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest income ​ 7,637 ​ 7,953 ​ (316) Non-cash royalty income ​ ​ 3,815 ​ ​ 1,914 ​ ​ 1,901 Total other income ​ ​ 11,452 ​ ​ 9,867 ​ ​ 1,585 Net loss ​ $ (64,923) ​ $ (132,065) ​ $ 67,142 ​ Revenue ​ Contract Research ​ The decrease in contract research revenue for the year ended December 31, 2025 compared to the year ended December 31, 2024 was due to lower overall hours billed for laboratory services. ​ Licensing ​ The decrease in licensing revenue during the year ended December 31, 2025 compared to the year ended December 31, 2024 was primarily due to larger milestone payments achieved under the license agreements with Sun Pharma and Lilly during the year ended December 31, 2024. ​ Cost and Expenses ​ Cost of Revenue ​ The decrease in cost of revenue during the year ended December 31, 2025 compared to the year ended December 31, 2024 was due to lower overall hours billed for laboratory services. 74 Table of Contents ​ Research and Development ​ The following table summarizes our research and development expenses by product candidate or, for unallocated expenses, by type: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ December 31, ​ ​ ​ (In thousands) ​ 2025 ​ ​ ​ 2024 ​ Change Bosakitug ​ $ 13,845 ​ $ 299 ​ $ 13,546 ATI-052 ​ ​ 7,074 ​ ​ 1,895 ​ ​ 5,179 ATI-2138 ​ ​ 4,921 ​ ​ 4,209 ​ ​ 712 ATI-9494 ​ ​ 5,371 ​ ​ 2,360 ​ ​ 3,011 Discovery ​ 3,872 ​ 3,415 ​ 457 Other research and development ​ ​ 1,488 ​ ​ 6,827 ​ ​ (5,339) Personnel ​ ​ 11,816 ​ ​ 11,446 ​ ​ 370 Stock-based compensation ​ ​ 4,258 ​ ​ 3,135 ​ ​ 1,123 Total research and development expenses ​ $ 52,645 ​ $ 33,586 ​ $ 19,059 ​ Bosakitug ​ The increase in expenses for bosakitug during the year ended December 31, 2025 compared to the year ended December 31, 2024 was due to the timing of the acquisition of the in-licensed asset, which occurred in November 2024.
In addition, we have agreed to pay the former Confluence equity holders future royalty payments calculated as a low single-digit percentage of annual net sales, subject to specified reductions, limitations and other adjustments, until the date that all of the patent rights for that product have expired, as determined on a country-by-country and product-by-product basis or, in specified circumstances, ten years from the first commercial sale of such product.
In addition, we agreed to pay the former Confluence equity holders future royalty payments calculated as a low single-digit percentage of annual net sales, subject to specified reductions, limitations and other adjustments, until the date that all of the patent rights for that product have expired, as determined on a country-by-country and product-by-product basis or, in specified circumstances, ten years from the first commercial sale of such product.
This uncertainty is due to the numerous risks and uncertainties associated with the duration and cost of discovery, as well as clinical trials, which vary significantly over the life of a project as a result of many factors, including: ​ ● the number of clinical sites included in the trials; ● the length of time required to enroll suitable subjects; ● the number of subjects that ultimately participate in the trials; ● the number of doses subjects receive; ● the duration of subject follow-up; and ● the results of our clinical trials. ​ Our expenditures are subject to additional uncertainties, including the preparation of regulatory filings for our product candidates.
This uncertainty is due to the numerous risks and uncertainties associated with the duration and cost of discovery, as well as clinical trials, which vary significantly over the life of a project as a result of many factors, including: ​ ● the number of clinical sites included in the trials; ● the length of time required to enroll suitable subjects; ● the number of subjects that ultimately participate in the trials; ● the number of doses subjects receive; ● the duration of treatment and subject follow-up; and ● the results of our clinical trials. ​ Our expenditures are subject to additional uncertainties, including the preparation of regulatory filings for our product candidates.
Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report, particularly in Part I, Item 1A. “Risk Factors,” and “Special Note Regarding Forward-Looking Statements.” ​ Overview ​ We are a clinical-stage biopharmaceutical company focused on developing novel small and large molecule product candidates for immuno-inflammatory diseases.
Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report, particularly in Part I, Item 1A. “Risk Factors,” and “Special Note Regarding Forward-Looking Statements.” ​ Overview ​ We are a clinical-stage biopharmaceutical company focused on discovering and developing novel small and large molecule product candidates for immuno-inflammatory diseases.
Pursuant to the terms of the Confluence Agreement, Merger Sub merged with and into Confluence, with Confluence surviving as our wholly-owned subsidiary. ​ Under the Confluence Agreement, we have agreed to pay the former Confluence equity holders aggregate remaining contingent consideration of up to $75.0 million based upon the achievement of specified regulatory and commercial milestones set forth in the Confluence Agreement.
Pursuant to the terms of the Confluence Agreement, Merger Sub merged with and into Confluence, with Confluence surviving as our wholly owned subsidiary. ​ Under the Confluence Agreement, we agreed to pay the former Confluence equity holders aggregate remaining contingent consideration of up to $75.0 million based upon the achievement of specified regulatory and commercial milestones set forth in the Confluence Agreement.
Under the royalty purchase agreement, we sold to OMERS a portion of the future royalty payments and the remaining anniversary milestones associated with our existing license to Eli Lilly and Company (“Lilly”), relating to OLUMIANT® (baricitinib) for the treatment of alopecia areata (see “—License Agreement with Eli Lilly and Company”).
Under the royalty purchase agreement, we sold to OMERS a portion of the future royalty payments and the remaining anniversary payments associated with our existing license to Eli Lilly and Company (“Lilly”), relating to OLUMIANT® (baricitinib) for the treatment of alopecia areata (see “—License Agreement with Eli Lilly and Company”).
We may not be able to generate revenue from these programs if, among other things, our clinical trials are not successful, the FDA does not approve our product candidates currently in clinical trials when we expect, or at all, or we are not able to identify and consummate transactions with third-party partners to further develop, obtain marketing approval for and/or commercialize our product candidates. ​ Our primary uses of capital are, and we expect will continue to be, compensation and related expenses, research and development expenses, laboratory and related supplies, legal and other regulatory expenses, and administrative and overhead costs.
We may not be able to generate revenue from these programs if, among other things, our clinical trials are not successful, the FDA does not approve our product candidates currently in clinical trials when we expect, or at all, or we are not able to identify and consummate transactions with third-party partners to further develop, obtain marketing approval for and/or commercialize our product candidates. ​ Our primary uses of capital are, and we expect will continue to be, compensation and related expenses, research and development expenses, laboratory and related supplies, professional and legal expenses, and administrative and overhead costs.
These expenses primarily include: ​ ● expenses incurred under agreements with contract research organizations (“CROs”), as well as clinical trial sites and consultants that conduct our clinical trials and preclinical studies, and investigator-initiated trials; ● manufacturing scale-up expenses and the cost of acquiring and manufacturing active pharmaceutical ingredients and preclinical and clinical trial materials, including domestic technology transfer expenses; ● quality assurance and quality control costs; 70 Table of Contents ● outsourced professional scientific development services; ● medical affairs expenses related to our product candidates; ● employee-related expenses, which include salaries, benefits and stock-based compensation; ● expenses relating to regulatory activities, including filing fees paid to regulatory agencies; and ● laboratory materials and supplies used to support our research activities. ​ Research and development activities are central to our business model.
These expenses primarily include: ​ ● expenses incurred under agreements with contract research organizations (“CROs”), as well as clinical trial sites and consultants that conduct our clinical trials and preclinical studies, and investigator-initiated trials; ● manufacturing scale-up expenses and the cost of acquiring and manufacturing active pharmaceutical ingredients and preclinical and clinical trial materials, including domestic technology transfer expenses; ● quality assurance and quality control costs; ● outsourced professional scientific development services; ● medical affairs expenses related to our product candidates; ● employee-related expenses, which include salaries, benefits and stock-based compensation; ● expenses relating to regulatory activities, including filing fees paid to regulatory agencies; and ● laboratory materials and supplies used to support our research activities. ​ Research and development activities are central to our business model.
Our funding requirements in the near term will depend on many factors, including: ​ ● the number and development requirements of the product candidates that we may pursue; ● the scope, progress, results and costs of preclinical development, laboratory testing and conducting preclinical and clinical trials for our product candidates; ● the costs, timing and outcome of regulatory review of our product candidates; ● the extent to which we in-license or acquire additional product candidates and technologies; ● the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims; ● our ability to identify and consummate transactions with third-party partners to further develop, obtain marketing approval for and/or commercialize our product candidates; and ● our ability to earn revenue as a result of licenses to, or partnerships or other arrangements with, third parties. ​ See “Risk Factors” for additional risks associated with our substantial capital requirements. ​ Leases ​ We occupy space for our headquarters in Wayne, Pennsylvania under a lease agreement which has a term through February 2029.
Our funding requirements in the near term will depend on many factors, including: ​ ● the number and development requirements of the product candidates that we may pursue; ● the scope, progress, results and costs of preclinical development, laboratory testing and conducting preclinical and clinical studies for our product candidates; ● the costs, timing, and outcome of regulatory review of our product candidates; ● the extent to which we in-license or acquire additional product candidates and technologies; ● the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims; ● our ability to identify and consummate transactions with third-party partners to further develop, obtain marketing approval for and/or commercialize our product candidates; and ● our ability to earn revenue as a result of licenses to, or partnerships or other arrangements with, third parties. ​ See “Risk Factors” for additional risks associated with our substantial capital requirements. ​ 79 Table of Contents Leases ​ We occupy space for our headquarters in Wayne, Pennsylvania under a lease agreement which has a term through February 2029.
Significant judgement is involved in determining the appropriateness of these assumptions. These assumptions are considered Level 3 inputs. Revaluation of our contingent consideration liability can result from changes to one or more of these assumptions. These assumptions are highly dependent on the outcome and timing of the development of certain of our product candidates.
Significant judgment is involved in determining the appropriateness of these assumptions. These assumptions are considered Level 3 inputs. Revaluation of our contingent consideration liability can result from changes to one or more of these assumptions. These assumptions are highly dependent on the outcome and timing of the development of certain of our product candidates.
We may also not be successful in pursuing strategic alternatives, including identifying and consummating transactions with third-party partners, to further develop, obtain marketing approval for and/or commercialize our product candidates. Furthermore, we have incurred and expect to continue to incur significant costs associated with operating as a public company, including legal, accounting, investor relations and other expenses.
We may also not be successful in identifying and consummating transactions with third-party partners to further develop, obtain marketing approval for and/or commercialize our product candidates. Furthermore, we have incurred and expect to continue to incur significant costs associated with operating as a public company, including legal, accounting, investor relations and other expenses.
Our ability to raise additional capital may be adversely impacted by potential worsening global economic conditions caused by a variety of factors including geopolitical tensions and inflationary pressures.
Our ability to raise additional capital may be adversely impacted by potential worsening global economic conditions caused by a variety of factors including geopolitical tensions, tariff policies, and inflationary pressures.
Under the license agreement, Sun Pharma has paid us an upfront payment and certain regulatory payments, and has agreed to pay us other regulatory and commercial milestone payments upon the achievement of specified milestones set forth in the agreement, and a mid single-digit tiered royalty calculated as a percentage of Sun Pharma’s net sales.
Under the license agreement, Sun Pharma has paid us upfront, regulatory and commercial milestone payments, and has agreed to pay us other regulatory and commercial milestone payments upon the achievement of specified milestones set forth in the agreement, and a mid single-digit tiered royalty calculated as a percentage of Sun Pharma’s net sales.
In such an event, our stockholders’ ownership will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of a holder of our common stock. ​ 79 Table of Contents Because of the numerous risks and uncertainties associated with research and development of pharmaceutical product candidates, we are unable to estimate the exact amount of our working capital requirements.
In such an event, our stockholders’ ownership may be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of a holder of our common stock. ​ Because of the numerous risks and uncertainties associated with research and development of pharmaceutical product candidates, we are unable to estimate the exact amount of our working capital requirements.
A portion of the consideration received from Pediatrix is payable to the former Confluence equity holders as described below under the caption “—Agreement and Plan of Merger with Confluence.” ​ License Agreement with Eli Lilly and Company ​ In August 2022, we entered into a non-exclusive patent license agreement with Lilly.
A portion of the consideration 69 Table of Contents received from Pediatrix is payable to the former Confluence (as defined below) equity holders as described below under the caption “—Agreement and Plan of Merger with Confluence.” ​ License Agreement with Eli Lilly and Company ​ In August 2022, we entered into a non-exclusive patent license agreement with Lilly.
We evaluate the fair value estimate of our contingent consideration liability on a quarterly basis with changes, if any, recorded as income or expense in our consolidated statement of operations.
We evaluate the fair value estimate of our contingent consideration liability on a quarterly basis with changes, if any, recorded as income or expense in our consolidated statement of operations and comprehensive loss.
The expected term of stock options we granted to non-employees is equal to the contractual term of the option award. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award.
The expected term of stock 73 Table of Contents options granted to non-employees is equal to the contractual term of the option award. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award.
The royalty payments and milestones we sold to OMERS represent our entire financial interest in the Lilly license agreement after taking into account our other contractual third-party obligations. ​ We recognized $1.9 million of non-cash royalty income during the year ended December 31, 2024. ​ License Agreement with Sun Pharmaceutical Industries, Inc. ​ In December 2023, we entered into an exclusive patent license agreement with Sun Pharmaceutical Industries, Inc.
The royalty payments and milestones we sold to OMERS represent our entire financial interest in the Lilly license agreement after taking into account our other contractual third-party obligations. ​ We recognized $3.8 million and $1.9 million of non-cash royalty income during the years ended December 31, 2025 and 2024, respectively. ​ License Agreement with Sun Pharmaceutical Industries, Inc. ​ In December 2023, we entered into an exclusive patent license agreement with Sun Pharmaceutical Industries, Inc.
We do not allocate personnel costs or other indirect expenses to specific research and development programs. ​ The successful development of our product candidates is highly uncertain.
We do not allocate personnel costs or other indirect expenses to specific research and development programs. ​ 71 Table of Contents The successful development of our product candidates is highly uncertain.
In addition, to the extent we are able to consummate transactions with potential third-party partners to further develop, obtain marketing approval for and/or commercialize our product candidates, we may receive upfront payments, milestone payments or royalties from such arrangements that would increase our liquidity. ​ As of December 31, 2024, we had cash, cash equivalents and marketable securities of $203.9 million.
In addition, to the extent we are able to consummate transactions with potential third-party partners to further develop, obtain marketing approval for and/or commercialize our product candidates, we may receive upfront payments, milestone payments or royalties from such arrangements that would increase our liquidity. ​ As of December 31, 2025, we had cash, cash equivalents and marketable securities of $151.4 million.
As of December 31, 2024, we had an accumulated deficit of $902.9 million. We expect to incur significant expenses and operating losses for the foreseeable future as we advance our product candidates from discovery through preclinical and clinical development. In addition, our product candidates, even if they are approved by regulatory agencies for marketing, may not achieve commercial success.
As of December 31, 2025, we had an accumulated deficit of $967.8 million. We expect to incur significant expenses and operating losses for the foreseeable future as we advance our product candidates from discovery through preclinical and clinical development. In addition, our product candidates, even if they are approved by regulatory agencies for marketing, may not achieve commercial success.
We also provide contract research services to third parties enabled by our early-stage research and development expertise. ​ Financial Overview ​ Since our inception, we have incurred significant net losses. Our net loss was $132.1 million for the year ended December 31, 2024 and $88.5 million for the year ended December 31, 2023.
In addition, we provide contract research services to third parties enabled by our early-stage research and development expertise. ​ Financial Overview ​ Since our inception, we have incurred significant net losses. Our net loss was $64.9 million for the year ended December 31, 2025 and $132.1 million for the year ended December 31, 2024.
We have issued stock options and restricted stock unit (“RSU”) awards with service-based vesting conditions, as well as with performance-based vesting conditions. We have not issued awards that include market-based conditions. For service-based awards, we recognize stock-based compensation expense on a straight-line basis over the requisite service period.
We have issued stock options and restricted stock unit (“RSU”) awards with service-based vesting conditions. For service-based awards, we recognize stock-based compensation expense on a straight-line basis over the requisite service period.
We are currently assessing the impact of this ASU. ​ In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” This standard enhances disclosures related to income taxes, including the rate reconciliation and information on income taxes paid. This ASU becomes effective for annual periods beginning after December 15, 2024.
We are currently assessing the impact of this ASU. ​ In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” This standard enhances disclosures related to income taxes, including the rate reconciliation and information on income taxes paid.
Significant assumptions used in our estimates include the probability of achieving regulatory milestones and commencing commercialization, which are based on an asset’s current stage of development and a review of existing clinical data. Probability of success assumptions ranged between 17% and 40% at December 31, 2024.
Significant assumptions used in our estimates include the probability of achieving regulatory milestones and commencing commercialization (collectively referred to as “probability of success”), which are based on an asset’s current stage of development and a review of existing clinical data. Probability of success assumptions ranged between 21% and 40% at December 31, 2025.
Under the license agreement, we granted Lilly non-exclusive rights under certain patents and patent applications that we exclusively license from a third party. The patents and patent applications relate to the use of baricitinib, Lilly’s JAK inhibitor, to treat alopecia areata.
Under the license agreement, we granted Lilly non-exclusive rights under certain patents and patent applications that we exclusively license from a third party. The patents and patent applications relate to the use of baricitinib, Lilly’s JAK inhibitor, to treat alopecia areata. Under the license agreement, Lilly has paid us upfront, anniversary, regulatory and commercial milestone payments.
Under the license agreement, Lilly has paid us an upfront payment and regulatory and certain commercial milestone payments, and agreed to pay us anniversary payments and other commercial milestone payments upon the achievement of specified milestones as set forth in the agreement, and a low single-digit royalty calculated as a percentage of Lilly’s net sales of baricitinib for the treatment of alopecia areata.
In addition, Lilly has agreed to pay us other commercial milestone payments upon the achievement of specified milestones and additional anniversary payments as set forth in the agreement, as well as a low single-digit royalty calculated as a percentage of Lilly’s net sales of baricitinib for the treatment of alopecia areata.
(“CTTQ”), a licensee of bosakitug in Greater China. ​ As partial consideration for the rights and licenses under the Biosion Agreement and CTTQ Agreement, we agreed to, in the aggregate, (i) pay $30.0 million in upfront cash consideration, plus $4.5 million for the reimbursement of certain development costs, (ii) issue warrants (the “Warrants”) to purchase 14,281,985 shares of our common stock and (iii) pay $6.2 million for the reimbursement of certain development costs and drug product material as set forth in the Biosion Agreement.
As partial consideration for the rights and licenses under the Biosion Agreements, we, in the aggregate, (i) paid $30.0 million in upfront cash consideration, plus $4.5 million for the reimbursement of certain development costs, (ii) issued warrants (the “Warrants”) to purchase 14,281,985 shares of our common stock and (iii) paid $6.2 million for the reimbursement of certain development costs and drug product material.
In July 2024, we entered into a royalty purchase agreement with OMERS pursuant to which we sold to OMERS a portion of our future royalty payments and the remaining anniversary milestones associated with the license to Lilly (see “—Royalty Purchase Agreement with OCM IP Healthcare Portfolio LP” above). ​ We recognized $13.2 million and $12.7 million of licensing revenue during the years ended December 31, 2024 and 2023, respectively.
In July 2024, we entered into a royalty purchase agreement with OMERS pursuant to which we sold to OMERS a portion of our future royalty payments and the remaining anniversary milestones associated with the license to Lilly (see “—Royalty Purchase Agreement with OCM IP Healthcare Portfolio LP” above). ​ We recognized $4.8 million of licensing revenue during the year ended December 31, 2025, all of which was payable to third parties.
The discount rate ranged between 7.4% and 8.7% depending on the year of each potential payment. 72 Table of Contents ​ During the year ended December 31, 2024, we adjusted estimated sales and the probability of success for certain product candidates.
As of December 31, 2025, the discount rate ranged between 6.7% and 8.7% depending on the year of each potential payment. ​ During the year ended December 31, 2025, we adjusted the probability of success for certain product candidates.
The effect of macroeconomic conditions may not be fully reflected in our results of operations until future periods. If, however, economic uncertainty increases or the global economy worsens, our business, financial condition and results of operations may be harmed.
For example, macroeconomic events, including inflationary pressure, tariff policies, and geopolitical conflicts, have led to economic uncertainty globally. The effect of macroeconomic conditions may not be fully reflected in our results of operations until future periods. If, however, economic uncertainty increases or the global economy worsens, our business, financial condition and results of operations may be harmed.
We also had $179.3 million in short- and long-term marketable securities as of December 31, 2024 compared to $142.0 million as of December 31, 2023. ​ The sources and uses of cash that contributed to the change in cash and cash equivalents were: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, (In thousands) 2024 2023 Cash and cash equivalents beginning balance ​ $ 39,878 ​ $ 45,277 Net cash used in operating activities ​ (20,075) ​ (78,325) Net cash (used in) provided by investing activities ​ (69,769) ​ 46,220 Net cash provided by financing activities ​ ​ 74,536 ​ ​ 26,706 Cash and cash equivalents ending balance ​ $ 24,570 ​ $ 39,878 ​ Operating Activities ​ Cash flow related to operating activities was the result of: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, (In thousands) 2024 2023 Net loss ​ $ (132,065) ​ $ (88,481) Non-cash adjustments to reconcile net loss to net cash used in operating activities ​ 101,068 ​ 767 Change in accounts receivable ​ ​ (20) ​ ​ 186 Change in prepaid expenses and other assets ​ (4,855) ​ (1,315) Change in accounts payable and accrued expenses ​ ​ (8,130) ​ ​ 10,518 Change in deferred income ​ ​ 23,927 ​ ​ — Net cash used in operating activities ​ $ (20,075) ​ $ (78,325) ​ Net cash used in operating activities decreased for the year ended December 31, 2024 compared to the year ended December 31, 2023 primarily as a result of lower net losses after adjusting for non-cash items and proceeds from the royalty sale to OMERS.
We also had $131.4 million in short- and long-term marketable securities as of December 31, 2025 compared to $179.3 million as of December 31, 2024. ​ The sources and uses of cash that contributed to the change in cash and cash equivalents were: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, (In thousands) ​ ​ ​ 2025 ​ ​ ​ 2024 Cash and cash equivalents beginning balance ​ $ 24,570 ​ $ 39,878 Net cash used in operating activities ​ (47,113) ​ (20,075) Net cash provided by (used in) investing activities ​ 48,365 ​ (69,769) Net cash (used in) provided by financing activities ​ ​ (5,862) ​ ​ 74,536 Cash and cash equivalents ending balance ​ $ 19,960 ​ $ 24,570 ​ 77 Table of Contents Operating Activities ​ Cash flow related to operating activities was the result of: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, (In thousands) ​ ​ ​ 2025 ​ ​ ​ 2024 Net loss ​ $ (64,923) ​ $ (132,065) Non-cash adjustments to reconcile net loss to net cash used in operating activities ​ 15,138 ​ 101,068 Change in accounts receivable, prepaid expenses and other assets ​ 6,138 ​ (4,875) Change in accounts payable and accrued expenses ​ ​ 350 ​ ​ (8,130) Change in deferred income ​ ​ (3,816) ​ ​ 23,927 Net cash used in operating activities ​ $ (47,113) ​ $ (20,075) ​ Net cash used in operating activities increased for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily as a result of higher net losses after adjusting for non-cash items and proceeds from the royalty sale to OMERS during 2024.
These contracts generally provide for termination upon notice, and therefore we believe that our non-cancelable obligations under these agreements are not material. ​ 80 Table of Contents Segment Information ​ We have two reportable segments, therapeutics and contract research. The therapeutics segment is focused on identifying and developing innovative therapies to address significant unmet needs for immuno-inflammatory diseases.
These contracts generally provide for termination upon notice, and therefore we believe that our non-cancelable obligations under these agreements are not material. ​ Segment Information ​ We operate and report as one reportable segment, which focuses on identifying and developing innovative therapies to address significant unmet needs for immuno-inflammatory diseases.
We adopted ASU No. 2023-07 effective December 31, 2024, on a retrospective basis, the impact of which is limited to additional segment expense disclosures in the notes to our consolidated financial statements. ​ ​
We adopted ASU No. 2023-09 effective December 31, 2025, on a prospective basis, the impact of which is limited to additional income tax disclosures in the notes to our consolidated financial statements. ​ 80 Table of Contents ​
The change was partially offset by an increase in cash used for accounts payable and accrued expenses, which was due to the timing of payments to vendors and severance payments as a result of our restructuring announced in December 2023. ​ The increase in non-cash adjustments to reconcile net loss to net cash used in operating activities was mainly the result of in-process research and development expenses recorded in connection with the in-license of bosakitug and ATI-052. ​ Investing Activities ​ Cash flow related to investing activities was the result of: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, (In thousands) 2024 2023 Purchases of property and equipment, net ​ $ (121) ​ $ (1,309) Purchases of marketable securities ​ (119,982) ​ (135,675) Proceeds from sales and maturities of marketable securities ​ ​ 86,144 ​ ​ 183,204 Acquisition of in-licensed assets, including transaction costs ​ ​ (35,810) ​ ​ — Net cash (used in) provided by investing activities ​ $ (69,769) ​ $ 46,220 ​ Net cash used in investing activities for the year ended December 31, 2024 was $69.8 million compared to net cash provided by investing activities during the year ended December 31, 2023 of $46.2 million.
The change was partially offset by a decrease in cash used for accounts payable and accrued expenses, after adjusting for the receipt and corresponding payment of a third-party milestone during the year ended December 31, 2025. ​ The decrease in non-cash adjustments to reconcile net loss to net cash used in operating activities was mainly the result of in-process research and development expenses recorded in connection with the in-license of bosakitug and ATI-052 during the year ended December 31, 2024. ​ Investing Activities ​ Cash flow related to investing activities was the result of: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, (In thousands) ​ ​ ​ 2025 ​ ​ ​ 2024 Purchases of property and equipment ​ $ (111) ​ $ (121) Purchases of marketable securities ​ (39,732) ​ (119,982) Proceeds from sales and maturities of marketable securities ​ ​ 89,041 ​ ​ 86,144 Payments of deferred transaction consideration for in-licensed assets ​ ​ (833) ​ ​ — Acquisition of in-licensed assets, including transaction costs ​ ​ — ​ ​ (35,810) Net cash provided by (used in) investing activities ​ $ 48,365 ​ $ (69,769) ​ Net cash provided by investing activities for the year ended December 31, 2025 was $48.4 million compared to net cash used in investing activities during the year ended December 31, 2024 of $69.8 million.
In November 2022, we entered into a license agreement with Pediatrix Therapeutics, Inc. (“Pediatrix”) under which we granted Pediatrix the exclusive rights to develop, manufacture and commercialize lepzacitinib in Greater China.
(“Pediatrix”) under which we granted Pediatrix the exclusive rights to develop, manufacture and commercialize lepzacitinib in Greater China.
If we fail to raise capital or enter into such agreements as, and when needed, we may have to significantly delay, scale back or discontinue the development of one or more of our product candidates.
If we fail to raise capital or enter into such agreements as, and when needed, we may have to significantly delay, scale back or discontinue the development of one or more of our product candidates. ​ Impact of Macroeconomic Conditions on Our Business ​ Unfavorable conditions in the economy both in the United States and abroad may negatively affect the growth of our business and our results of operations.
The contract research segment earns revenue from the provision of laboratory services. ​ Recently Issued Accounting Pronouncements ​ In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” This standard requires disclosure of additional information about specific expense categories in the notes to financial statements on an annual and interim basis.
We are currently assessing the impact of this ASU. ​ In November 2024, the FASB issued ASU No. 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” This standard requires disclosure of additional information about specific expense categories in the notes to financial statements on an annual and interim basis.
Through the bankruptcy process, EPI Health and its parent company, Novan, Inc., sold the RHOFADE assets to a third party, which excluded our asset purchase agreement with EPI Health and the outstanding amounts due. The sale was approved by the bankruptcy court in September 2023.
In July 2023, EPI Health filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code. Through the bankruptcy process, EPI Health and its parent company, Novan, Inc., sold the RHOFADE assets to a third party, which excluded our asset purchase agreement with EPI Health and the outstanding amounts due.
These changes, as well as the passage of time, partially offset by higher discount rates resulting from higher risk-free rates and changes in credit spreads, resulted in an overall increase of $2.5 million during the year ended December 31, 2024. ​ Stock-Based Compensation ​ We measure the compensation expense of stock-based awards granted to employees and directors using the grant date fair value of the award.
This change and the passage of time resulted in an overall increase of $2.3 million in contingent consideration liability during the year ended December 31, 2025. ​ Stock-Based Compensation ​ We measure the compensation expense of stock-based awards granted to employees and directors using the grant date fair value of the award.
(“Biosion”) pursuant to which we received the exclusive rights to develop, manufacture and commercialize bosakitug 67 Table of Contents (ATI-045) and ATI-052 worldwide, excluding Mainland China, Macau, Hong Kong and Taiwan (“Greater China”). In connection with the Biosion Agreement, we also entered into a collaboration agreement (the “CTTQ Agreement”) with Biosion and Chia Tai Tianqing Pharmaceutical Group, Co., Ltd.
(“Biosion”) pursuant to which we received the exclusive rights to develop, manufacture and commercialize bosakitug (ATI-045) and ATI-052 worldwide, excluding Mainland China, Macau, Hong Kong and Taiwan (“Greater China”).
For the year ended December 31, 2024, we incurred severance expenses of $2.7 million and made cash severance payments of $5.6 million to impacted employees.
During the year ended December 31, 2024, we recognized severance expense of $2.7 million and made cash severance payments of $5.6 million to impacted employees. ​ Components of Our Results of Operations ​ Revenue ​ Contract Research ​ We earn revenue from the provision of laboratory services.
We paid selling commissions of $0.8 million in connection with the sale. 77 Table of Contents Cash Flows ​ Cash and cash equivalents were $24.6 million as of December 31, 2024 compared to $39.9 million as of December 31, 2023.
We paid placement agent and other fees of $5.1 million in connection with the private placement. ​ Cash Flows ​ Cash and cash equivalents were $20.0 million as of December 31, 2025 compared to $24.6 million as of December 31, 2024.
In the near term, we expect to finance our operations through these and other capital sources, including potential partnerships with other companies or other strategic transactions. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on commercially acceptable terms, or at all.
We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on commercially acceptable terms, or at all.
Louis, Missouri under a sublease agreement which has a term through May 2029. ​ Our aggregate remaining lease payment obligation for these two spaces was $3.2 million as of December 31, 2024. ​ Agreement and Plan of Merger with Confluence ​ Under the Confluence Agreement, we agreed to pay the former Confluence equity holders aggregate remaining contingent consideration of up to $75.0 million based upon the achievement of specified regulatory and commercial milestones set forth in the Confluence Agreement.
Louis, Missouri under a sublease agreement which has a term through May 2029. ​ Our aggregate remaining lease payment obligation for these two spaces was $2.5 million as of December 31, 2025. ​ Agreement and Plan of Merger with Confluence ​ We have agreed to certain payment obligations in accordance with and subject to the terms of the Confluence Agreement (see “Overview—Acquisition and License Agreements—Agreement and Plan of Merger with Confluence”).
General and administrative expenses also include facility-related costs, patent filing and prosecution costs, professional fees for legal, auditing and tax services, investor relations costs, business development costs, insurance costs and travel expenses. ​ Licensing ​ Licensing expenses consist of third-party contractual obligations incurred under license and acquisition agreements with third parties, as described above. ​ Revaluation of Contingent Consideration ​ Revaluation of contingent consideration consists of changes in the fair value of our contingent consideration liability between reporting dates. ​ 71 Table of Contents In-process Research and Development ​ In-process research and development (“IPR&D”) consists of expenses related to in-licensed assets with no future alternative use and impairment charges recorded for IPR&D intangible assets. ​ Other Income ​ Interest Income ​ Interest income primarily consists of interest earned on our cash, cash equivalents and marketable securities. ​ Non-cash Royalty Income ​ In July 2024, we entered into the royalty purchase agreement with OMERS pursuant to which we sold a portion of our royalties due to us under the license agreement with Lilly and received upfront proceeds of $26.5 million. ​ We evaluated the royalty purchase agreement under Accounting Standards Codification (“ASC”) 470 – Debt and concluded that the upfront payment should be accounted for as deferred income because the criteria for debt classification were not met.
General and administrative expenses also include facility-related costs, patent filing and prosecution costs, professional fees for legal, auditing and tax services, investor relations costs, business development costs, insurance costs, and travel expenses. ​ Licensing ​ Licensing expenses consist of third-party contractual obligations incurred under license and acquisition agreements with third parties, as described above. ​ Revaluation of Contingent Consideration ​ Revaluation of contingent consideration consists of changes in the fair value of our contingent consideration liability between reporting dates, as described below. ​ In-process Research and Development ​ In-process research and development (“IPR&D”) consists of expenses related to in-licensed assets with no future alternative use. ​ Other Income ​ Interest Income ​ Interest income primarily consists of interest earned on our cash, cash equivalents and marketable securities. ​ Non-cash Royalty Income ​ Non-cash royalty income includes income related to the proceeds from the sale of future royalties to OMERS, recognized under the “units-of-revenue” method. ​ 72 Table of Contents Critical Accounting Estimates ​ This discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States.
The change was primarily 78 Table of Contents due to the consideration paid for the acquisition of in-licensed assets in connection with the Biosion Agreement and CTTQ Agreement and lower sales and maturities of marketable securities, partially offset by a reduction in purchases of marketable securities. ​ Financing Activities ​ Cash flow related to financing activities was the result of: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, (In thousands) 2024 2023 Proceeds from issuance of common stock under securities purchase agreement, net of issuance costs ​ $ 74,913 ​ $ — Proceeds from issuance of common stock under the at-the-market sales agreement, net of issuance costs ​ ​ — ​ ​ 26,714 Payments of employee withholding taxes related to restricted stock unit award vesting and exercise of employee stock options ​ ​ (409) ​ ​ (102) Proceeds from exercise of employee stock options and the issuance of stock ​ 32 ​ 94 Net cash provided by financing activities ​ $ 74,536 ​ $ 26,706 ​ The increase in net cash provided by financing activities for the year ended December 31, 2024 compared to December 31, 2023 was primarily due to proceeds from our private placement in November 2024, offset by proceeds from sales under our at-the-market sales agreement in 2023. ​ Funding Requirements ​ We anticipate we will incur net losses in the near term as we continue the development of our product candidates and continue to discover and develop additional product candidates.
The change was primarily due to higher purchases of marketable securities and the consideration paid in connection with the in-license of bosakitug and ATI-052 during the year ended December 31, 2024. ​ Financing Activities ​ Cash flow related to financing activities was the result of: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, (In thousands) ​ ​ ​ 2025 ​ ​ ​ 2024 Proceeds from issuance of common stock under securities purchase agreement, net of issuance costs ​ $ — ​ $ 74,913 Payments of deferred transaction consideration for in-licensed assets ​ ​ (5,416) ​ ​ — Payments of employee withholding taxes related to restricted stock unit award vesting ​ ​ (446) ​ ​ (409) Proceeds from exercise of employee stock options and the issuance of stock ​ — ​ 32 Net cash (used in) provided by financing activities ​ $ (5,862) ​ $ 74,536 ​ 78 Table of Contents Net cash used in financing activities for the year ended December 31, 2025 was $5.9 million compared to net cash provided by financing activities during the year ended December 31, 2024 of $74.5 million.
In addition to the payments described above, if we sell, license or transfer any of the intellectual property acquired from Confluence pursuant to the Confluence Agreement to a third party, we will be obligated to pay the former Confluence equity holders a portion of any consideration received from such sale, license or transfer in specified circumstances. ​ Exclusive License Agreement with Biosion; Collaboration Agreement with Biosion and CTTQ ​ Under the Biosion and CTTQ Agreements, we agreed to pay, in the aggregate, up to $920 million upon the achievement of specified regulatory and sales milestones.
In addition to the payments described above, if we sell, license or transfer any of the intellectual property acquired from Confluence pursuant to the Confluence Agreement to a third party, we will be obligated to pay the former Confluence equity holders a portion of any consideration received from such sale, license or transfer in specified circumstances. ​ Restructuring ​ In December 2023, our board of directors approved a reduction of our workforce by approximately 46%, which was completed as of December 31, 2024.
We have separate contractual obligations under which we have agreed to pay to third parties a portion of the consideration we may receive under the license agreement. ​ We recognized $3.0 million and $15.0 million of licensing revenue during the years ended December 31, 2024 and 2023, respectively. 68 Table of Contents License Agreement with Pediatrix Therapeutics, Inc.
We may seek to monetize this asset. ​ We recognized $1.2 million and $3.0 million of licensing revenue during the years ended December 31, 2025 and 2024, respectively, a portion of which was payable to third parties. License Agreement with Pediatrix Therapeutics, Inc. In November 2022, we entered into a license agreement with Pediatrix Therapeutics, Inc.
Prior to our acquisition of Confluence, we did not generate any revenue. We have financed our operations over the last several years primarily through sales of our equity securities and incurring indebtedness in the form of loans from commercial lenders. We may engage in additional debt and equity financing transactions in order to raise funds.
We have financed our operations over the last several years primarily through sales of our equity securities and non-dilutive financing. We may engage in additional equity and other financing transactions in order to raise funds. We may receive royalties and milestone payments under third-party licensing and acquisition agreements.
As a result, we will need substantial additional funding to support our continuing operations. ​ We have historically financed our operations primarily with sales of equity securities and incurring indebtedness in the form of loans from commercial lenders.
As a result, we will need substantial additional funding to support our continuing operations. ​ We have historically financed our operations primarily with sales of equity securities and non-dilutive financing. In the near term, we expect to finance our operations through these and other capital sources, including potential partnerships with other companies or other strategic transactions.
As a result of the bankruptcy proceedings, all amounts that were due and outstanding by EPI Health have been fully reserved. Agreement and Plan of Merger with Confluence In 2017, we entered into an Agreement and Plan of Merger (the “Confluence Agreement”) with Confluence Life Sciences, Inc.
The sale was approved by the bankruptcy court in September 2023. As a result of the bankruptcy proceedings, all amounts that were due and outstanding by EPI Health had been fully reserved.
This decrease was partially offset by clinical development expenses associated with a Phase 2a trial that was initiated in August 2024. ​ ATI-052 ​ Research and development expenses related to ATI-052 for the year ended December 31, 2024 primarily consisted of product candidate manufacturing costs and preclinical development activities.
The expenses consist primarily of product candidate manufacturing costs and clinical development expenses associated with a Phase 2 trial in atopic dermatitis. ​ ATI-052 ​ The increase in expenses for ATI-052 during the year ended December 31, 2025 compared to the year ended December 31, 2024 was due to the timing of the acquisition of the in-licensed asset, which occurred in November 2024.
There was no bad debt expense during the year ended December 31, 2024. ​ Licensing ​ The decrease in licensing expenses during the year ended December 31, 2024 compared to the year ended December 31, 2023 was primarily driven by the upfront payment received under the Sun Pharma agreement during the year ended December 31, 2023, a portion of which was payable to third parties, partially offset by the achievement of higher milestones under license agreements during the year ended December 31, 2024. ​ Revaluation of Contingent Consideration ​ The revaluation of contingent consideration loss during the year ended December 31, 2024 was primarily due to changes in estimated sales levels and changes to the probability of success for certain product candidates, compared to the revaluation of contingent consideration gain during the year ended December 31, 2023 which was primarily due to the removal of estimated sales levels of zunsemetinib following our decision to discontinue further development of our MK2 inhibitor programs in immuno-inflammatory diseases. ​ 76 Table of Contents In-process Research and Development ​ In-process research and development expenses recorded during the year December 31, 2024 included the fair value of the consideration expensed in connection with the in-license of bosakitug and ATI-052, as well as transaction costs incurred as part of the transaction.
The increase in stock-based compensation expense during the year ended December 31, 2025 compared to the year ended December 31, 2024 was primarily due to higher forfeiture credits during the year ended December 31, 2024. ​ Professional and legal fees ​ The decrease in professional and legal fees during the year ended December 31, 2025 compared to the year ended December 31, 2024 was primarily due to legal, accounting, and other professional expenses incurred in 2024 in connection with acquisition and license agreements, partially offset by an increase in investor relations costs incurred in 2025. ​ Other general and administrative ​ The decrease in other general and administrative expenses during the year ended December 31, 2025 compared to the year ended December 31, 2024 was primarily due to the sale of our bankruptcy claims against EPI Health and a decrease in insurance costs in 2025. ​ Licensing ​ The decrease in licensing expenses during the year ended December 31, 2025 compared to the year ended December 31, 2024 was primarily due to larger milestone payments achieved under the license agreements with Sun Pharma and Lilly during the year ended December 31, 2024, a portion of which was payable to third parties. ​ Revaluation of Contingent Consideration ​ The revaluation of contingent consideration loss decreased during the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily due to changes in estimated sales levels for certain product candidates during the year ended December 31, 2024. ​ In-process Research and Development ​ In-process research and development expenses recorded during the year ended December 31, 2024 included the fair value of the consideration expensed in connection with the in-license of bosakitug and ATI-052, as well as transaction costs incurred as part of the transaction. 76 Table of Contents ​ Non-cash Royalty Income ​ Non-cash royalty income includes income related to the proceeds from the sale of a portion of our OLUMIANT royalty payments to OMERS in July 2024. ​ Liquidity and Capital Resources ​ Overview ​ Since our inception, we have incurred net losses and negative cash flows from our operations.
In addition to the payments described above, we have also agreed to pay a portion of any sublicense consideration received from the grant of any sublicense or similar rights under any of the rights or licenses granted to us under the Biosion Agreement. ​ R&D Obligations ​ We enter into contracts in the normal course of business with CROs, contract manufacturing organizations and other service providers for clinical trials, preclinical studies and testing, manufacturing and other services and products for operating purposes.
As of December 31, 2025, the balance of our contingent consideration liability was $11.0 million. ​ Exclusive License Agreement with Biosion; Collaboration Agreement with Biosion and CTTQ ​ We have agreed to certain payment obligations in accordance with and subject to the terms of the Biosion Agreements (see “Overview—Acquisition and License Agreements—Exclusive License Agreement with Biosion”). ​ R&D Obligations ​ We enter into contracts in the normal course of business with CROs, contract manufacturing organizations and other service providers for clinical trials, preclinical studies and testing, manufacturing and other services and products for operating purposes.
Asset Purchase Agreement with EPI Health, LLC In October 2019, we sold RHOFADE (oxymetazoline hydrochloride) cream, 1% (“RHOFADE”) to EPI Health, LLC (“EPI Health”) pursuant to an asset purchase agreement. In July 2023, EPI Health filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code.
We recognized $13.2 million of licensing revenue during the year ended December 31, 2024, a portion of which was payable to third parties. Asset Purchase Agreement with EPI Health, LLC ​ In October 2019, we sold RHOFADE (oxymetazoline hydrochloride) cream, 1% (“RHOFADE”), to EPI Health, LLC (“EPI Health”) pursuant to an asset purchase agreement.
We assigned an estimated fair value of $44.8 million to the Warrants, which was based on the fair value of our common stock on the date of issuance less the nominal exercise price of $0.00001 per share. ​ Royalty Purchase Agreement with OCM IP Healthcare Portfolio LP ​ In July 2024, we entered into a royalty purchase agreement with OCM IP Healthcare Portfolio LP, an investment vehicle for Ontario Municipal Employees Retirement System (“OMERS”).
We will expense these payments in the period when either they are determined to be probable of occurring or when the payment is triggered. ​ Royalty Purchase Agreement with OCM IP Healthcare Portfolio LP ​ In July 2024, we entered into a royalty purchase agreement with OCM IP Healthcare Portfolio LP, an investment vehicle for Ontario Municipal Employees Retirement System (“OMERS”).
In addition to identifying and developing our novel product candidates, we are pursuing strategic alternatives, including identifying and consummating transactions with third-party partners, to further develop, obtain marketing approval for and/or commercialize our novel product candidates.
Our proprietary KINect drug discovery platform coupled with our integrated discovery approach to small and large molecules enables us to identify and advance product candidates designed to have superior target affinity, specificity and potency. We are seeking to identify and consummate transactions with third-party partners to further develop, obtain marketing approval for and/or commercialize our novel product candidates.
Removed
Our proprietary KINect drug discovery platform combined with our preclinical development capabilities allows us to identify and advance potential product candidates that we may develop independently or in collaboration with third parties.
Added
In 68 Table of Contents connection with the Biosion Agreement, we also entered into a collaboration agreement (the “CTTQ Agreement”, and together with the Biosion Agreement, the “Biosion Agreements”) with Biosion and Chia Tai Tianqing Pharmaceutical Group, Co., Ltd. (“CTTQ”), a licensee of bosakitug in Greater China.
Removed
Impact of Macroeconomic Conditions on Our Business ​ Unfavorable conditions in the economy both in the United States and abroad may negatively affect the growth of our business and our results of operations. For example, macroeconomic events, including inflationary pressure and geopolitical conflicts, have led to economic uncertainty globally.
Added
We made cash payments of $6.2 million and $34.5 million as set forth in the Biosion Agreements during the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025, 3,000,000 Warrants remained unexercised.
Removed
We determined that the transaction was an acquisition of assets with no alternative future use and therefore expensed as incurred the fair value of the consideration given of $85.6 million as a component of in-process research and development expense during the year ended December 31, 2024.
Added
We have separate contractual obligations under which we have agreed to pay to third parties a portion of the consideration we may receive under the license agreement.
Removed
We incurred $1.3 million in expenses related to this transaction which were expensed as incurred.
Added
In September 2025, we sold all of our right, title and interest in our bankruptcy claims against EPI Health and wrote off the remaining reserved balance as it was deemed uncollectible. ​ Agreement and Plan of Merger with Confluence ​ In 2017, we entered into an Agreement and Plan of Merger (the “Confluence Agreement”) with Confluence Life Sciences, Inc.
Removed
We will expense these payments in the period when either they are determined to be probable of occurring or when the payment is triggered. The Warrants have an initial exercise price of $0.00001 per share, subject to adjustment as provided in the Warrants.
Added
During the year ended December 31, 2025, we made cash severance payments 70 Table of Contents of $0.2 million to impacted employees.
Removed
The Warrants are immediately exercisable, subject to any applicable overseas direct investment filing that may be required for the holders. The Warrants will terminate when exercised in full. We classified the Warrants within equity because they are indexed to our own stock.
Added
The increase primarily consisted of preclinical development activities and clinical development expenses associated with a Phase 1a/1b program, partially offset by a decrease in product manufacturing costs. ​ ATI-2138 ​ The increase in expenses for ATI-2138 during the year ended December 31, 2025 compared to the year ended December 31, 2024 was primarily due to an increase in clinical development expenses associated with a Phase 2a trial in atopic dermatitis. ​ ATI-9494 ​ The increase in expenses for ATI-9494 for the year ended December 31, 2025 compared to the year ended December 31, 2024 was primarily due to an increase in product candidate manufacturing costs, preclinical development activities, and IND-enabling studies. ​ Discovery ​ Discovery expenses consisted primarily of continued investment in our other JAK-sparing ITK inhibitors as we progress toward candidate selection. ​ Other research and development ​ The decrease in other research and development expenses during the year ended December 31, 2025 compared to the year ended December 31, 2024 was primarily due to clinical development expenses associated with former development assets. ​ 75 Table of Contents Personnel and stock-based compensation ​ The increase in personnel expenses during the year ended December 31, 2025 compared to the year ended December 31, 2024 was primarily due to higher headcount.
Removed
In addition to the payments described above, if we sell, license or transfer any of the intellectual property acquired from Confluence pursuant to the Confluence Agreement to a third party, we will be obligated to pay the former Confluence equity holders a portion of any consideration received from such sale, license or transfer in specified circumstances. ​ 69 Table of Contents Discontinued Programs ​ We were previously developing zunsemetinib (ATI-450) as a potential treatment for various immuno-inflammatory diseases, including hidradenitis suppurativa, psoriatic arthritis, and rheumatoid arthritis.
Added
The increase in stock-based compensation expense during the year ended December 31, 2025 compared to the year ended December 31, 2024 was primarily due to higher forfeiture credits during the year ended December 31, 2024.
Removed
Following the results of the Phase 2 trials for these programs, we discontinued further development of our mitogen-activated protein kinase-activated protein kinase 2 (“MK2”) inhibitor programs in immuno-inflammatory diseases in 2023. ​ We were also previously exploring the use of ATI-2231, our second MK2 inhibitor, as a potential treatment for oncology diseases, but decided to pursue this with zunsemetinib due to its more advanced clinical development package. ​ Restructuring ​ In December 2023, our board of directors approved a reduction of our workforce by approximately 46%, which was completed as of December 31, 2024.
Added
General and Administrative ​ The following table summarizes our general and administrative expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ December 31, ​ ​ ​ (In thousands) ​ 2025 ​ ​ ​ 2024 ​ Change Personnel ​ ​ ​ $ 7,581 ​ ​ ​ $ 6,786 ​ $ 795 Professional and legal fees ​ ​ 3,757 ​ ​ 4,508 ​ ​ (751) Facility and support services ​ 2,493 ​ 2,234 ​ 259 Other general and administrative ​ ​ 803 ​ ​ 1,892 ​ ​ (1,089) Stock-based compensation ​ ​ 7,338 ​ ​ 6,783 ​ ​ 555 Total general and administrative expenses ​ $ 21,972 ​ $ 22,203 ​ $ (231) ​ Personnel and stock-based compensation ​ The increase in personnel expenses during the year ended December 31, 2025 compared to the year ended December 31, 2024 was primarily due to higher headcount.
Removed
In the year ended December 31, 2023, we recorded a restructuring charge of $3.1 million, representing one-time termination benefits for employees with retention periods less than the sixty-day minimum retention period. ​ Components of Our Results of Operations ​ Revenue ​ Contract Research ​ We earn revenue from the provision of laboratory services.
Added
The change was primarily due to proceeds from our private placement during the year ended December 31, 2024. ​ Funding Requirements ​ We anticipate we will incur net losses in the near term as we continue the development of our product candidates and continue to discover and develop additional product candidates.
Removed
We apply the “units-of-revenue” method of recognizing income in the consolidated statements of operations and comprehensive loss and such amounts are included in non-cash royalty income. ​ Critical Accounting Estimates ​ This discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements which have been prepared in accordance with generally accepted accounting principles in the United States.
Added
The segment earns revenue through the licensing of our intellectual property and the provision of laboratory services.
Removed
For performance-based awards, we recognize stock-based compensation expense on a straight-line basis over the requisite service period beginning in the period that it becomes probable the performance conditions will occur. At each balance sheet date, we evaluate whether any performance conditions related to a performance-based award have changed.
Added
Our chief operating decision maker, our Chief Executive Officer, manages our operations on a consolidated basis for the purpose of making operating decisions, assessing financial performance, and allocating resources. ​ Recently Issued Accounting Pronouncements ​ In December 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2025-12, “Interim Reporting (Topic 270): Narrow-Scope Improvements.” This standard clarifies interim disclosure requirements and the applicability of Topic 270.

… 14 more changes not shown on this page.

Other ACRS 10-K year-over-year comparisons