10q10k10q10k.net
PRECISION BIOSCIENCES INC

PRECISION BIOSCIENCES INCDTILEarnings & Financial Report

Nasdaq · biotechnology industry

Precision BioSciences, Inc. is a publicly traded American clinical stage gene editing company headquartered in Durham, North Carolina. Founded in 2006, Precision is focused on developing both in vivo and ex vivo gene editing therapies using its proprietary "ARCUS" genome editing platform.

What changed in PRECISION BIOSCIENCES INC's 10-K — 2023 vs 2024

Top changes in PRECISION BIOSCIENCES INC's 2024 10-K

584 paragraphs added · 580 removed · 412 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

130 edited+57 added−62 removed122 unchanged
The Additional TG Milestone Payments become due upon the achievement of certain milestones as specified in the TG License Agreement.
The Additional Milestone Payments become due upon the achievement of certain milestones as specified in the TG License Agreement.
Additionally, on the Novartis Effective Date, Novartis made an equity investment in the Company’s common stock pursuant to a stock purchase agreement (the “Novartis Stock Purchase Agreement”) pursuant to which, on the Novartis Effective Date, the Company issued and sold to Novartis 413,581 shares of the Company’s common stock (the “Novartis Shares”) in a private placement transaction for an aggregate purchase price of $ 25.0 million, or approximately $ 60.30 per share.
Additionally, on the Novartis Effective Date, Novartis made an equity investment in the Company’s common stock pursuant to a stock purchase agreement (the “Novartis Stock Purchase Agreement”) pursuant to which, on the Novartis Effective Date, the Company issued and sold to Novartis 413,581 shares of its common stock (the “Novartis Shares”) in a private placement transaction for an aggregate purchase price of $ 25.0 million, or approximately $ 60.30 per share.
All historical share and per-share amounts reflected throughout the accompanying consolidated financial statements and other financial information in this Annual Report on Form 10-K have been retroactively adjusted to reflect the 2024 Reverse Stock Split as if the split occurred as of the earliest period presented.
All historical share and per-share amounts reflected throughout the accompanying financial statements and other financial information in this Annual Report on Form 10-K have been retroactively adjusted to reflect the 2024 Reverse Stock Split as if the split occurred as of the earliest period presented.
Principal among these risks are dependence on key individuals and intellectual property, competition from other products and companies, and the technical risks associated with the successful research, development and clinical manufacturing of its product candidates.
Principal among these risks are the Company’s dependence on key individuals and intellectual property, competition from other products and companies, and the technical risks associated with the successful research, development and clinical manufacturing of its product candidates.
As described below, up to $ 10.0 million of the cash payments potentially payable to the Company are payable in exchange for the issuance to TG Subsidiary by the Company of shares of the Company’s common stock (the “Company Stock Issuances”).
As described below, up to $ 10.0 million of the cash payments potentially payable to the Company are payable in exchange for the issuance (the “Company Stock Issuances”) to TG Subsidiary of shares of the Company’s common stock.
Either party may terminate the License Agreement (i) for material breach by the other party and a failure to cure such breach within the time period specified in the agreement or (ii) the other party’s insolvency.
Either party may terminate the Imugene License Agreement (i) for material breach by the other party and a failure to cure such breach within the time period specified in the agreement or (ii) the other party’s insolvency.
TG Therapeutics’ obligation to pay royalties to the Company expires on a country-by-country and licensed product-by-licensed product basis, upon the latest to occur of (i) the expiration of the last-to-expire valid claim in such country covering such licensed product; (ii) the expiration of any period of data, regulatory, or market exclusivity, or supplemental protection certificates (other than patents) covering the licensed product in such country; and (iii) a period of ten years following the first commercial sale of the respective licensed product in such country.
TG Therapeutics’ obligation to pay royalties to the Company expires on a country-by-country and licensed product-by-licensed product basis, upon the latest to occur of (i) the expiration of the last-to-expire valid claim in such country covering such licensed product; (ii) the expiration of any period of data, regulatory, or market exclusivity, or supplemental protection certificates (other than patents) covering the licensed product in such country; and (iii) a period of 10 years following the first commercial sale of the respective licensed product in such country.
Under the TG License Agreement, the Company is entitled to receive an upfront cash payment of $ 10.0 million (the “TG Upfront Payment”), an additional cash payment of $ 7.5 million in the event that TG Therapeutics achieves a certain clinical milestone that is expected to be achieved in the near-term (the “Initial Milestone Payment”), and additional payments upon the achievement of additional specified milestones of up to $ 288.6 million (the “Additional TG Milestone Payments”).
Under the TG License Agreement, the Company is entitled to receive an upfront cash payment of $ 10.0 million (the “Upfront Payment”), an additional cash payment of $ 7.5 million in the event that TG Therapeutics achieves a certain clinical milestone that is expected to be achieved in the near-term (the “Initial Milestone Payment”), and additional payments upon the achievement of additional specified milestones of up to $ 288.6 million (the “Additional Milestone Payments”).
As part of the Imugene Purchase Agreement, Imugene US hired a number of employees of the Company who were associated with the Company’s historical CAR T cell therapy operations.
As part of the Imugene Purchase Agreement, Imugene US hired a number of the Company’s employees who were associated with the Company’s historical CAR T cell therapy operations.
The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent it believes, based upon the weight of available evidence, that it is more likely than not that all or a portion of the deferred tax assets will not be realized, a valuation allowance is established through a charge to income tax expense.
The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent it believes, based upon the weight of available evidence, that it is more likely than not that all or a portion of the deferred tax assets will F- 12 not be realized, a valuation allowance is established through a charge to income tax expense.
An impairment charge is recognized for the amount by which the carrying amount exceeds the fair value of the asset. F- 9 Fair Value Measurements Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
An impairment charge is recognized for the amount by which the carrying amount exceeds the fair value of the asset. Fair Value Measurements Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
Accordingly, contingent liabilities of $ 10.0 million related to the Program Purchase Agreement are accrued and included in contract liabilities in the balance sheets as of December 31, 2023 and December 31, 2022. Leases The Company has an operating lease for real estate in North Carolina and does not have any finance leases.
Accordingly, contingent liabilities of $ 10.0 million related to the Program Purchase Agreement are accrued and included in contract liabilities in the balance sheets as of December 31, 2024 and December 31, 2023. Leases The Company has an operating lease for real estate in North Carolina and does not have any finance leases.
Leases At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present. Leases with a term greater than one year are recognized on the balance sheet as right-of-use assets and lease liabilities.
Leases At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present. Leases with a term greater than one year are recognized on the balance sheet as right-of-use assets and F- 9 lease liabilities.
To date, the Company has not recognized any royalty revenue resulting from any of its licensing arrangements. Significant Financing Component – In determining the transaction price, the Company adjusts consideration for the effects of the time value of money if the timing of payments provides the Company with a significant benefit of financing.
To date, the Company has not recognized any royalty revenue resulting from any of its licensing arrangements. F- 10 Significant Financing Component – In determining the transaction price, the Company adjusts consideration for the effects of the time value of money if the timing of payments provides the Company with a significant benefit of financing.
Employee contributions to the Retirement Plan can be 100 % of annual compensation up to the prescribed annual maximum under the Internal Revenue Code. Administrative fees of less than $ 0.1 million were paid by the Company for the years ended December 31, 2023 and December 31, 2022.
Employee contributions to the Retirement Plan can be 100 % of annual compensation up to the prescribed annual maximum under the Internal Revenue Code. Administrative fees of less than $ 0.1 million were paid by the Company for the years ended December 31, 2024 and December 31, 2023.
F- 16 Unless earlier terminated, the Novartis Agreement will remain in effect on a licensed product-by-licensed product and country-by-country basis until the expiration of a defined royalty term for each licensed product and country. Novartis has the right to terminate the Novartis Agreement without cause by providing advance notice to the Company.
Unless earlier terminated, the Novartis Agreement will remain in effect on a licensed product-by-licensed product and country-by-country basis until the expiration of a defined royalty term for each licensed product and country. Novartis has the right to terminate the Novartis Agreement without cause by providing advance notice to the Company.
Imugene’s obligation to pay royalties to the Company expires on a country-by-country and licensed product-by-licensed product basis, upon the latest to occur of certain events related to expiration of patents, regulatory exclusivity or a period of ten years following the first commercial sale of the respective licensed product.
Imugene’s obligation to pay royalties to the Company expires on a country-by-country and licensed product-by-licensed product basis, upon the latest to occur of certain events related to expiration of patents, regulatory exclusivity or a period of 10 years following the first commercial sale of the respective licensed product.
Additionally, the Company and Imugene US entered into a license agreement (the “Imugene License Agreement”) on the Closing Date, pursuant to which the Company granted Imugene US certain exclusive and non-exclusive license rights to develop, manufacture, and commercialize oncological applications of the Company’s allogeneic CAR T therapy, azer-cel, and up to three additional research product candidates directed to targets that Imugene US may nominate prior to the fifth anniversary of the effective date of the Imugene License Agreement, pursuant to the terms of the Imugene License Agreement.
Additionally, the Company entered into a license agreement with Imugene (the “Imugene License Agreement”) on the Closing Date, pursuant to which the Company granted Imugene US certain exclusive and non-exclusive license rights to develop, manufacture, and commercialize oncological applications of our allogeneic CAR T therapy, azer-cel, and up to three additional research product candidates directed to targets that Imugene US may nominate prior to the fifth anniversary of the effective date of the Imugene License Agreement, pursuant to the terms of the Imugene License Agreement.
Impairment Charges Long-lived assets, such as PP&E, intangible assets, and long-term prepaid assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
F- 8 Impairment Charges Long-lived assets, such as PP&E, intangible assets, and long-term prepaid assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
As of December 31, 2023, management has constrained all variable consideration related to milestone payments in the Imugene License given the level of uncertainty associated with achievement of the milestone payments. Accordingly, no revenue was recognized under the Imugene License Agreement during the year ended December 31, 2023.
As of December 31, 2024 management has constrained all variable consideration related to milestone payments in the Imugene License Agreement given the level of uncertainty associated with achievement of the milestone payments. Accordingly, no revenue was recognized under the Imugene License Agreement during the year ended December 31, 2024.
As of December 31, 2023 and December 31, 2022 , the Company had no unrecognized income tax benefits. The Company’s policy for recording interest and penalties relating to uncertain income tax positions is to record them as a component of income tax expense in the accompanying statements of operations.
As of December 31, 2024 and December 31, 2023 , the Company had no unrecognized income tax benefits. The Company’s policy for recording interest and penalties relating to uncertain income tax positions is to record them as a component of income tax expense in the accompanying statements of operations.
F- 10 Revenue Recognition for Contracts with Customers The Company’s revenues are generated primarily through collaborative research, license, development and commercialization agreements. ASC 606 applies to all contracts with customers, except for contracts that are within the scope of other standards.
Revenue Recognition for Contracts with Customers The Company’s revenues are generated primarily through collaborative research, license, development and commercialization agreements. ASC 606 applies to all contracts with customers, except for contracts that are within the scope of other standards.
Included within the Additional TG Milestone Payments is a potential payment of $ 3.0 million in connection with achievement of a milestone specified in the TG License Agreement, payable in exchange for such number of shares of the Company’s common stock determined based on a price per share equal to the greater of (A) 200 % of the VWAP of the Company’s common stock for the 30 trading days prior to the achievement of such milestone or (B) the Minimum Price.
Included within the Additional Milestone Payments is a potential payment of $ 3.0 million in connection with achievement of a milestone specified in the TG License Agreement, payable in exchange for such number of shares of the Company’s common stock determined based on a price per share equal to the greater of (A) 100 % premium to the VWAP of the Company’s common stock for the 30 trading days prior to the achievement of such milestone or (B) the Minimum Price.
The purchase price of the shares under the 2019 ESPP, in the absence of a contrary designation, will be 85 % of the lower of the fair market value of our common stock on the first trading day of the offering period or on the purchase date.
T he purchase price of the shares under the 2019 ESPP, in the absence of a contrary designation, will be 85 % of the lower of the fair market value of our common stock on the first trading day of the offering period or on the purchase date.
The Company has elected to account for GILTI in the year the tax is incurred. The Company does not have a GILTI inclusion in years ends December 31, 2023 or December 31, 2022 and therefore, no GILTI tax has been recorded for the years then ended.
The Company has elected to account for GILTI in the year the tax is incurred. The Company does not have a GILTI inclusion in years ends December 31, 2024 or December 31, 2023 and therefore, no GILTI tax has been recorded for the years then ended.
Each of the Company and TG Therapeutics may terminate the TG License Agreement (i) for material breach by the other party and a failure to cure such breach within the time period specified in the TG License Agreement or (ii) the other party’s insolvency.
The Company or TG Therapeutics may terminate the TG License Agreement (i) for material breach by the other party and a failure to cure such breach within the time period specified in the TG License Agreement or (ii) the other party’s insolvency.
Either party may terminate the Novartis Agreement for material breach by the other party and a failure to cure such breach within the time period specified in the Novartis Agreement. The Company may also terminate the Novartis Agreement in the event that Novartis brings a challenge to our patents.
Either party may terminate the Novartis Agreement for material breach by the other party and a failure to cure such breach within the time period specified in the Novartis Agreement. The Company may also terminate the Novartis Agreement in the event that Novartis brings a challenge to its patents.
Investments under the Equity Method The Company utilizes the equity method to account for investments when it is determined that the Company possess the ability to exercise significant influence, but not control, over the operating and financial policies of the investee.
Investments under the Equity Method The Company utilizes the equity method to account for investments when it is determined that the Company possesses the ability to exercise significant influence, but not control, over the operating and financial policies of the investee.
The three tiers are defined as follows: Level 1—Observable inputs based on unadjusted quoted prices in active markets for identical assets or liabilities Level 2—Inputs, other than quoted prices in active markets, that are observable either directly or indirectly Level 3—Unobservable inputs for which there is little or no market data, which require the Company to develop its own assumptions Cash Equivalents As of December 31, 2023, the Company held cash equivalents which are composed of money market funds.
The three tiers are defined as follows: Level 1—Observable inputs based on unadjusted quoted prices in active markets for identical assets or liabilities Level 2—Inputs, other than quoted prices in active markets, that are observable either directly or indirectly Level 3—Unobservable inputs for which there is little or no market data, which require the Company to develop its own assumptions Cash Equivalents As of December 31, 2024 and December 31, 2023, the Company held cash equivalents which were composed of investments in money market funds.
In accordance with ASC 323, the Company will continue to record its proportionate share of Elo’s net loss in the statements of operations along with a corresponding reduction in the carrying value of the Note Receivable.
In accordance with ASC 323, the Company will continue to record its F- 24 proportionate share of Elo’s net loss in the statements of operations along with a corresponding reduction in the carrying value of the Note Receivable.
NOTE 2: COLLABORATION AND LICENSE AGREEMENTS TG Therapeutics F- 13 On January 7, 2024, the Company entered into a license agreement (the “TG License Agreement”) with TG Cell Therapy, Inc. (“TG Subsidiary”) and its parent company TG Therapeutics, Inc.
NOTE 2: COLLABORATION AND LICENSE AGREEMENTS TG Therapeutics On January 7, 2024, the Company entered into a license agreement (the “TG License Agreement”) with TG Cell Therapy, Inc. (“TG Subsidiary”) and its parent company TG Therapeutics, Inc.
The Company may terminate the entire Imugene License Agreement due to a challenge to its patents brought by Imugene and a breach by Imugene in any material respect of the Imugene License Agreement, the Imugene Purchase Agreement or any related transaction documents.
The Company may terminate the entire Imugene License Agreement due to a challenge to the Company’s patents brought by Imugene and a breach by Imugene in any material respect of the Imugene License Agreement, the Imugene Purchase Agreement or any related transaction documents.
In consideration for the assets acquired under the Imugene Purchase Agreement, Imugene US assumed certain liabilities of the Company, paid the Company $ 8 million in cash, and issued to the Company convertible notes pursuant to the terms and conditions set forth in a convertible note subscription deed (collectively, the “Imugene Convertible Note”) in an aggregate principal amount of $ 13 million.
In consideration for the Acquired Assets, Imugene US assumed certain liabilities, paid the Company $ 8 million in cash, and issued the Company convertible notes pursuant to the terms and conditions set forth in a convertible note subscription deed (collectively, the “Imugene Convertible Note”) in an aggregate principal amount of $ 13 million.
The price per share of the Company’s common stock under the Novartis Stock Purchase Agreement represented a 20 % premium over the volume-weighted-average-price of the Company’s common stock over the 10 trading days preceding the execution date of the Novartis Stock Purchase Agreement.
The price per share of the Company’s common stock under the Novartis F- 15 Stock Purchase Agreement represented a 20 % premium over the volume-weighted-average-price of the Company’s common stock over the 10 trading days preceding the execution date of the Novartis Stock Purchase Agreement.
The following table summarizes certain information about stock options granted under the stock option plans which are vested or expected to vest as of December 31, 2023 and December 31, 2022.
The following table summarizes certain information about stock options granted under the stock option plans which are vested or expected to vest as of December 31, 2024 and December 31, 2023.
Sale of Azer-cel CAR T Platform to Imugene F- 14 On August 15, 2023, the Company entered into an asset purchase agreement (the “Imugene Purchase Agreement”) with Imugene Limited, and its wholly-owned subsidiary Imugene (USA) Inc. (“Imugene US” and together with Imugene Limited, “Imugene”).
Sale of Azer-cel CAR T Platform to Imugene On August 15, 2023 the Company entered into an asset purchase agreement (the “Imugene Purchase Agreement”) with Imugene Limited (“Imugene Limited”), and its wholly owned subsidiary Imugene (USA) Inc. (“Imugene US” and together with Imugene Limited, “Imugene”).
Pursuant to the terms of the Prevail Agreement, Prevail and the Company will continue to collaborate on developing the Company’s ARCUS nucleases for the research and development of potential in vivo therapies for genetic disorders, including Duchenne muscular dystrophy, a liver-directed target, and a central nervous system directed target.
Pursuant to the terms of the Prevail Agreement, Prevail and the Company continued to collaborate on developing the Company’s ARCUS nucleases for the research and development of potential in vivo therapies for genetic disorders, including Duchenne muscular dystrophy, a liver-directed target, and a central nervous system directed target.
For additional information related to discontinued operations, refer to Note 6, Discontinued Operations. Comprehensive Loss F- 12 Comprehensive loss includes net loss as well as other changes in stockholders’ equity that result from transactions and economic events other than those with stockholders.
F- 11 For additional information related to discontinued operations, refer to Note 6, Discontinued Operations. Comprehensive Income (Loss) Comprehensive income (loss) includes net income (loss) as well as other changes in stockholders’ equity that result from transactions and economic events other than those with stockholders.
On June 30, 2023, the Company entered into an amended and restated development and license agreement (the “Prevail Agreement”) with Prevail. The Prevail Agreement amends and restates the Original Prevail Agreement.
On June 30, 2023, the Company entered into an amended and restated development and license agreement (the “Prevail Agreement”) with Prevail. The Prevail Agreement amended and restated the Original Prevail Agreement.
As of December 31, 2023, the Company had $ 0.5 million in property, plant, and equipment that met the criteria for classification as held for sale. These assets are recognized at the lower of net book value or fair value less costs to sell using a market approach.
As of December 31, 2024 , the Company had $ 0.2 million in property, plant, and equipment that met the criteria for classification as held for sale. These assets are recognized at the lower of net book value or fair value less costs to sell using a market approach.
For additional discussion of accounting for collaboration revenues, see Note 10, Collaboration and License Agreements . Research and Development Research and development costs are expensed as incurred.
For additional discussion of accounting for collaboration revenues, see Note 2 , Collaboration and License Agreements . Research and Development Research and development costs are expensed as incurred.
The Initial Milestone Payment of $ 7.5 million, if payable, will consist of (i) a $ 5.25 million cash milestone payment and (ii) a $ 2.25 million cash payment payable in exchange for such number of shares of the Company’s common stock determined based on a price per share equal to the greater of (A) 200 % of the VWAP of the Company’s common stock for the 30 trading days prior to the achievement of such milestone or (B) the Minimum Price.
F- 13 The Initial Milestone Payment of $ 7.5 million, if payable, will consist of (i) a $ 5.25 million cash milestone payment and (ii) a $ 2.25 million cash payment payable in exchange for such number of shares of the Company’s common stock determined based on a price per share equal to the greater of (A) 100 % premium to the VWAP of the Company’s common stock for the 30 trading days prior to the achievement of such milestone or (B) the Minimum Price.
Novartis’s obligation to pay royalties to us expires on a country-by-country and licensed product-by-licensed product basis, upon the latest to occur of certain events related to expiration of patents, regulatory exclusivity or a period of ten years following the first commercial sale of the licensed product.
Novartis’s obligation to pay royalties to the Company expires on a country-by-country and licensed product-by-licensed product basis, upon the latest to occur of certain events related to expiration of patents, regulatory exclusivity or a period of 10 years following the first commercial sale of the licensed product.
Accordingly, the Company recorded an impairment of $ 0.5 million on assets held for sale during the year ended December 31, 2023 to reflect the difference between net book value and the fair value less costs to sell of assets held for sale.
Accordingly, the Company recorded an impairment of $ 0.2 million on assets held for sale during the year ended December 31, 2024 to reflect the difference between net book value and the fair value less costs to sell of assets held for sale.
As of December 31, 2023 , the Company had federal and state R&D tax credits of $ 17.2 million and an amount less than $ 0.1 million, which begin to expire in 2029 and 2030 , respectively.
As of December 31, 2024 , the Company had federal and state R&D tax credits of $ 20.2 million and an amount less than $ 0.1 million, which begin to expire in 2029 and 2030 , respectively.
Summary of Significant Accounting Policies Cash and Cash Equivalents F- 8 As of December 31, 2023, the Company held cash equivalents which are composed of money market funds.
F- 7 Summary of Significant Accounting Policies Cash and Cash Equivalents As of December 31, 2024 and December 31, 2023 , the Company held cash equivalents which are composed of money market funds.
F- 21 The Retirement Plan includes a safe-harbor matching employer contribution equal to 100 % of participants’ deferral contributions up to 4 %. The Company made contributions of $ 0.9 million to the Retirement Plan during each of the years ended December 31, 2023 and December 31, 2022 , respectively.
F- 19 The Retirement Plan includes a safe-harbor matching employer contribution equal to 100 % of participants’ deferral contributions up to 4 %. The Company made contributions of $ 0.6 million and $ 0.9 million to the Retirement Plan during each of the years ended December 31, 2024 and December 31, 2023, respectively.
F- 15 Collaboration and License Agreement with Novartis On June 14, 2022, the Company entered into a collaboration and license agreement (the “Novartis Agreement”) with Novartis Pharma AG (“Novartis”), which became effective on June 15, 2022 (the “Novartis Effective Date”), to collaborate to discover and develop in vivo gene editing products incorporating our custom ARCUS nucleases for the purpose of seeking to research and develop potential treatments for certain diseases (collectively referred to as licensed products).
Collaboration and License Agreement with Novartis On June 14, 2022, the Company entered into the Novartis Agreement, which became effective on June 15, 2022 (the “Novartis Effective Date”), to collaborate to discover and develop in vivo gene editing products incorporating its custom ARCUS nucleases for the purpose of seeking to research and develop potential treatments for certain diseases (collectively referred to as licensed products).
No contract liability for the Company's guarantee of Imugene’s performance on the MCAT lease was recorded as of December 31, 2023, as it was not deemed probable that Imugene will be in default under the MCAT Lease.
No contract liability for the Company ’s guarantee of Imugene’s performance on the MCAT lease was recorded as of December 31, 2024, as it was not deemed probable that Imugene will be in default under the MCAT Lease.
NOTE 3: SHARE-BASED COMPENSATION The Company previously granted stock options under its 2015 Stock Incentive Plan (the “2015 Plan”). As of December 31, 2023 there were 36,552 stock options outstanding under the 2015 Plan and no remaining stock options available to be granted under the 2015 Plan.
NOTE 3: SHARE-BASED COMPENSATION The Company previously granted stock options under its 2015 Stock Incentive Plan (the “2015 Plan”). As of December 31, 2024 there were 29,935 stock options outstanding under the 2015 Plan and no remaining stock options available to be granted under the 2015 Plan.
Accordingly, the Company will adjust the carrying value of the final payment fee to fair value each reporting period with any changes in fair value recorded to other income (expense). There was an assessed loss on change in fair value of the final payment fee of less than $ 0.1 million during the year ended December 31, 2023.
Accordingly, the Company will adjust the carrying value of the final payment fee to fair value each reporting period with any changes in fair value recorded to other income (expense ). The change in fair value of the final payment fee was less than $ 0.1 million during the year ended December 31, 2024.
As the Company's cumulative proportionate share of Elo’s net loss exceeded the carrying value of the investment in Elo, the carrying value of the Investment in Elo has been reduced to $ 0 .
As the Company ’ s cumulative proportionate share of Elo’s net loss exceeded the carrying value of the investment in Elo, the carrying value of the Investment in Elo has been reduced to $ 0 .
In addition, under the Imugene License Agreement, the Company is eligible to receive milestone payments of up to an aggregate of $ 206 million for azer-cel, inclusive of a payment of $ 8 million in cash and equity upon successful completion of the Phase 1b dosing in the CAR T relapsed large B cell lymphoma (“LBCL”) patient population.
F- 14 In addition, under the License Agreement, the Company is eligible to receive milestone payments of up to an aggregate of $ 206 million for azer-cel, inclusive of a payment of $ 8 million in cash and equity upon successful completion of the Phase 1b dosing in the CAR T relapsed LBCL patient population.
As of December 31, 2023 and December 31, 2022 the Company held common stock in iECURE (defined below) with a fair value of $ 3.2 million and $ 2.6 million, respectively.
As of both December 31, 2024 and December 31, 2023 , the Company held common stock in iECURE (defined below) with a fair value of $ 3.2 million.
The Company concluded the Imugene License Agreement represents functional intellectual property in accordance with ASC 606 given the Company will not be providing any additional services to Imugene outside of the right to use the licensed intellectual property.
The Company concluded the Imugene License Agreement represents functional intellectual property in accordance with ASC 606 given the Company does not expect to provide any additional services to Imugene outside of the right to use the licensed intellectual property.
Amortization expense for intangible assets with definite lives will be less than $ 0.1 million for each of the next five years with the remaining $ 0.2 million amortized to expense in 2029 and beyond.
Amortization expense for intangible assets with definite lives will be less than $ 0.1 million for each of the following five years with the remaining $ 0.4 million amortized to expense in 2030 and beyond.
NOTE 9: INTANGIBLE ASSETS Intangible assets, net, consisted of the following as of December 31 (in thousands): 2023 2022 License cost $ 548 $ 910 Less: accumulated amortization ( 148 ) ( 179 ) Intangible assets, net $ 400 $ 731 Amortization expense of intangible assets was less than $ 0.1 million and $ 0.1 million for the years ended December 31, 2023 and December 31, 2022 , respectively.
NOTE 9: INTANGIBLE ASSETS Intangible assets, net, consisted of the following as of December 31, 2024 and December 31, 2023 (in thousands): 2024 2023 License cost $ 821 $ 548 Less: accumulated amortization ( 199 ) ( 148 ) Intangible assets, net $ 622 $ 400 Amortization expense of intangible assets was less than $ 0.1 million and $ 0.1 million for the years ended December 31, 2024 and December 31, 2023 , respectively.
Pursuant to and simultaneously with the execution of the Imugene Purchase Agreement, on August 15, 2023 (the “Closing Date”), Imugene US acquired the Company’s manufacturing infrastructure used in the development and manufacture of azer-cel, including assuming the lease to the Company’s manufacturing facility and certain contracts of the Company with respect to the Company’s manufacturing facility, and related equipment, supplies, azer-cel clinical trial inventory and other assets related to the Company’s CAR T cell therapy platform.
Pursuant to and simultaneously with the execution of the Imugene Purchase Agreement, Imugene US acquired the Company’s manufacturing infrastructure used in the development and manufacture of azer-cel, including assuming the lease to the Company’s manufacturing facility and certain contracts with respect to our manufacturing facility, and related equipment, supplies, azer-cel clinical trial inventory and other assets related to the Company’s CAR T cell therapy platform (the “Acquired Assets”).
As of December 31, 2023 , 122,630 shares were available to be issued under the 2019 Plan. Up to 17,500 shares of the Company’s common stock were initially reserved for issuance under the 2019 ESPP.
As of December 31, 2024 , 99,638 shares were available to be issued under the 2019 Plan. Up to 17,500 shares of the Company’s common stock were initially reserved for issuance under the 2019 ESPP.
As of December 31, 2023 , the aggregate number of shares available for issuance under the 2019 Plan has been increased by 367,616 pursuant to this provision.
As of December 31, 2024 , the aggregate number of shares available for issuance under the 2019 Plan has been increased by 534,177 pursuant to this provision.
As of December 31, 2023 , the aggregate number of shares available for issuance under the 2019 ESPP has been increased by 91,903 shares pursuant to this provision.
As of December 31, 2024 , the aggregate number of shares available for issuance under the 2019 ESPP has been increased by 133,543 shares pursuant to this provision.
F- 26 NOTE 12: DEBT Pursuant to the terms of the loan and security agreement with Pacific Western Bank (“PWB”) the Company may request advances on a revolving line of credit of up to an aggregate principal amount of $ 30.0 million (as amended from time to time, the “Revolving Line”) at an interest rate equal to the greater of (a) 0.75 % above the Prime rate (as defined in the Revolving Line) and (b) 4.25 %.
NOTE 12: DEBT Pursuant to the terms of the loan and security agreement, as amended (the “2019 Loan and Security Agreement”), with Banc of California (formerly known as Pacific Western Bank) the Company was entitled to request advances on a revolving line of credit of up to an aggregate principal amount of $ 30.0 million (as amended from time to time, the “Revolving Line”) at an annual interest rate equal to the greater of (a) 0.75 % above the Prime Rate (as defined in the 2019 Loan and Security Agreement) and (b) 4.25 %.
The net increase in the valuation allowance for the year ended December 31, 2023 of $ 17.8 million is comprised of an increase in the valuation allowance recorded against the deferred tax assets, primarily related to tax credits and net operating loss (“NOL”) carryforwards for the year.
The net decrease in the valuation allowance for the year ended December 31, 2024 of $ 2.3 million is comprised of an decrease in the valuation allowance recorded against the deferred tax assets, primarily related to tax credits and net operating loss (“NOL”) carryforwards for the year.
As of December 31, 2023 , the carrying value of the Note Receivable was $ 5.0 million including a $ 2.8 million decrease in the carrying value as a result of equity method investment losses. The remaining $ 5.0 million discount on the Note Receivable will be amortized to interest income over the life of the Note.
As of December 31, 2024 , the carrying value of the Note Receivable was $ 4.6 million including a $ 1.1 million net decrease in the carrying value as a result of equity method investment losses. The remaining $ 5.4 million discount on the Note Receivable will be amortized to interest income over the life of the Note.
The fair value of each stock option grant is estimated using a Black-Scholes option-pricing model on the date of grant as follows: Years Ended December 31, 2023 2022 Estimated dividend yield 0.00 % 0.00 % Weighted-average expected stock price volatility 87.15 % 79.66 % Weighted-average risk-free interest rate 3.89 % 2.57 % Expected term of options (in years) 5.78 6.07 Weighted-average fair value per option $ 17.41 $ 55.91 The expected volatility rates are estimated based on the actual volatility of a peer group comprising the Company and other comparable public companies over the expected term.
The fair value of each stock option grant is estimated using a Black-Scholes option-pricing model on the date of grant using the following inputs: Years Ended December 31, 2024 2023 Estimated dividend yield 0.00 % 0.00 % Weighted-average expected stock price volatility 87.93 % 87.15 % Weighted-average risk-free interest rate 3.67 % 3.89 % Expected term of options (in years) 5.63 5.78 Weighted-average fair value per option $ 10.58 $ 17.41 The expected volatility rates are estimated based on the actual volatility of a peer group comprising the Company and other comparable public companies over the expected term.
During the years ended December 31, 2023 and 2022, the Company recognized revenue under the Novartis Agreement of $ 22.7 million and $ 9.5 million, respectively.
During the years ended December 31, 2024 and 2023 , the Company recognized revenue under the Novartis Agreement of $ 6.4 million and $ 22.7 million, respectively.
The Company recorded employee and nonemployee share-based compensation expense as follows (in thousands): Years Ended December 31, 2023 2022 Employee $ 12,364 $ 15,921 Nonemployee 1,676 3,276 $ 14,040 $ 19,197 F- 19 Share-based compensation expense is included in the following line items in the statements of operations (in thousands): Years Ended December 31, 2023 2022 Research and development $ 4,355 $ 7,973 General and administrative 9,685 11,224 $ 14,040 $ 19,197 Determining the appropriate fair value model to measure the fair value of the stock option grants on the date of grant and the related assumptions requires judgment.
F- 17 The Company recorded employee and nonemployee share-based compensation expense as follows (in thousands): Years Ended December 31, 2024 2023 Employee $ 11,023 $ 12,364 Nonemployee 1,581 1,676 $ 12,604 $ 14,040 Share-based compensation expense is included in the following line items in the statements of operations (in thousands): Years Ended December 31, 2024 2023 Research and development $ 2,560 $ 4,355 General and administrative 10,044 9,685 $ 12,604 $ 14,040 Determining the appropriate fair value model to measure the fair value of the stock option grants on the date of grant and the related assumptions requires judgment.
The TG Upfront Payment of $ 10.0 million is comprised of (i) a $ 5.25 million cash payment that was paid to the Company on February 5, 2024 , (ii) a $ 2.25 million cash payment that was paid to the Company on February 4, 2024 , in exchange for 97,360 shares of the Company’s common stock, based on a price per share equal to 200 % of the volume-weighted-average-price (“VWAP”) of the Company’s common stock for the 30 trading days prior to the date of the TG License Agreement, and (iii) a deferred cash payment of $ 2.5 million due within 12 months following the date of the TG License Agreement, payable in exchange for such number of shares of the Company’s common stock determined based on a price per share equal to the greater of (A) 200 % of the VWAP of the Company’s common stock for the 30 trading days prior to the date of payment or (B) a minimum price of $ 11.1660 determined in accordance with Nasdaq Listing Rule 5635(d) (the “Minimum Price”).
The Upfront Payment of $ 10.0 million is comprised of (i) a $ 5.25 million cash payment that was paid to the Company on February 5, 2024 , (ii) a $ 2.25 million cash payment that was paid to the Company on February 5, 2024 in exchange for 97,360 shares of the Company’s common stock, based on a price per share equal to a 100 % premium to the VWAP of the Company’s common stock for the 30 trading days prior to the date of the TG License Agreement, and (iii) a deferred cash payment of $ 2.5 million that was paid to the Company on January 6, 2025 in exchange for 220,712 shares of the Company’s common stock, based on a price per share equal to the greater of (A) 100 % premium to the VWAP of the Company’s common stock for the 30 trading days prior to the date of payment or (B) a minimum price of $ 11.1660 determined in accordance with Nasdaq Listing Rule 5635(d) (the “Minimum Price”).
Deferred revenue related to the Prevail Agreement amounted to $ 52.7 million and $ 74.8 million as of December 31, 2023 and December 31, 2022, respectively, of which $ 4.7 million and $ 18.3 million, respectively, was included in current liabilities within the balance sheets.
Deferred revenue related to the Prevail Agreement was $ 52.7 million as of December 31, 2023, of which $ 4.7 million was included in current liabilities within the balance sheets.
Deferred revenue related to the Novartis Agreement amounted to $ 32.4 million and $ 54.2 million as of December 31, 2023 and December 31, 2022, respectively, of which $ 7.4 million and $ 27.9 million, respectively, was included in current liabilities within the balance sheets.
Deferred revenue related to the Novartis Agreement amounted to $ 26.3 million and $ 32.4 million as of December 31, 2024 and December 31, 2023, respectively, of which $ 3.0 million and $ 7.4 million, respectively, was included in current liabilities within the balance sheets.
If Imugene fails to pay rent due on the MCAT Lease, the lessor may have contractual recourse against the Company. As of December 31, 2023, the Company’s guarantee consists of a contingent liability for aggregate minimum lease payments of approximately $ 5.8 million.
If Imugene (including any successor or assignee of Imugene) fails to pay rent due on the MCAT Lease, the lessor may have contractual recourse against the Company. As of December 31, 2024 , the Company’s guarantee consists of a contingent liability for aggregate minimum lease payments of approximately $ 4.3 million.
As of December 31, 2023 and December 31, 2022 , the Company had no such accruals. In November 2021, North Carolina enacted the 2021 Appropriations Act, which included a gradual corporate income tax rate decrease from the current 2.5 % to 0 % by 2030.
As of December 31, 2024 and December 31, 2023 , the Company had no such accruals. In November 2021, North Carolina enacted the 2021 Appropriations Act, which included a gradual corporate income tax rate decrease from the current 2.5 % to 0 % by 2030. For tax years beginning on or after January 1, 2025, the rate is 2.25 %.
As of December 31, 2023 and December 31, 2022 , the Company had federal contribution carryforwards of $ 0.2 million which began to expire in 2023 .
As of December 31, 2024 and December 31, 2023 , the Company had federal contribution carryforwards of $ 0.1 million and $ 0.2 million, respectively, which begin to expire in 2026 .
The 2019 Plan provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units and other share-based awards. The 2019 Plan had 211,303 stock options and 214,857 restricted stock units (“RSUs”) outstanding as of December 31, 2023.
The 2019 Plan provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units and other share-based awards. The 2019 Plan had 180,190 stock options and 970,278 restricted stock units (“RSUs”) outstanding as of December 31, 2024.
(“TG Parent” and, together with TG Subsidiary, “TG Therapeutics”), pursuant to which the Company granted TG Subsidiary certain exclusive and non-exclusive license rights to develop, manufacture, and commercialize the Company’s allogeneic CAR T therapy azer-cel for autoimmune diseases and other indications outside of cancer (collectively referred to as licensed products).
(“TG Parent” and, together with TG Subsidiary, “TG Therapeutics”), pursuant to which the Company granted TG Subsidiary certain exclusive and non-exclusive license rights to develop, manufacture, and commercialize azer-cel for autoimmune diseases and other indications outside of cancer pursuant to the terms of the TG License Agreement.
As of December 31, 2023 , we had issued 33,080 shares under the 2019 ESPP. As of December 31, 2023 , 76,323 shares were available to be issued under the 2019 ESPP. The Company recognized share-based compensation expense related to the ESPP of $ 0.1 million and $ 0.2 million during the years ended December 31, 2023 and 2022, respectively.
As of December 31, 2024 , we had issued 56,911 shares under the 2019 ESPP. As of December 31, 2024 , 94,132 shares were available to be issued under the 2019 ESPP. The Company recognized share-based compensation expense related to the ESPP of $ 0.1 million during the years ended December 31, 2024 and 2023.
Amounts expected to be recognized as revenue within the 12 months following the balance sheet date are classified as deferred revenue within current liabilities in the accompanying balance sheets. Amounts not expected to be recognized as revenue within the 12 months following the balance sheet date are classified as noncurrent deferred revenue.
Invoices issued as stipulated in contracts prior to revenue recognition are recorded as deferred revenue. Amounts expected to be recognized as revenue within the 12 months following the balance sheet date are classified as deferred revenue within current liabilities in the accompanying balance sheets.
Significant components of the Company’s deferred tax assets and deferred tax liabilities are as follows (in thousands): Years Ended December 31, 2023 2022 Noncurrent deferred tax assets: Net operating loss carryforwards $ 45,472 $ 36,457 Contribution carryforwards 34 48 Lease liability 2,116 1,120 Deferred revenue 20,337 30,022 Capitalized R&D costs 28,732 15,893 Other assets 14,962 14,279 Tax credits 30,757 24,721 Less: valuation allowance ( 139,133 ) ( 121,372 ) Total deferred tax assets, noncurrent 3,277 1,168 Noncurrent deferred tax liability: Investments and other — 476 Deferred gain - Imugene 1,303 — Right of use asset 1,974 692 Total deferred tax liabilities, noncurrent 3,277 1,168 Net deferred tax assets $ — $ — As of December 31, 2023 and December 31, 2022, the Company has provided a valuation allowance for the full amount of the net deferred tax assets as the realization of the net deferred tax assets is not determined to be more likely than not.
Significant components of the Company’s deferred tax assets and deferred tax liabilities are as follows (in thousands): Years Ended December 31, 2024 2023 Noncurrent deferred tax assets: Net operating loss carryforwards $ 51,777 $ 45,472 Contribution carryforwards 26 34 Lease liability 1,671 2,116 Deferred revenue 5,681 20,337 Capitalized R&D costs 31,282 28,732 Other assets 14,845 14,962 Tax credits 33,701 30,757 Less: valuation allowance ( 136,872 ) ( 139,133 ) Total deferred tax assets, noncurrent 2,111 3,277 Noncurrent deferred tax liability: Investments and other 577 — Deferred gain - Imugene — 1,303 Right of use asset 1,534 1,974 Total deferred tax liabilities, noncurrent 2,111 3,277 Net deferred tax assets $ — $ — As of December 31, 2024 and December 31, 2023, the Company has provided a valuation allowance for the full amount of the net deferred tax assets as the realization of the net deferred tax assets is not determined to be more likely than not.
During the year ended December 31, 2023, the Company recorded a $ 0.6 million increase in the carrying value of its iECURE equity to adjust to fair value.
There was no change in the fair value of the IECURE equity during the year ended December 31, 2024. During the year ended December 31, 2023 , we recorded a $ 0.6 million increase in the carrying value of our iECURE equity to adjust to fair value.
F- 20 The following table summarizes the Company’s RSU activity for the years ended December 31, 2022 and December 31, 2023: RSU Awards Weighted-Average Grant Date Fair Value Unvested RSUs as of December 31, 2021 25,668 338.76 Granted 110,842 78.73 Forfeited ( 6,404 ) 214.04 Vested ( 9,556 ) 336.29 Unvested RSUs as of December 31, 2022 120,550 106.49 Granted 161,161 34.49 Forfeited ( 19,961 ) 109.19 Vested ( 46,893 ) 112.02 Unvested RSUs As of December 31, 2023 214,857 51.03 There was approximately $ 16.7 million of total unrecognized compensation cost related to unvested stock options and RSUs as of December 31, 2023, which is expected to be recognized over a weighted-average period of 1.8 years.
F- 18 The following table summarizes the Company’s RSU activity for the years ended December 31, 2024 and December 31, 2023: RSU Awards Weighted-Average Grant Date Fair Value Unvested RSUs as of December 31, 2022 120,550 106.49 Granted 161,161 34.49 Forfeited ( 19,961 ) 109.19 Vested ( 46,893 ) 112.02 Unvested RSUs as of December 31, 2023 214,857 51.03 Granted 881,233 10.33 Forfeited ( 18,438 ) 23.04 Vested ( 102,132 ) 55.51 Unvested RSUs as of December 31, 2024 975,520 14.32 There was approximately $ 12.7 million of total unrecognized compensation cost related to unvested stock options and RSUs as of December 31, 2024, which is expected to be recognized over a weighted-average period of 1.6 years.

… 169 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

182 edited+62 added−37 removed605 unchanged
This applies to products (1) that are intended for a life-threatening or chronically debilitating condition; and (2) either (a) such condition affects not more than five in 10,000 persons in the EU when the application is made, or (b) the product, without the benefits derived from orphan status, would be unlikely to generate sufficient returns in the EU to justify the necessary investment, and (3) there exists no satisfactory method of diagnosis, prevention or treatment of such condition authorized for marketing in the EU or, if such a method exists, the product will be of significant benefit to those affected by the condition.
This applies to products (1) that are intended for a life-threatening or chronically debilitating condition; (2) either (a) such condition affects not more than five in 10,000 persons in the EU when the application is made, or (b) the product, without the benefits derived from orphan status, would be unlikely to generate sufficient returns in the EU to justify the necessary investment, and (3) there exists no satisfactory method of diagnosis, prevention or treatment of such condition authorized for marketing in the EU or, if such a method exists, the product will be of significant benefit to those affected by the condition.
Provisions in our amended and restated certificate of incorporation and restated bylaws or Delaware law might discourage, delay or prevent a change in control of our company or changes in our management and therefore depress the trading price of our common stock.
Provisions in our amended and restated certificate of incorporation and amended and restated bylaws or Delaware law might discourage, delay or prevent a change in control of our company or changes in our management and therefore depress the trading price of our common stock.
Provisions in our amended and restated certificate of incorporation and our restated bylaws may discourage, delay or prevent a merger, acquisition or other change in control of our company that stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares.
Provisions in our amended and restated certificate of incorporation and our amended and restated bylaws may discourage, delay or prevent a merger, acquisition or other change in control of our company that stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares.
If we are unable to obtain sufficient funding on a timely basis or on favorable terms, we may be required to significantly delay, alter reduce or eliminate one or more of our research or product development programs and/or commercialization efforts, or to grant rights to develop and market products or product candidates that we would otherwise prefer to develop and market ourselves.
If we are unable to obtain sufficient funding on a timely basis or on favorable terms, we may be required to significantly delay, alter reduce or eliminate one or more of our research or product development programs and/or commercialization efforts, or to grant rights to develop and market products or product candidates that we would otherwise prefer to develop and market ourselves.
Physician Payments Sunshine Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to CMS information related to payments or other “transfers of value” made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain non-physician practitioners such as physician assistants and nurse practitioners, and teaching hospitals, and requires applicable manufacturers and group purchasing organizations to report annually to the Centers for Medicare and Medicaid Services (“CMS”), ownership and investment interests held by the physicians described above and their immediate family members; and 54 • analogous state and foreign laws and regulations, such as state anti-kickback and anti-corruption and false claims laws, which may apply to our business practices, including, but not limited to, research, distribution, sales and marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers, or by the patients themselves; state laws and foreign laws and regulations that require pharmaceutical and device companies to comply with the industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the U.S. government or foreign governmental authorities, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state and local laws and regulations and foreign. laws and regulations that require manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures and pricing information; state and local laws and foreign laws and regulations which require the registration of pharmaceutical sales representatives.
Physician Payments Sunshine Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to the Centers for Medicare and Medicaid Services (“CMS”) information related to payments or other “transfers of value” made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain non-physician practitioners such as physician assistants and nurse practitioners, and teaching hospitals, and requires applicable manufacturers and group purchasing organizations to report annually to the CMS, ownership and investment interests held by the physicians described above and their immediate family members; and • analogous state and foreign laws and regulations, such as state anti-kickback and anti-corruption and false claims laws, which may apply to our business practices, including, but not limited to, research, distribution, sales and marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers, or by the patients themselves; state laws and foreign laws and regulations that require pharmaceutical and device companies to comply with the industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the U.S. government or foreign governmental authorities, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state and local laws and regulations and foreign. laws and regulations that require manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures and pricing information; state and local laws and foreign laws and regulations which require the registration of pharmaceutical sales representatives.
Patient enrollment may also be affected by many factors, including: • severity and difficulty of diagnosing of the disease under investigation; • the difficulty in recruiting and/or identifying eligible patients suffering from rare diseases being evaluated under our trials; • size of the patient population and process for identifying subjects; • eligibility and exclusion criteria for the trial in question, including unforeseen requirements by the FDA or other regulatory authorities that we restrict one or more entry criteria for the study for safety reasons; • our or our collaborators’ ability to recruit clinical trial investigators with the appropriate competencies and experience; • design of the trial protocol; • availability and efficacy of approved medications or therapies, or other clinical trials, for the disease or condition under investigation; • perceived risks and benefits of the product candidate under trial or testing, or of the application of genome editing to human indications; • availability of genetic testing for potential patients; • efforts to facilitate timely enrollment in clinical trials; • patient referral practices of physicians; • ability to obtain and maintain subject consent; • risk that enrolled subjects will drop out before completion of the trial; • ability to monitor patients adequately during and after treatment; • proximity and availability of clinical trial sites for prospective patients; and • unforeseen events, such as natural or manmade disasters, public health emergencies may impact our operations, or other natural catastrophic events.
Patient enrollment may also be affected by many factors, including: • severity and difficulty of diagnosing of the disease under investigation; • the difficulty in recruiting and/or identifying eligible patients suffering from rare diseases being evaluated under our trials; • size of the patient population and process for identifying subjects; • eligibility and exclusion criteria for the trial in question, including unforeseen requirements by the FDA or other regulatory authorities that we restrict one or more entry criteria for the study for safety reasons; 52 • our or our collaborators’ ability to recruit clinical trial investigators with the appropriate competencies and experience; • design of the trial protocol; • availability and efficacy of approved medications or therapies, or other clinical trials, for the disease or condition under investigation; • perceived risks and benefits of the product candidate under trial or testing, or of the application of genome editing to human indications; • availability of genetic testing for potential patients; • efforts to facilitate timely enrollment in clinical trials; • patient referral practices of physicians; • ability to obtain and maintain subject consent; • risk that enrolled subjects will drop out before completion of the trial; • ability to monitor patients adequately during and after treatment; • proximity and availability of clinical trial sites for prospective patients; and • unforeseen events, such as natural or manmade disasters, public health emergencies may impact our operations, or other natural catastrophic events.
Commercialization of products in various markets could subject us to risks and uncertainties, including: • obtaining, on a country-by-country basis, the applicable marketing authorization from the competent regulatory authority; • the burden of complying with complex and changing regulatory, tax, accounting, labor and other legal requirements in each jurisdiction that we or our collaborators pursue; • reduced protection for intellectual property rights; 43 • differing medical practices and customs affecting acceptance in the marketplace; • import or export licensing requirements; • governmental controls, trade restrictions or changes in tariffs; • economic weakness, including inflation, political instability in particular foreign economies and markets, or civil unrest or war, such as the current conflict between Russia and Ukraine; • production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; • longer accounts receivable collection times; • longer lead times for shipping; • language barriers; • foreign currency exchange rate fluctuations; • foreign reimbursement, pricing and insurance regimes; and • the interpretation of contractual provisions governed by foreign laws in the event of a contract dispute.
Commercialization of products in various markets could subject us to risks and uncertainties, including: • obtaining, on a country-by-country basis, the applicable marketing authorization from the competent regulatory authority; • the burden of complying with complex and changing regulatory, tax, accounting, labor and other legal requirements in each jurisdiction that we or our collaborators pursue; • reduced protection for intellectual property rights; • differing medical practices and customs affecting acceptance in the marketplace; • import or export licensing requirements; • governmental controls, trade restrictions or changes in tariffs; • economic weakness, including inflation, political instability in particular foreign economies and markets, or civil unrest or war, such as the current conflict between Russia and Ukraine; • production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; • longer accounts receivable collection times; • longer lead times for shipping; • language barriers; • foreign currency exchange rate fluctuations; • foreign reimbursement, pricing and insurance regimes; and • the interpretation of contractual provisions governed by foreign laws in the event of a contract dispute.
Our future capital requirements will depend on many factors, including: • the timing, scope, progress, costs, results and analysis of results of research activities, preclinical studies and potential clinical trials for any of our product candidates; • the costs of future activities, including product manufacturing, sales, marketing and distribution activities for any product candidates that receive regulatory approval; • the success of our existing collaborative and other out-licensing relationships; • the extent to which we exercise any development or commercialization rights under collaborative relationships; • our ability to establish and maintain additional collaborative or other out-licensing relationships on favorable terms, or at all; • the extent to which we expand our operations and the timing of such expansion, including with respect to facilities, employees and product development platforms; • the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property and proprietary rights and defending intellectual property-related claims; • the extent to which we acquire or in-license other technologies or product candidates; • the extent to which we acquire or invest in other businesses; • the costs of continuing to operate as a public company; and • the amount of revenues, if any, received from commercial sales of any products that we develop alone or with collaborators that receive regulatory approval.
Our future capital requirements will depend on many factors, including: • the timing, scope, progress, costs, results and analysis of results of research activities, preclinical studies and potential clinical trials for any of our product candidates; • the costs of future activities, including product manufacturing, sales, marketing and distribution activities for any product candidates that receive regulatory approval; • the success of our existing collaborative and other out-licensing relationships; • the extent to which we exercise any development or commercialization rights under collaborative relationships; • our ability to establish and maintain additional collaborative or other out-licensing relationships on favorable terms, or at all; • the extent to which we expand our operations and the timing of such expansion, including with respect to facilities, employees and product development platforms; • the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property and proprietary rights and defending intellectual property-related claims; 39 • the extent to which we acquire or in-license other technologies or product candidates; • the extent to which we acquire or invest in other businesses; • the costs of continuing to operate as a public company; and • the amount of revenues, if any, received from commercial sales of any products that we develop alone or with collaborators that receive regulatory approval.
Such identification could also have several additional significant negative consequences, such as: • regulatory authorities may suspend, withdraw or limit approvals of such product, or seek an injunction against its manufacture or distribution; • regulatory authorities may require additional warnings on the label, including “boxed” warnings, or issue safety alerts, Dear Healthcare Provider letters, press releases or other communications containing warnings or other safety information about the product; 53 • we may be required to create a medication guide outlining the risks of such side effects for distribution to patients; • we may be required to change the way a product is administered or conduct additional trials; • the product may become less competitive; • we or our collaborators may decide to remove the product from the marketplace; • we may be subject to fines, injunctions or the imposition of civil or criminal penalties; • we could be sued and be held liable for harm caused to patients; and • our reputation may suffer.
Such identification could also have several additional significant negative consequences, such as: • regulatory authorities may suspend, withdraw or limit approvals of such product, or seek an injunction against its manufacture or distribution; • regulatory authorities may require additional warnings on the label, including “boxed” warnings, or issue safety alerts, Dear Healthcare Provider letters, press releases or other communications containing warnings or other safety information about the product; • we may be required to create a medication guide outlining the risks of such side effects for distribution to patients; • we may be required to change the way a product is administered or conduct additional trials; • the product may become less competitive; • we or our collaborators may decide to remove the product from the marketplace; • we may be subject to fines, injunctions or the imposition of civil or criminal penalties; • we could be sued and be held liable for harm caused to patients; and • our reputation may suffer.
Disputes may arise regarding intellectual property subject to a license agreement, including: 75 • the scope of rights granted under the license agreement and other interpretation-related issues; • the amounts of royalties, milestones or other payments due to our licensors; • the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the license agreement; • the sublicensing of patent and other rights under our collaborative development relationships; • our diligence obligations under the license agreement and what activities satisfy those diligence obligations; • the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our collaborators; and • the priority of invention of patented technology.
Disputes may arise regarding intellectual property subject to a license agreement, including: • the scope of rights granted under the license agreement and other interpretation-related issues; • the amounts of royalties, milestones or other payments due to our licensors; • the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the license agreement; • the sublicensing of patent and other rights under our collaborative development relationships; • our diligence obligations under the license agreement and what activities satisfy those diligence obligations; • the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our collaborators; and • the priority of invention of patented technology.
Regardless of merit or eventual outcome, liability claims may result in: • significant time and costs to defend the related litigation; • injury to our reputation and significant negative media attention; • diversion of management’s attention from pursuing our strategy; • withdrawal of clinical trial participants; • delay or termination of clinical trials; • decreased demand for any products that we develop alone or with collaborators; 44 • substantial monetary awards to trial participants or patients; • product recalls, withdrawals or labeling, marketing or promotional restrictions; • loss of revenue; and • the inability to further develop or commercialize any products.
Regardless of merit or eventual outcome, liability claims may result in: • significant time and costs to defend the related litigation; • injury to our reputation and significant negative media attention; • diversion of management’s attention from pursuing our strategy; • withdrawal of clinical trial participants; • delay or termination of clinical trials; • decreased demand for any products that we develop alone or with collaborators; • substantial monetary awards to trial participants or patients; • product recalls, withdrawals or labeling, marketing or promotional restrictions; • loss of revenue; and • the inability to further develop or commercialize any products.
Any such access, disclosure, notifications, follow-up actions related to such a security breach or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information and significant costs, including regulatory penalties, fines and legal expenses, and such an event could disrupt our operations, cause us to incur remediation costs, damage our reputation and cause a loss of confidence in us and our or such third parties’ ability to conduct clinical trials, which could adversely affect our reputation and delay our research and development programs.
Any such access, disclosure, notifications, follow-up actions related to such a security breach or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information and significant costs, including regulatory 69 penalties, fines and legal expenses, and such an event could disrupt our operations, cause us to incur remediation costs, damage our reputation and cause a loss of confidence in us and our or such third parties’ ability to conduct clinical trials, which could adversely affect our reputation and delay our research and development programs.
Even if a therapeutic product candidate receives regulatory approval, future revenues for such product candidate will depend upon many factors, such as, as applicable, the size of any markets in which such product candidate is approved for sale, the market share captured by such product candidate, including as a result of the market acceptance of such product candidate and the effectiveness of manufacturing, sales, marketing and distribution operations related to such product candidate, the terms of any collaboration, license, or other strategic arrangement we may have with respect to such product candidate and levels of reimbursement from third-party payors.
Even if a therapeutic product candidate receives regulatory approval, future revenues for such product candidate will depend upon many factors, such as, as applicable, the size of any markets in which such product candidate is approved for sale, the market share captured by such product candidate, including as a result of the market acceptance of such product candidate and the 38 effectiveness of manufacturing, sales, marketing and distribution operations related to such product candidate, the terms of any collaboration, license, or other strategic arrangement we may have with respect to such product candidate and levels of reimbursement from third-party payors.
The market price of our common stock is likely to be highly volatile and may fluctuate substantially due to many factors, including: • inconsistent trading volume levels of our common stock; • announcements or expectations regarding debt or equity financing efforts; • sales of common stock by us, our insiders or our other stockholders; • actual or anticipated fluctuations in our financial condition and operating results; • failure to meet or exceed financial estimates and projections of the investment community or that we provide to the public; • results from or delays in our studies or trials, or those of our collaborators, competitors or companies perceived to be similar to us; • delay, failure or discontinuation of any of our product development and research programs, or those of our collaborators, competitors or companies perceived to be similar to us; • announcements about new research programs or product candidates from us or our collaborators, our competitors or companies perceived to be similar to us; • announcements by us, our collaborators, our competitors or companies perceived to be similar to us relating to significant acquisitions, strategic partnerships or alliances, joint ventures, collaborations or capital commitments; • actual or anticipated changes in our growth rate relative to our competitors or companies perceived to be similar to us; • fluctuations in the valuation of our collaborators, our competitors or companies perceived to be comparable to us; • a lack of, limited or withdrawal of coverage by security analysts, or positive or negative recommendations by them; • actual or expected changes in estimates as to financial results, development timelines or recommendations by securities analysts; • publication of research reports about us, genome editing or the biopharmaceutical industries; • developments or changing views regarding the use of genomic products, including those that involve genome editing; • our ability to effectively manage our growth; • the recruitment or departure of key personnel; • the results of any efforts by us to identify, develop, acquire or in-license additional product candidates, products or technologies; • unanticipated serious safety concerns related to the use of any of our product candidates, or those of our competitors or companies perceived to be similar to us; • the termination of a collaboration agreement, licensing agreement or other strategic arrangement or the inability to establish additional strategic arrangements on favorable terms, or at all; 85 • regulatory actions with respect to any of our product candidates, or those of our competitors or companies perceived to be similar to us; • developments or disputes concerning patent applications, issued patents or other proprietary rights; • regulatory or legal developments in the United States and other countries; • changes in physician, hospital, or healthcare provider practices that may make our or our collaborators’ products less useful; • changes in the structure of healthcare payment systems; • significant lawsuits, such as products liability, patent or stockholder litigation; • short sales of our common stock; and • general economic, industry and market conditions.
The market price of our common stock is likely to be highly volatile and may fluctuate substantially due to many factors, including: • inconsistent trading volume levels of our common stock; • announcements or expectations regarding debt or equity financing efforts; • sales of common stock by us, our insiders or our other stockholders; • actual or anticipated fluctuations in our financial condition and operating results; 86 • failure to meet or exceed financial estimates and projections of the investment community or that we provide to the public; • results from or delays in our studies or trials, or those of our collaborators, competitors or companies perceived to be similar to us; • delay, failure or discontinuation of any of our product development and research programs, or those of our collaborators, competitors or companies perceived to be similar to us; • announcements about new research programs or product candidates from us or our collaborators, our competitors or companies perceived to be similar to us; • announcements by us, our collaborators, our competitors or companies perceived to be similar to us relating to significant acquisitions, strategic partnerships or alliances, joint ventures, collaborations or capital commitments; • actual or anticipated changes in our growth rate relative to our competitors or companies perceived to be similar to us; • fluctuations in the valuation of our collaborators, our competitors or companies perceived to be comparable to us; • a lack of, limited or withdrawal of coverage by security analysts, or positive or negative recommendations by them; • actual or expected changes in estimates as to financial results, development timelines or recommendations by securities analysts; • publication of research reports about us, genome editing or the biopharmaceutical industries; • developments or changing views regarding the use of genomic products, including those that involve genome editing; • our ability to effectively manage our growth; • the recruitment or departure of key personnel; • the results of any efforts by us to identify, develop, acquire or in-license additional product candidates, products or technologies; • unanticipated serious safety concerns related to the use of any of our product candidates, or those of our competitors or companies perceived to be similar to us; • the termination of a collaboration agreement, licensing agreement or other strategic arrangement or the inability to establish additional strategic arrangements on favorable terms, or at all; • regulatory actions with respect to any of our product candidates, or those of our competitors or companies perceived to be similar to us; • developments or disputes concerning patent applications, issued patents or other proprietary rights; • regulatory or legal developments in the United States and other countries; • changes in physician, hospital, or healthcare provider practices that may make our or our collaborators’ products less useful; • changes in the structure of healthcare payment systems; • significant lawsuits, such as products liability, patent or stockholder litigation; • short sales of our common stock; and 87 • general economic, industry and market conditions.
Furthermore, our or our collaborators’ ability to successfully initiate, enroll and conduct a clinical trial outside the United States is subject to numerous additional risks, including: 51 • difficulty in establishing or managing relationships with CROs and physicians; • differing standards for the conduct of clinical trials; • differing standards of care for patients with a particular disease; • an inability to locate qualified local consultants, physicians and partners; and • the potential burden of complying with a variety of foreign laws, medical standards and regulatory requirements, including the regulation of pharmaceutical and biotechnology products and treatments.
Furthermore, our or our collaborators’ ability to successfully initiate, enroll and conduct a clinical trial outside the United States is subject to numerous additional risks, including: • difficulty in establishing or managing relationships with CROs and physicians; • differing standards for the conduct of clinical trials; • differing standards of care for patients with a particular disease; • an inability to locate qualified local consultants, physicians and partners; and • the potential burden of complying with a variety of foreign laws, medical standards and regulatory requirements, including the regulation of pharmaceutical and biotechnology products and treatments.
Market conditions can impact the viability of these institutions and, in the event of failure of the financial institution where we maintain our cash and cash equivalents, if the treatment of our cash sweep accounts were called into question in a bank receivership or if there is continued turmoil in the banking industry generally, we may not be able to access uninsured funds in a timely manner or at all, which would 84 adversely impact our business, financial condition and results of operations.
Market conditions can impact the viability of these institutions and, in the event of failure of the financial institution where we maintain our cash and cash equivalents, if the treatment of our cash sweep accounts were called into question in a bank receivership or if there is continued turmoil in the banking industry generally, we may not be able to access uninsured funds in a timely manner or at all, which would adversely impact our business, financial condition and results of operations.
Exclusive marketing rights in the United States may be limited if we or our collaborators or licensees seek approval for a disease or condition broader than the orphan designated disease or condition and may be lost if the FDA later determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantities of the product to meet the needs of patients with the rare disease or condition.
Exclusive marketing rights in the 59 United States may be limited if we or our collaborators or licensees seek approval for a disease or condition broader than the orphan designated disease or condition and may be lost if the FDA later determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantities of the product to meet the needs of patients with the rare disease or condition.
The aforementioned third parties with which we have relationships include service providers and vendors who provide to us a broad array 66 of software and other technologies as well as products, services and functions (e.g., human resources, finance, communications, data transmission, risk, compliance) that enable us to conduct, monitor and/or protect our business, operations, systems and data assets.
The aforementioned third parties with which we have relationships include service providers and vendors who provide to us a broad array of software and other technologies as well as products, services and functions (e.g., human resources, finance, communications, data transmission, risk, compliance) that enable us to conduct, monitor and/or protect our business, operations, systems and data assets.
We expect to experience pricing pressures in connection with the sale of any products that may receive approval due to the trend toward managed health care, the increasing influence of health maintenance organizations and additional legislative changes. The downward pressure on healthcare costs in general, particularly prescription drugs and biologics and surgical procedures and other treatments, has become intense.
We expect to experience pricing pressures in connection with the sale of any products that may receive approval due to the trend toward managed health care, the increasing influence of health maintenance organizations and additional legislative changes. The downward pressure on healthcare costs in general, particularly 66 prescription drugs and biologics and surgical procedures and other treatments, has become intense.
Criminal or civil proceedings might be filed against us by patients, regulatory authorities, biopharmaceutical companies and any other third party using or marketing any product candidates or products that we develop alone or with collaborators. On occasion, large judgments have been awarded in class action lawsuits based on products that had unanticipated adverse effects.
Criminal or civil proceedings might be filed against us by patients, regulatory authorities, biopharmaceutical companies and any other third party using or marketing any product candidates or products that we develop alone or with collaborators. On occasion, 45 large judgments have been awarded in class action lawsuits based on products that had unanticipated adverse effects.
Any problems in our manufacturing process or facilities could make us a less attractive collaborator for potential partners, including larger pharmaceutical companies and academic research institutions, which could limit our access to additional attractive development opportunities. 50 Any delays or difficulties in our or our collaborators' ability to enroll patients in clinical trials could delay or prevent receipt of regulatory approvals.
Any problems in our manufacturing process or facilities could make us a less attractive collaborator for potential partners, including larger pharmaceutical companies and academic research institutions, which could limit our access to additional attractive development opportunities. Any delays or difficulties in our or our collaborators’ ability to enroll patients in clinical trials could delay or prevent receipt of regulatory approvals.
The number of patients in the United States, Europe and elsewhere may turn out to be lower than expected, and patients may not be amenable to treatment with products that we may develop alone or with collaborators, or may become increasingly difficult to identify or gain access to, any of which would decrease our ability to realize revenue from any such products for such diseases.
The number of patients in the United 65 States, Europe and elsewhere may turn out to be lower than expected, and patients may not be amenable to treatment with products that we may develop alone or with collaborators, or may become increasingly difficult to identify or gain access to, any of which would decrease our ability to realize revenue from any such products for such diseases.
Furthermore, any capital 39 raising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to advance research programs, product development activities or product candidates. We have a limited operating history, which makes it difficult to evaluate our current business and future prospects and may increase the risk of your investment.
Furthermore, any capital raising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to advance research programs, product development activities or product candidates. We have a limited operating history, which makes it difficult to evaluate our current business and future prospects and may increase the risk of your investment.
Moreover, success in commercializing any therapeutic product candidates that receive regulatory approval will depend upon physicians prescribing, and their patients being willing to receive, treatments that 42 involve the use of such product candidates in lieu of, or in addition to, existing treatments with which they are already familiar and for which greater clinical data may be available.
Moreover, success in commercializing any therapeutic product candidates that receive regulatory approval will depend upon physicians prescribing, and their patients being willing to receive, treatments that involve the use of such product candidates in lieu of, or in addition to, existing treatments with which they are already familiar and for which greater clinical data may be available.
If we are unable to enter into additional collaboration agreements, or to maintain existing collaborations, we may have to curtail the research and development of the product candidate or technology for which we are seeking to collaborate, reduce or delay research and development programs, delay potential commercialization timelines, reduce the scope of any sales or marketing activities or undertake research, development or commercialization activities at our own expense.
If we are unable to enter into additional collaboration agreements, or to maintain existing collaborations, we may have to curtail the research and development of the product candidate or technology for which we are seeking to collaborate, reduce or delay 73 research and development programs, delay potential commercialization timelines, reduce the scope of any sales or marketing activities or undertake research, development or commercialization activities at our own expense.
Any failure or perceived failure by us or our employees, representatives, contractors, consultants, CROs, collaborators, or other third parties to comply with such 56 requirements or adequately address privacy and security concerns, even if unfounded, could result in additional cost and liability to us, damage our reputation, and adversely affect our business and results of operations.
Any failure or perceived failure by us or our employees, representatives, contractors, consultants, CROs, collaborators, or other third parties to comply with such requirements or adequately address privacy and security concerns, even if unfounded, could result in additional cost and liability to us, damage our reputation, and adversely affect our business and results of operations.
If the IRS or any other tax authorities were successful in challenging our positions, we may be liable for additional tax and penalties and interest related thereto or other taxes, as applicable, in excess of any reserves established therefor, which may have a significant impact on our results and operations and future cash flow.
If the IRS or any other tax authorities were successful in challenging our positions, we may be liable for additional tax and penalties 71 and interest related thereto or other taxes, as applicable, in excess of any reserves established therefor, which may have a significant impact on our results and operations and future cash flow.
In addition, if any therapeutic product candidate that we develop alone or with collaborators obtains marketing approval, we may incur significant commercialization expenses related to product manufacturing, sales, marketing and distribution 37 efforts. Furthermore, we have incurred, and expect to continue to incur, additional costs associated with operating as a public company.
In addition, if any therapeutic product candidate that we develop alone or with collaborators obtains marketing approval, we may incur significant commercialization expenses related to product manufacturing, sales, marketing and distribution efforts. Furthermore, we have incurred, and expect to continue to incur, additional costs associated with operating as a public company.
Upon grant of a MA and assuming the requirements for orphan designation are also met at the time the marketing authorization is granted, orphan medicinal products are entitled to 10 years of market exclusivity for the approved therapeutic indication, during which time no similar medicinal product for the same indication may be placed on the market.
Upon grant of a marketing authorization (“MA”) and assuming the requirements for orphan designation are also met at the time the MA is granted, orphan medicinal products are entitled to 10 years of market exclusivity for the approved therapeutic indication, during which time no similar medicinal product for the same indication may be placed on the market.
For example, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) modified certain provisions of the TCJA. Under the CARES Act, NOLs arising in a tax 69 year beginning after December 31, 2017, and before January 1, 2021, generally may now be carried back five years.
For example, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) modified certain provisions of the TCJA. Under the CARES Act, NOLs arising in a tax year beginning after December 31, 2017, and before January 1, 2021, generally may now be carried back five years.
If we are unable to obtain a patent term extension, or if the term of any such extension is less than our request, the period during which we can enforce 76 our patent rights for that product will be in effect shortened and our competitors may obtain approval to market competing products sooner.
If we are unable to obtain a patent term extension, or if the term of any such extension is less than our request, the period during which we can enforce our patent rights for that product will be in effect shortened and our competitors may obtain approval to market competing products sooner.
We may not be able to protect our rights to our trademarks and trade names, which we need to build name recognition among potential collaborators or customers in our markets of interest. At times, competitors may adopt trade names or trademarks similar to ours, thereby impeding our ability to build brand identity and possibly leading to market confusion.
We may not be able to protect our rights to our trademarks and trade names, which we need to build name recognition among potential collaborators or customers in our markets of interest. At times, competitors may adopt trade names or trademarks similar to ours, thereby impeding our ability to build brand identity and possibly leading to 83 market confusion.
For example, restricted or closed distribution channels may make it difficult to distribute products to segments 62 of the patient population, and the lack of complementary medicines to be offered by sales personnel may put us at a competitive disadvantage relative to companies with more extensive product lines.
For example, restricted or closed distribution channels may make it difficult to distribute products to segments of the patient population, and the lack of complementary medicines to be offered by sales personnel may put us at a competitive disadvantage relative to companies with more extensive product lines.
These current or future laws, regulations and permitting requirements may impair our research, development or production efforts. Failure to comply with these laws, regulations and permitting requirements, either by us or by any third-party contract manufacturers and suppliers we engage, also may result in substantial fines, penalties or other sanctions or business disruption.
These current or future laws, regulations and permitting requirements may impair our research, development or production efforts. Failure to comply with these laws, regulations and permitting requirements, either by us 70 or by any third-party contract manufacturers and suppliers we engage, also may result in substantial fines, penalties or other sanctions or business disruption.
With respect to the validity of patents, for example, we cannot be certain that there is no invalidating prior art of which we and the patent examiner were unaware during prosecution, but that an adverse third party may identify and submit in support of such assertions of invalidity.
With respect to the validity of patents, for example, we cannot be certain that there is no invalidating prior art of which we and the patent examiner were unaware during prosecution, but that an 80 adverse third party may identify and submit in support of such assertions of invalidity.
Resource allocation and other developmental decisions made by our collaborators may result in the delay or termination of research programs, studies or trials, repetition of or initiation of new studies or trials or provision of insufficient funding or resources for the completion of studies or trials or the successful marketing and distribution of any product candidates that may receive approval.
Resource allocation 72 and other developmental decisions made by our collaborators may result in the delay or termination of research programs, studies or trials, repetition of or initiation of new studies or trials or provision of insufficient funding or resources for the completion of studies or trials or the successful marketing and distribution of any product candidates that may receive approval.
We also conduct joint research and product development activities that may require us to share trade secrets under the terms of our research and development collaborations or similar agreements. In addition to contractual measures, we try to protect the confidential nature of 79 our proprietary information using physical and technological security measures.
We also conduct joint research and product development activities that may require us to share trade secrets under the terms of our research and development collaborations or similar agreements. In addition to contractual measures, we try to protect the confidential nature of our proprietary information using physical and technological security measures.
For example, many other countries, including countries in the EU, have compulsory licensing laws under which a patent owner must grant licenses to third parties. In addition, many countries limit the enforceability of patents against third parties, including government agencies or government contractors. In these countries, patents may provide limited or no benefit.
For example, many other countries, including countries in the EU, have compulsory licensing laws under which a patent owner must grant licenses to third parties. In addition, many countries limit the 82 enforceability of patents against third parties, including government agencies or government contractors. In these countries, patents may provide limited or no benefit.
If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline. Item 1B. Unresolve d Staff Comments. None.
If one or more of these analysts ceases coverage of us or fails 88 to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline. Item 1B. Unresolve d Staff Comments. None.
To the extent that we raise additional capital through the sale of equity or convertible debt securities, including in underwritten and ATM offerings, stockholders' ownership interest will be diluted, and the terms of such securities may include liquidation or other preferences that adversely affect common stockholders' rights.
To the extent that we raise additional capital through the sale of equity or convertible debt securities, including in underwritten and ATM offerings, stockholders’ ownership interest will be diluted, and the terms of such securities may include liquidation or other preferences that adversely affect 40 common stockholders’ rights.
Accordingly, in markets outside the United States, the reimbursement 64 for such products may be reduced compared with the United States and may be insufficient to generate commercially reasonable revenue and profits. Our product candidates for which we intend to seek approval as biologic products may face competition sooner than anticipated.
Accordingly, in markets outside the United States, the reimbursement for such products may be reduced compared with the United States and may be insufficient to generate commercially reasonable revenue and profits. Our product candidates for which we intend to seek approval as biologic products may face competition sooner than anticipated.
We may decide to incur debt in connection with an acquisition, investment or in-license, which may negatively impact our financial condition and restrict our operations, or issue our common stock or other equity securities to the stockholders of the acquired company, which would reduce the percentage ownership 65 of our existing stockholders.
We may decide to incur debt in connection with an acquisition, investment or in-license, which may negatively impact our financial condition and restrict our operations, or issue our common stock or other equity securities to the stockholders of the acquired company, which would reduce the percentage ownership of our existing stockholders.
We also expect that operating as a public company will make it more expensive for us to obtain director and officer liability insurance, and we 67 may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage.
We also expect that operating as a public company will make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage.
Consequently, depending on the facts and circumstances, we could face substantial criminal penalties if we knowingly 55 receive individually identifiable health information from a HIPAA-covered healthcare provider or research institution that has not satisfied HIPAA’s requirements for disclosure of individually identifiable health information.
Consequently, depending on the facts and circumstances, we could face substantial criminal penalties if we knowingly receive individually identifiable health information from a HIPAA-covered healthcare provider or research institution that has not satisfied HIPAA’s requirements for disclosure of individually identifiable health information.
While we expect that we will continue to be able to patent our ARCUS nucleases 74 for the foreseeable future, as the scientific and patent literature relating to engineered endonucleases increases, including our own patents and publications, it may become more difficult or impossible to patent new engineered endonucleases in the future.
While we expect that we will continue to be able to patent our ARCUS nucleases for the foreseeable future, as the scientific and patent literature relating to engineered endonucleases increases, including our own patents and publications, it may become more difficult or impossible to patent new engineered endonucleases in the future.
For example, we have granted exclusive rights or options to Prevail and Novartis for certain targets, and during the term of our collaboration agreements we will be restricted from granting rights to other parties to use our ARCUS technology to pursue potential products that address those targets.
For example, we have granted exclusive rights or options to Novartis for certain targets, and during the term of our collaboration agreements we will be restricted from granting rights to other parties to use our ARCUS technology to pursue potential products that address those targets.
We have financed our operations primarily through proceeds from upfront and milestone payments from collaboration and licensing agreements, our IPO, private placements of our common stock, convertible preferred stock and convertible debt financings, underwritten and at-the-market (“ATM”) offerings of common stock, and borrowings on credit facilities.
We have financed our operations primarily through proceeds from upfront and milestone payments from collaboration and licensing agreements, our IPO, private placements of our common stock, convertible preferred stock and convertible debt financings, underwritten and at-the-market (“ATM”) offerings of common stock and warrants, and borrowings on credit facilities.
Our competitors also may obtain FDA or other regulatory approval for their products more rapidly than we or our collaborators may obtain approval for any that we develop, which could result in our competitors establishing a strong market position before we are able to enter the market.
Our competitors also may obtain FDA 44 or other regulatory approval for their products more rapidly than we or our collaborators may obtain approval for any that we develop, which could result in our competitors establishing a strong market position before we are able to enter the market.
Our business operations, as well as our current and anticipated future arrangements with investigators, healthcare professionals, consultants, third-party payors, customers and patients, expose or will expose us to broadly applicable foreign, federal, and state fraud and abuse and other healthcare laws and regulations.
Our business operations, as well as our current and anticipated future arrangements with investigators, healthcare professionals, consultants, third-party payors, customers and patients, expose or will expose us to broadly applicable foreign, federal, and state fraud 55 and abuse and other healthcare laws and regulations.
If key suppliers or manufacturers are lost, or if the supply of the materials is diminished or discontinued, we or our collaborators may not be able to develop, manufacture and market product candidates in a timely and competitive manner, or at all.
If key suppliers or manufacturers are lost, or if the supply of the materials is diminished or discontinued, we or our collaborators may not be able to develop, manufacture and market product 74 candidates in a timely and competitive manner, or at all.
If we or our collaborators fail to achieve announced milestones in the expected timeframes, the commercialization of the product candidates may be delayed, our credibility may be undermined, our business and results of operations may be harmed, and the trading price of our common stock may decline.
If we or our collaborators fail to achieve announced milestones in the expected timeframes, 43 the commercialization of the product candidates may be delayed, our credibility may be undermined, our business and results of operations may be harmed, and the trading price of our common stock may decline.
If microbial, viral or other contaminations are discovered in our product candidates or in the manufacturing facilities in which such product candidates are made, such manufacturing facilities may need to be closed for an extended period of time to investigate and remedy the contamination.
If microbial, viral or 51 other contaminations are discovered in our product candidates or in the manufacturing facilities in which such product candidates are made, such manufacturing facilities may need to be closed for an extended period of time to investigate and remedy the contamination.
Failure can occur at any time during the preclinical study or clinical trial process. Despite promising preclinical or clinical results, any product candidate can unexpectedly fail at any stage of preclinical or clinical development. The historical failure rate for product candidates in our industry is high.
Failure can occur at any time during the preclinical study or clinical trial process. Despite promising preclinical or clinical results, any 53 product candidate can unexpectedly fail at any stage of preclinical or clinical development. The historical failure rate for product candidates in our industry is high.
This risk is especially relevant to us as a biopharmaceutical company, as our stock price can significantly fluctuate as a result of public announcements regarding the progress of our development efforts for our discovery platform and our product 81 candidates.
This risk is especially relevant to us as a biopharmaceutical company, as our stock price can significantly fluctuate as a result of public announcements regarding the progress of our development efforts for our discovery platform and our product candidates.
Any time, effort and financial resources we expend on identifying and researching new product candidates and product development platforms may divert our attention from, and adversely affect our ability to continue, development and commercialization of existing research programs, product candidates and product development platforms.
Any time, effort and financial resources we expend on identifying and researching 41 new product candidates and product development platforms may divert our attention from, and adversely affect our ability to continue, development and commercialization of existing research programs, product candidates and product development platforms.
The ability to achieve acceptable levels of coverage and 63 reimbursement for any potential products that may be approved by governmental authorities will have an effect on our and our collaborators’ ability to successfully commercialize such products.
The ability to achieve acceptable levels of coverage and reimbursement for any potential products that may be approved by governmental authorities will have an effect on our and our collaborators’ ability to successfully commercialize such products.
These licenses 77 may not be available on reasonable terms or at all. Even if a license can be obtained on reasonable terms, the rights may be nonexclusive, which would give our competitors access to the same intellectual property rights.
These licenses may not be available on reasonable terms or at all. Even if a license can be obtained on reasonable terms, the rights may be nonexclusive, which would give our competitors access to the same intellectual property rights.
Defending against any such actions can be costly, time-consuming and may require significant financial and personnel resources. Therefore, even if we are successful in defending against any such actions that may be brought against us, our business may be impaired.
Defending against any such actions can be costly, time-consuming 56 and may require significant financial and personnel resources. Therefore, even if we are successful in defending against any such actions that may be brought against us, our business may be impaired.
We have sought in the past, and anticipate that we will continue to seek in the future, third-party collaborators for the research, development and commercialization of certain product candidates and the research and development of certain technologies. For example, we are party to the Prevail Agreement and Novartis Agreement.
We have sought in the past, and anticipate that we will continue to seek in the future, third-party collaborators for the research, development and commercialization of certain product candidates and the research and development of certain technologies. For example, we are party to the Novartis Agreement.
Clinical trials have been and may in the future be delayed, suspended or terminated for a variety of reasons, including in connection with: • the inability to generate sufficient preclinical, toxicology or other in vivo or in vitro data to support the initiation of clinical trials; • applicable regulatory authorities disagreeing as to the design or implementation of the clinical trials; • obtaining regulatory authorization to commence a trial; • reaching an agreement on acceptable terms with prospective contract research organizations (“CROs”) and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; • obtaining IRB or ethics committee approval or positive opinion at each site; • developing and validating the companion diagnostic to be used in a clinical trial, if applicable; • insufficient or inadequate supply or quality of product candidates or other materials, including identification of lymphocyte donors meeting regulatory standards necessary for use in clinical trials, or delays in sufficiently developing, characterizing or controlling a manufacturing process suitable for clinical trials; • recruiting and retaining enough suitable patients to participate in a trial; • having enough patients complete a trial or return for post-treatment follow-up; • adding a sufficient number of clinical trial sites; • inspections of clinical trial sites or operations by applicable regulatory authorities, or the imposition of a clinical hold; • clinical sites deviating from trial protocol or dropping out of a trial; • the inability to demonstrate the efficacy and benefits of a product candidate; • discovering that product candidates have unforeseen safety issues, undesirable side effects or other unexpected characteristics; • addressing patient safety concerns that arise during the course of a trial; • receiving untimely or unfavorable feedback from applicable regulatory authorities regarding the trial or requests from regulatory authorities to modify the design of a trial; • non-compliance with applicable regulatory requirements by us or third parties or changes in such regulations or administrative actions; • suspensions or terminations by IRBs of the institutions at which such trials are being conducted, by the Data Safety Monitoring Board (“DSMB”) for such trial or by the FDA or other foreign regulatory authorities due to a number of factors, including those described above; 48 • third parties being unable or unwilling to satisfy their contractual obligations to us; • competitive pressures and other market conditions; • changes in our financial priorities, greater than anticipated costs of completing a trial or our inability to continue funding the trial; or • unforeseen events, such as natural or manmade disasters, public health emergencies, such as natural catastrophic events.
Clinical trials have been and may in the future be delayed, suspended or terminated for a variety of reasons, including in connection with: • the inability to generate sufficient preclinical, toxicology or other in vivo or in vitro data to support the initiation of clinical trials; • applicable regulatory authorities disagreeing as to the design or implementation of the clinical trials; • obtaining regulatory authorization to commence a trial; • reaching an agreement on acceptable terms with prospective CROs and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; • obtaining IRB or ethics committee approval or positive opinion at each site; • developing and validating the companion diagnostic to be used in a clinical trial, if applicable; • insufficient or inadequate supply or quality of product candidates or other materials, including identification of lymphocyte donors meeting regulatory standards necessary for use in clinical trials, or delays in sufficiently developing, characterizing or controlling a manufacturing process suitable for clinical trials; • recruiting and retaining enough suitable patients to participate in a trial; • having enough patients complete a trial or return for post-treatment follow-up; • adding a sufficient number of clinical trial sites; • inspections of clinical trial sites or operations by applicable regulatory authorities, or the imposition of a clinical hold; • clinical sites deviating from trial protocol or dropping out of a trial; • the inability to demonstrate the efficacy and benefits of a product candidate; 49 • discovering that product candidates have unforeseen safety issues, undesirable side effects or other unexpected characteristics; • addressing patient safety concerns that arise during the course of a trial; • receiving untimely or unfavorable feedback from applicable regulatory authorities regarding the trial or requests from regulatory authorities to modify the design of a trial; • non-compliance with applicable regulatory requirements by us or third parties or changes in such regulations or administrative actions; • suspensions or terminations by IRBs of the institutions at which such trials are being conducted, by the Data Safety Monitoring Board for such trial or by the FDA or other foreign regulatory authorities due to a number of factors, including those described above; • third parties being unable or unwilling to satisfy their contractual obligations to us; • competitive pressures and other market conditions; • changes in our financial priorities, greater than anticipated costs of completing a trial or our inability to continue funding the trial; or • unforeseen events, such as natural or manmade disasters, public health emergencies, such as natural catastrophic events.
There can be no assurance that we will have sufficient financial or other resources to file and pursue infringement claims, which typically last for years before they are concluded.
There can be no assurance that we will have sufficient financial or other resources to file and pursue infringement 76 claims, which typically last for years before they are concluded.
Therefore, we cannot be certain that these patents and patent applications will be prepared, filed, prosecuted, maintained and defended in a manner consistent with the best interests of our business.
Therefore, we cannot be certain that 77 these patents and patent applications will be prepared, filed, prosecuted, maintained and defended in a manner consistent with the best interests of our business.
In addition, approval policies, regulations or the type and amount of 46 clinical data necessary to gain approval may change during the course of a product candidate’s clinical development and may vary among jurisdictions.
In addition, approval policies, regulations or the type and amount of clinical data necessary to gain approval may change during the course of a product candidate’s clinical development and may vary among jurisdictions.
The delivery of healthcare in the EU, including the establishment and operation of health services and the pricing and reimbursement of medicines, is almost exclusively a matter for national, rather than EU, law and policy.
The delivery of healthcare in the EU, including the establishment and operation of health services and the pricing and reimbursement of medicines, is almost exclusively a matter for 61 national, rather than EU, law and policy.
We may not have sufficient financial or other resources to adequately conduct such litigation or proceedings. 78 Developments in patent law could have a negative impact on our business.
We may not have sufficient financial or other resources to adequately conduct such litigation or proceedings. Developments in patent law could have a negative impact on our business.
Moreover, addressing our personnel needs may lead to significant costs and may divert our management and business development resources from other projects, such as the development of product candidates.
Moreover, addressing our personnel needs may lead to significant 67 costs and may divert our management and business development resources from other projects, such as the development of product candidates.
Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare (beginning in 2026), with prices that can be negotiated subject to a cap; imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (first due in 2023); and replaces the Part D coverage gap discount program with a new discounting program (beginning in 2025).
Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare (beginning in 2026), with prices that can be negotiated subject to a cap; imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (first due in 2023); and replaces the Part D coverage gap discount program with a new discounting program (which began in 2025).
Disruptions at the FDA and other government agencies caused by funding shortages or global health concerns could hinder their ability to hire, retain or deploy key leadership and other personnel, or otherwise prevent new or modified products from being developed, approved or commercialized in a timely manner or at all, which could negatively impact our business.
Disruptions at the FDA and other government agencies caused by funding shortages, global health concerns, or administration changes could hinder their ability to hire, retain or deploy key leadership and other personnel, or otherwise prevent new or modified products from being developed, approved or commercialized in a timely manner or at all, which could negatively impact our business.
These laws 68 and regulations restrict or prohibit a wide range of pricing, discounting, marketing, promotion, sales commission and customer incentive programs and other business arrangements.
These laws and regulations restrict or prohibit a wide range of pricing, discounting, marketing, promotion, sales commission and customer incentive programs and other business arrangements.
As a result, the U.S. government may have certain rights to intellectual property embodied in our current or future product candidates pursuant to the Bayh-Dole Act of 1980, or the Patent and Trademark Law Amendment. These U.S. government rights include a non-exclusive, non-transferable, irrevocable worldwide license to use inventions for any governmental purpose.
As a result, the U.S. government may have certain rights to intellectual property embodied in our current or future product candidates pursuant to the Bayh-Dole Act of 1980, or the Patent and Trademark Law Amendments Act. These U.S. government rights include a non-exclusive, non-transferable, irrevocable worldwide license to use inventions for any governmental purpose.
An orphan product can also obtain an additional two years of market exclusivity in the EU for complying with an agreed Pediatric Investigation Plan.
An orphan product can also obtain an additional two years of market exclusivity in the EU for complying with an agreed Pediatric Investigation Plan (“PIP”).
Some of our in-licensed intellectual property has been discovered through government funded research and thus may be subject to federal regulations such as “march-in” rights, certain reporting requirements and a preference for U.S.-based companies, and compliance with such regulations may limit our exclusive rights and our ability to contract with foreign manufacturers.
Some of our in-licensed intellectual property has been discovered through government funded research and thus may be subject to federal regulations such as “march-in rights”, certain reporting requirements and a preference for U.S.-based companies, and compliance with such regulations may limit our exclusive rights and our ability to contract with foreign manufacturers.
We are dependent on third parties for the supply of various biological materials, such as cells, cytokines and antibodies, and the manufacture of product supplies, such as media, plasmids, mRNA and AAV viral vectors, that are necessary to produce our product candidates. The supply of these materials could be reduced or interrupted at any time.
We are dependent on third parties for the supply of various biological materials, such as cells, cytokines and antibodies, and the manufacture of product supplies, such as media, plasmids, mRNA and AAV viral vectors, which are necessary to produce our product candidates. The supply of these materials could be reduced or interrupted at any time.
It is uncertain if and to what extent various states will conform to the to the TCJA or the CARES Act. As of December 31, 2023, we have a valuation allowance for the full amount of our net deferred tax assets as the realization of the net deferred tax assets is not determined to be more likely than not.
It is uncertain if and to what extent various states will conform to the TCJA or the CARES Act. As of December 31, 2024, we have a valuation allowance for the full amount of our net deferred tax assets as the realization of the net deferred tax assets is not determined to be more likely than not.
We may continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250 million or (ii) our annual revenue is less than $100 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700 million.
We will continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250 million or (ii) our annual revenue is less than $100 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700 million.
While we are not aware of any downgrades, material losses or other significant deterioration in the fair value of our cash equivalents since December 31, 2023, deterioration of the global credit and financial markets could negatively impact our current portfolio of cash equivalents or our ability to meet our financing objectives.
While we are not aware of any downgrades, material losses or other significant deterioration in the fair value of our cash equivalents since December 31, 2024, deterioration of the global credit and financial markets could negatively impact our current portfolio of cash equivalents or our ability to meet our financing objectives.
Our research and product development programs and the potential commercialization of any product candidates we develop alone or with collaborators will require substantial additional cash to fund expenses, and we expect continuing to seek collaborative arrangements with others in connection with the development and potential commercialization of current and future product candidates or the development of ancillary technologies.
Our research and product development programs and the potential commercialization of any product candidates we develop alone or with collaborators will require substantial additional cash to fund expenses, and we expect to continue to seek collaborative arrangements with others in connection with the development and potential commercialization of current and future product candidates or the development of ancillary technologies.
In the event we breach any of our obligations related to such prosecution, we may incur significant liability to our licensing partners. For example, our license agreement with Duke (the “Duke License”) imposes various payment, royalty and other obligations on us in order to maintain the license.
In the event we breach any of our obligations related to such prosecution, we may incur significant liability to our licensing partners. For example, our license agreement (the “Duke License”) with Duke University (“Duke”) imposes various payment, royalty and other obligations on us in order to maintain the license.
We believe that, as of the date of this Annual Report on Form 10-K, existing cash and cash equivalents, expected operational receipts, including upfront and potential near-term consideration to be received from TG Therapeutics and other licensees, operational efficiencies gained from divestment of our historical CAR T operations, and availability of our ATM facility will be sufficient to fund our operating expenses and capital expenditure requirements into the second half of 2026.
We believe that, as of the date of this Annual Report on Form 10-K, existing cash and cash equivalents, expected operational receipts, including upfront and potential near-term consideration to be received from our licensees, operational efficiencies gained from divestment of our historical CAR T operations, and availability of our ATM facility will be sufficient to fund our operating expenses and capital expenditure requirements into the second half of 2026.
Protecting our patent rights in connection with such proceeding may also be expensive and may involve the diversion of significant management time. Furthermore, we cannot guarantee that any patents will be issued from any pending or future owned or licensed patent applications.
Protecting our patent rights in connection with such proceedings may also be expensive and may involve the diversion of significant management time. Furthermore, we cannot guarantee that any patents will be issued from any pending or future owned or licensed patent applications.

… 201 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

4 edited+1 added−1 removed5 unchanged
Cybersecurity Governance Our board of directors considers cybersecurity risk part of its risk oversight function and has delegated to the audit committee of our board of directors (the “Audit Committee”) oversight of cybersecurity and other information technology risks. The Audit Committee oversees management’s implementation of our cybersecurity risk management program.
Cybersecurity Governance Our board of directors considers cybersecurity risk part of its risk oversight function and has delegated to the audit committee of our board of directors (the “Audit Committee”) oversight of cybersecurity and other information technology risks. The Audit Committee oversees our cybersecurity risk management program.
Key elements of our cybersecurity risk management program include: • risk assessments designed to help identify material cybersecurity risks to our critical systems, information, products, services, and our broader enterprise information technology environment; • a security team principally responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity incidents; • the use of external service providers, where appropriate, to assess, test, or otherwise assist with aspects of our security controls; • cybersecurity awareness training for our employees, incident response personnel, and senior management; • a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and • a third-party risk management process for service providers, suppliers, and vendors that have access to our critical systems and information. 87 We have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition.
Key elements of our cybersecurity risk management program include: • risk assessments designed to help identify material cybersecurity risks to our critical systems, information, products, services, and our broader enterprise information technology environment; • a security team principally responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity incidents; • the use of external service providers, where appropriate, to assess, test, or otherwise assist with aspects of our security controls; • cybersecurity awareness training for our employees, incident response personnel, and senior management; • a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and • a third-party risk management process for service providers, suppliers, and vendors that have access to our critical systems and information.
In addition, management regularly updates the Audit Committee with respect to cybersecurity risk, also on an ad hoc basis as necessary, regarding any material cybersecurity incidents and any incidents with lesser impact potential. The Audit Committee reports to the full board of directors regarding its activities, including those related to cybersecurity.
The Audit Committee reports to the full board of directors regarding its activities, including those related to cybersecurity.
Our management team, including our Vice President of Operations & Information Technology and Head of Information Technology, has 18+ years of experience in enterprise risk management, governance, and technical operations, information technology enterprise architecture, and information technology management, and oversees our information security program.
The Audit Committee receives quarterly and, if necessary, ad-hoc reports from the Vice President of Operation & Information Technology and the Head of Information Technology on our cybersecurity and information technology risks, including data security incidents (material and those with lesser impact potential), annual risk assessments, risk identification and evaluation, and targeted remediation plans and related execution/delivery. 89 Our management team, including our Vice President of Operations and Information Technology and Head of Information Technology, has 19+ years of experience in cybersecurity and data risk administration, governance and technical operations, information technology enterprise architecture, and information technology management.
Removed
The Audit Committee receives quarterly reports from the Vice President of Operation & Information Technology, and Head of Information Technology on our cybersecurity risks.
Added
We have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed0 unchanged
Item 3. Legal Proceedings. From time to time we may be involved in claims and proceedings arising in the course of our business. The outcome of any such claims or proceedings, regardless of the merits, is inherently uncertain. We are not currently party to any material legal proceedings. Item 4. Mine Safe ty Disclosures. Not applicable. 88 PART II
Item 3. Legal Proceedings. From time to time we may be involved in claims and proceedings arising in the course of our business. The outcome of any such claims or proceedings, regardless of the merits, is inherently uncertain. We are not currently party to any material legal proceedings. Item 4. Mine Safe ty Disclosures. Not applicable. 90 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

2 edited+0 added−1 removed1 unchanged
Any future determination related to our dividend policy will be made at the discretion of our board of directors after considering our financial condition, results of operations, capital requirements, business prospects and other factors our board of directors deems relevant, and subject to any restrictions applicable to us contained in any future financing instruments. Item 6. [Reserved] 89
Any future determination related to our dividend policy will be made at the discretion of our board of directors after considering our financial condition, results of operations, capital requirements, business prospects and other factors our board of directors deems relevant, and subject to any restrictions applicable to us contained in any future financing instruments. Item 6. [Reserved] 91
Item 5. Market for Registrant’s Common Equity, Related Stock holder Matters and Issuer Purchases of Equity Securities. Our common stock trades on The Nasdaq Capital Market under the symbol “DTIL.” Holders of Common Stock As of March 21, 2024, there were approximately 25 holders of record of our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stock holder Matters and Issuer Purchases of Equity Securities. Our common stock trades on The Nasdaq Capital Market under the symbol “DTIL.” Holders of Common Stock As of March 20, 2025, there were approximately 29 holders of record of our common stock.
Removed
In addition, pursuant to the terms of our Revolving Line, we are prohibited from paying cash dividends without the prior written consent of PWB and future debt instruments may materially restrict our ability to pay dividends on our common stock.

Item 7. Management's Discussion & Analysis

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

90 edited+52 added−67 removed99 unchanged
These include the following: • salaries, benefits and other related costs, including share-based compensation expense, for personnel engaged in research and development functions; • expenses incurred under agreements with third parties, including third parties that conduct preclinical research and development activities on our behalf; • costs of manufacturing drug products for use in our preclinical studies, including the costs of contract manufacturing organizations (“CMOs”); • costs of outside consultants; 96 • costs of laboratory supplies and acquiring, developing and manufacturing preclinical study materials; • license payments made for intellectual property used in research and development activities; and • facility-related expenses, which include direct depreciation costs and expenses for rent and maintenance of facilities and other operating costs if specifically identifiable to research activities.
These include the following: • salaries, benefits and other related costs, including share-based compensation expense, for personnel engaged in research and development functions; • expenses incurred under agreements with third parties, including third parties that conduct preclinical research and development activities on our behalf; • costs of manufacturing drug products for use in our preclinical studies, including the costs of contract manufacturing organizations (“CMOs”); • costs of outside consultants; • costs of laboratory supplies and acquiring, developing and manufacturing preclinical study materials; • license payments made for intellectual property used in research and development activities; and • facility-related expenses, which include direct depreciation costs and expenses for rent and maintenance of facilities and other operating costs if specifically identifiable to research activities.
For example, if the FDA or another regulatory authority were to require us to conduct clinical trials beyond those that we anticipate will be required for the completion of clinical development of a product candidate, or if we experience significant delays in our clinical trials due to slower than expected patient enrollment or other reasons, we would be required to expend significant additional financial resources and time on the completion of clinical development.
For example, if the FDA or another regulatory authority were to require us to conduct clinical trials beyond those that we anticipate will be required for the completion of clinical development of a product candidate, or if we experience significant delays in our clinical trials due to slower than expected 98 patient enrollment or other reasons, we would be required to expend significant additional financial resources and time on the completion of clinical development.
In connection with this partnership, we are developing 91 a custom ARCUS nuclease that will be designed to insert, in vivo , a therapeutic transgene at a “safe harbor” location in the genome as a potential one-time transformative treatment option for diseases including certain hemoglobinopathies such as sickle cell disease and beta thalassemia.
In connection with this partnership, we are developing a custom ARCUS nuclease that will be designed to insert, in vivo , a therapeutic transgene at a “safe harbor” location in the genome as a potential one-time transformative treatment option for diseases including certain hemoglobinopathies such as sickle cell disease and beta thalassemia.
If we are unable to raise additional funds through equity or debt financings when needed, we may be required to significantly delay, alter reduce or eliminate one or more of our research or product development programs and/or commercialization efforts, or to grant rights to develop and market products or product candidates that we would otherwise prefer to develop and market ourselves.
If we are unable to raise additional funds through equity or debt financings when needed, we may be required to significantly delay, alter reduce or eliminate one or more of our research or product development programs and/or commercialization efforts, or to grant rights to 104 develop and market products or product candidates that we would otherwise prefer to develop and market ourselves.
The terms of these agreements typically contain multiple promises or 104 obligations, which may include: (1) licenses, or options to obtain licenses, to use our technology, (2) research and development activities to be performed on behalf of the collaboration partner, and (3) in certain cases, services in connection with the manufacturing of preclinical and clinical material.
The terms of these agreements typically contain multiple promises or obligations, which may include: (1) licenses, or options to obtain licenses, to use our technology, (2) research and development activities to be performed on behalf of the collaboration partner, and (3) in certain cases, services in connection with the manufacturing of preclinical and clinical material.
Additionally, we entered into a license agreement with Imugene (the “Imugene License Agreement”) on the Closing Date, pursuant to which we granted Imugene US certain exclusive and non-exclusive license rights to develop, manufacture, and commercialize oncological applications of our allogeneic CAR T therapy, azer-cel, and up to three additional research product candidates directed to targets that Imugene US may nominate prior to the fifth anniversary of the effective date of the Imugene License Agreement, pursuant to the terms of the Imugene License Agreement. 93 In addition, under the License Agreement, we are eligible to receive milestone payments of up to an aggregate of $206 million for azer-cel, inclusive of a payment of $8 million in cash and equity upon successful completion of the Phase 1b dosing in the CAR T relapsed LBCL patient population.
Additionally, we entered into a license agreement with Imugene (the “Imugene License Agreement”) on the Closing Date, pursuant to which we granted Imugene US certain exclusive and non-exclusive license rights to develop, manufacture, and commercialize oncological applications of our allogeneic CAR T therapy, azer-cel, and up to three additional research product candidates directed to targets that Imugene US may nominate prior to the fifth anniversary of the effective date of the Imugene License Agreement, pursuant to the terms of the Imugene License Agreement. 95 In addition, under the License Agreement, we are eligible to receive milestone payments of up to an aggregate of $206 million for azer-cel, inclusive of a payment of $8 million in cash and equity upon successful completion of the Phase 1b dosing in the CAR T relapsed LBCL patient population.
Income Taxes Since our inception in 2006, we have generated cumulative federal and state NOL and R&D credit carryforwards for which we have not recorded any net tax benefit due to the uncertainty around utilizing these tax attributes within their respective carryforward periods.
Income Taxes Since our inception in 2006, we have generated cumulative federal and state NOL and R&D credit carryforwards for which we have not recorded any net tax benefit due to the uncertainty around utilizing these tax attributes within their respective carryforward 101 periods.
We expect that our research and development and general and administrative costs will increase over the long term, including in connection with conducting preclinical studies and potential clinical trials for our product candidates, contracting with 100 CROs and CMOs, expanding our intellectual property portfolio and providing general and administrative support for our operations.
We expect that our research and development and general and administrative costs will increase over the long term, including in connection with conducting preclinical studies and potential clinical trials for our product candidates, contracting with CROs and CMOs, expanding our intellectual property portfolio and providing general and administrative support for our operations.
If licensed products resulting from the collaboration are approved and sold, we will also be entitled to receive tiered royalties ranging from the mid-single digit to low-double digit percentages on net sales of licensed products, subject to customary potential reductions.
If licensed products resulting from the collaboration are approved and sold, we will also be entitled to receive tiered royalties 96 ranging from the mid-single digit to low-double digit percentages on net sales of licensed products, subject to customary potential reductions.
Common Stock Offering In March 2024, we entered into an underwriting agreement relating to the issuance and sale of an aggregate of 2,500,000 shares of our common stock and warrants to purchase 2,500,000 shares of our common stock at a combined offering price of $16.00 per share.
Common Stock Offering In March 2024, we entered into an underwriting agreement relating to the offering, issuance and sale of an aggregate of 2,500,000 shares of our common stock and warrants to purchase up to an aggregate of 2,500,000 shares of our common stock at a combined offering price of $16.00 per share.
We believe that, as of the date of this Annual Report on Form 10-K, existing cash and cash equivalents, expected operational receipts, including near-term consideration to be received from licensees, operational efficiencies gained from divestment of our historical CAR T operations, and availability of our ATM facility will be sufficient to fund our operating expenses and capital expenditure requirements into the second half of 2026.
We believe that, as of the date of this Annual Report on Form 10-K, existing cash and cash equivalents, expected operational receipts, including upfront and potential near-term consideration to be received from licensees, operational efficiencies gained from divestment of our historical CAR T operations, and availability of our ATM facility will be sufficient to fund our operating expenses and capital expenditure requirements into the second half of 2026.
The price per share of our common stock under the Novartis Stock Purchase Agreement represented a 94 20% premium over the volume-weighted-average-price of our common stock over the 10 trading days preceding the execution date of the Novartis Stock Purchase Agreement.
The price per share of our common stock under the Novartis Stock Purchase Agreement represented a 20% premium over the volume-weighted-average-price of our common stock over the 10 trading days preceding the execution date of the Novartis Stock Purchase Agreement.
TG Therapeutics’ obligation to pay royalties to us expires on a country-by-country and licensed product-by-licensed product basis, upon the latest to occur of (i) the expiration of the last-to-expire valid claim in such country covering such licensed product; (ii) the expiration of any period of data, regulatory, or market exclusivity, or supplemental protection certificates (other than patents) covering the licensed product in such country; and (iii) a period of ten years following the first commercial sale of the respective licensed product in such country.
TG Therapeutics’ obligation to pay royalties to us expires on a country-by-country and licensed product-by-licensed product basis, upon the latest to occur of (i) the expiration of the last-to-expire valid claim in such country covering such licensed product; (ii) the expiration of any period of data, regulatory, or market exclusivity, or supplemental protection certificates (other than patents) covering the licensed product in such country; and (iii) a period of 10 years following the first commercial sale of the respective licensed product in such country.
Each warrant has an exercise price per share of $20.00, is immediately exercisable and will expire on March 5, 2029. The offering was made pursuant to a registration statement on Form S-3. Gross proceeds from the transaction were $40.0 million before deducting underwriting discounts and commissions and offering expenses of approximately $2.9 million.
Each warrant has an exercise price per share of $20.00, is immediately exercisable and will expire on March 5, 2029. The offering was made pursuant to a registration statement on Form S-3. Gross proceeds from the transaction were $40.0 million before deducting underwriting discounts and commissions and offering expenses of approximately $3.0 million.
Our future funding requirements will depend on many factors, including: • the ability to collaborate and partner with third parties to fund any or all of our programs; • the progress, costs and results of our additional research and preclinical development programs including our in vivo pipeline and our planned IND or CTA submissions and potential BLA submissions; • the outcome, timing and cost of meeting regulatory requirements established by the FDA and other comparable foreign regulatory authorities; • our ability to establish and maintain strategic collaborations, licensing or other agreements and the financial terms of such agreements; • the scope, progress, results and costs of any product candidates that we may derive from ARCUS or any other product candidates we may develop alone or with collaborators; • the extent to which we in-license or acquire rights to other products, product candidates or technologies; • the costs and timing of preparing, filing and prosecuting patent applications, maintaining and protecting our intellectual property rights and defending against any intellectual property-related claims; and 102 • the costs and timing of future commercialization activities, including product manufacturing, marketing, sales and distribution, for any product candidates for which we or our collaborators obtain marketing approval.
Our future funding requirements will depend on many factors, including: • the ability to collaborate and partner with third parties to fund any or all of our programs; • the progress, costs and results of our additional research and preclinical development programs including our in vivo pipeline and our planned IND or CTA submissions and potential biologics license application (“BLA”) submissions; • the outcome, timing and cost of meeting regulatory requirements established by the FDA and other comparable foreign regulatory authorities; • our ability to establish and maintain strategic collaborations, licensing or other agreements and the financial terms of such agreements; • the scope, progress, results and costs of any product candidates that we may derive from ARCUS or any other product candidates we may develop alone or with collaborators; • the extent to which we in-license or acquire rights to other products, product candidates or technologies; • the costs and timing of preparing, filing and prosecuting patent applications, maintaining and protecting our intellectual property rights and defending against any intellectual property-related claims; and • the costs and timing of future commercialization activities, including product manufacturing, marketing, sales and distribution, for any product candidates for which we or our collaborators obtain marketing approval.
Imugene’s obligation to pay royalties to us expires on a country-by-country and licensed product-by-licensed product basis, upon the latest to occur of certain events related to expiration of patents, regulatory exclusivity or a period of ten years following the first commercial sale of the respective licensed product.
Imugene’s obligation to pay royalties to us expires on a country-by-country and licensed product-by-licensed product basis, upon the latest to occur of certain events related to expiration of patents, regulatory exclusivity or a period of 10 years following the first commercial sale of the respective licensed product.
As of December 31, 2023 management has constrained all variable consideration related to milestone payments in the Imugene License Agreement given the level of uncertainty associated with achievement of the milestone payments. Accordingly, no revenue was recognized under the Imugene License Agreement during the year ended December 31, 2023.
As of December 31, 2024 management has constrained all variable consideration related to milestone payments in the Imugene License Agreement given the level of uncertainty associated with achievement of the milestone payments. Accordingly, no revenue was recognized under the Imugene License Agreement during the year ended December 31, 2024.
Novartis’s obligation to pay royalties to us expires on a country-by-country and licensed product-by-licensed product basis, upon the latest to occur of certain events related to expiration of patents, regulatory exclusivity or a period of ten years following the first commercial sale of the licensed product.
Novartis’s obligation to pay royalties to us expires on a country-by-country and licensed product-by-licensed product basis, upon the latest to occur of certain events related to expiration of patents, regulatory exclusivity or a period of 10 years following the first commercial sale of the licensed product.
Included within the Additional Milestone Payments is a potential payment of $3.0 million in connection with achievement of a milestone specified in the TG License Agreement, payable in exchange for such number of shares of our common stock determined based on a price per share equal to the greater of (A) 200% of the VWAP of our common stock for the 30 trading days prior to the achievement of such milestone or (B) the Minimum Price.
Included within the Additional Milestone Payments is a potential payment of $3.0 million in connection with achievement of a milestone specified in the TG License Agreement, payable in exchange for such number of shares of our common stock determined based on a price per share equal to the greater of (A) 100% premium to the VWAP of our common stock for the 30 trading days prior to the achievement of such milestone or (B) the Minimum Price.
Contractual Obligations and Commitments In addition to the contractual obligations and commitments as described elsewhere in this Annual Report on Form 10-K with respect to leases, the Revolving Line, and intellectual property licenses, we also enter into contracts in the normal course of business with CMOs, universities, and other third parties for preclinical research studies, testing, manufacturing services, and other services and products for operating purposes.
Contractual Obligations and Commitments In addition to the contractual obligations and commitments as described elsewhere in this Annual Report on Form 10-K with respect to leases, the Term Loan, and intellectual property licenses, we also enter into contracts in the normal course of business with CMOs, universities, and other third parties for preclinical research studies, testing, manufacturing services, and other services and products for operating purposes.
Deferred revenue related to the Prevail Agreement was $52.7 million and $74.8 million as of December 31, 2023 and December 31, 2022, respectively, of which $4.7 million and $18.3 million, respectively, was included in current liabilities within the balance sheets. iECURE In August 2021, we entered into a development and license agreement with iECURE (the “iECURE DLA”) under which iECURE was to advance our PBGENE-PCSK9 candidate through preclinical activities as well as a Phase 1 clinical trial in order to gain access to a license to use our PCSK9-directed ARCUS nuclease to insert genes into the PCSK9 locus to develop treatments for four pre-specified rare genetic diseases, including OTC deficiency (the “PCSK9 License”).
Deferred revenue related to the Prevail Agreement was $52.7 million as of December 31, 2023, of which $4.7 million was included in current liabilities within the balance sheet. iECURE In August 2021, we entered into a development and license agreement with iECURE (the “iECURE DLA”) under which iECURE was to advance our PBGENE-PCSK9 candidate through preclinical activities as well as a Phase 1 clinical trial in order to gain access to a license to use our PCSK9-directed ARCUS nuclease to insert genes into the PCSK9 locus to develop treatments for four pre-specified rare genetic diseases, including OTC deficiency (the “PCSK9 License”).
As of December 31, 2023, we also had federal and state R&D tax credits of $17.2 million and an amount less than $0.1 million, which begin to expire in 2029 and 2030, respectively. As of December 31, 2023 we had federal Orphan Drug credits of $13.5 million which begin to expire in 2038.
As of December 31, 2024, we also had federal and state R&D tax credits of $20.2 million and an amount less than $0.1 million, which begin to expire in 2029 and 2030, respectively. As of December 31, 2024 we had federal Orphan Drug credits of $13.5 million which begin to expire in 2038.
We expect our cash runway to be sufficient to achieve first-in-human Phase 1 clinical data for our lead in vivo gene editing programs. We have based these estimates on assumptions that may prove to be imprecise, and we could utilize our available capital resources sooner than we expect.
We expect our cash runway to be sufficient to achieve first-in-human Phase 1 clinical data for two of our wholly-owned in vivo gene editing programs. We have based these estimates on assumptions that may prove to be imprecise, and we could utilize our available capital resources sooner than we expect.
Pursuant to and simultaneously with the execution of the Imugene Purchase Agreement, on August 15, 2023 (the “Closing Date”), Imugene US acquired our manufacturing infrastructure used in the development and manufacture of azer-cel, including assuming the lease to our manufacturing facility and certain contracts with respect to our manufacturing facility, and related equipment, supplies, azer-cel clinical trial inventory and other assets related to our CAR T cell therapy platform (the “Acquired Assets”).
Pursuant to and simultaneously with the execution of the Imugene Purchase Agreement, Imugene US acquired our manufacturing infrastructure used in the development and manufacture of azer-cel, including assuming the lease to our manufacturing facility and certain contracts with respect to our manufacturing facility, and related equipment, supplies, azer-cel clinical trial inventory and other assets related to our CAR T cell therapy platform (the “Acquired Assets”).
Cash used in investing activities primarily relates to cash expenditures to acquire leasehold additions, equipment, software and intangible assets. Net cash provided by investing activities during the year ended December 31, 2023 was $5.8 million, compared to $3.3 million net cash used in investing activities during the year ended December 31, 2022.
Cash (Used in) Provided by Investing Activities Cash used in investing activities primarily relates to cash expenditures to acquire leasehold additions, equipment, software and intangible assets. Net cash used in investing activities during the year ended December 31, 2024 was $0.2 million, compared to $5.8 million provided by investing activities in the year ended December 31, 2023.
A discussion regarding our financial condition and results of operation, including liquidity and capital resources, for the year ended December 31, 2023 compared to the year ended December 31, 2022 is presented below.
A discussion regarding our financial condition and results of operations, including liquidity and capital resources, for the year ended December 31, 2024 compared to the year ended December 31, 2023 is presented below.
Loss from Equity Method Investment Loss from equity method investment was $4.9 million during the year ended December 31, 2023 and represented our proportionate share of Elo’s net loss for such period.
Loss from equity method investment was $4.9 million during the year ended December 31, 2023, which represented our proportionate share of Elo’s net loss for such periods.
Overview We are an advanced gene editing company dedicated to improving life by developing in vivo therapies for genetic and infectious diseases with the application of our wholly-owned proprietary ARCUS genome editing platform.
Overview We are a clinical stage gene editing company dedicated to improving life by developing in vivo therapies for genetic and infectious diseases with the application of our wholly-owned proprietary ARCUS genome editing platform.
We are now solely focused on leveraging our proprietary ARCUS genome editing platform to advance in vivo gene editing programs that go beyond gene knockouts in the liver and carry out more sophisticated edits such as gene insertions, gene excision, and gene elimination, unlocking a broader potential for ARCUS in vivo gene editing in human therapeutics.
Business Updates Since mid-2023, we have solely focused on leveraging our proprietary ARCUS genome editing platform to advance in vivo gene editing programs that go beyond gene knockouts in the liver and carry out more sophisticated edits such as gene insertions, gene excision, and gene elimination, unlocking a broader potential for ARCUS in vivo gene editing in human therapeutics.
These contract are generally cancelable upon written notice. The Company does not have any material capital expenditure commitments at December 31, 2023.
These contracts are generally cancelable upon written notice. The Company does not have any material capital expenditure commitments at December 31, 2024.
Under the terms of the agreement, we received an upfront payment and, upon commercialization by Caribou, will receive royalties on net sales of licensed products. In addition, for each occurrence of certain strategic transactions involving Caribou, we are entitled to receive a specific tiered milestone payment.
Under the terms of the agreement, we received an upfront payment and, upon commercialization by Caribou, will receive royalties on net sales of licensed products. In addition, for each occurrence of certain strategic transactions involving Caribou, we are entitled to receive a specific tiered milestone payment. In April 2024, we received written notice from Prevail Therapeutics, Inc.
Pursuant to the terms of the Prevail Agreement, we and Prevail will continue to collaborate on developing our ARCUS nucleases for the research and development of potential in vivo therapies for genetic disorders, including DMD, a liver-directed target, and a central nervous system directed target.
Pursuant to the terms of the Prevail Agreement, we and Prevail continued to collaborate on developing our ARCUS nucleases for the research and development of potential in vivo therapies for genetic disorders, including Duchenne muscular dystrophy, a liver-directed target, and a central nervous system directed target.
As of December 31, 2023, we also have federal contribution carryforwards of $0.2 million, which began to expire in 2023. We have recorded a full valuation allowance against our net deferred tax assets at each balance sheet date.
As of December 31, 2024, we also have federal contribution carryforwards of $0.1 million, which begin to expire in 2026. We have recorded a full valuation allowance against our net deferred tax assets at each balance sheet date.
As of December 31, 2023, we had an accumulated deficit of $489.6 million. We expect to incur significant expenses and operating losses for the foreseeable future as we advance the development of our product candidates.
As of December 31, 2024, we had an accumulated deficit of $482.5 million. We expect to incur significant expenses and operating losses for the foreseeable future as we advance the development of our product candidates.
As of December 31, 2023, we had federal and state NOL carryforwards of $195.0 million and $166.8 million respectively, which may be available to offset future taxable income. The U.S. federal NOLs carryforward indefinitely. The state NOL carryforwards begin to expire in 2027.
As of December 31, 2024, we had federal and state NOL carryforwards of $235.5 million and $212.0 million respectively, which may be available to offset future taxable income. The U.S. federal NOLs carryforward indefinitely. The state NOL carryforwards begin to expire in 2027.
Cash Provided by Financing Activities Net cash provided by financing activities during the year ended December 31, 2023 was $5.4 million, compared to $95.0 million during the year ended December 31, 2022.
Cash Provided by Financing Activities Net cash provided by financing activities during the year ended December 31, 2024 was $50.5 million, compared to $5.4 million during the year ended December 31, 2023.
Deferred revenue related to the Novartis Agreement amounted to $32.4 million and $54.2 million as of December 31, 2023 and December 31, 2022, respectively, of which $7.4 million and $27.9 million, respectively, was included in current liabilities within the balance sheets. Prevail Therapeutics, Inc.
Deferred revenue related to the Novartis Agreement amounted to $26.3 million and $32.4 million as of December 31, 2024 and December 31, 2023, respectively, of which $3.0 million and $7.4 million, respectively, was included in current liabilities within the balance sheets. Prevail Therapeutics, Inc.
(“Caribou”), a leading CRISPR genome-editing cell therapy company, a non-exclusive, worldwide license, with the right to sublicense, to one of our foundational cell therapy patent families for use with CRISPR-based therapies in the field of human therapeutics.
In February 2024, we announced that we had granted Caribou Biosciences, Inc. (“Caribou”), a leading CRISPR genome-editing cell therapy company, a non-exclusive, worldwide license, with the right to sublicense, to one of our foundational cell therapy patent families for use with CRISPR-based therapies in the field of human therapeutics.
During the years ended December 31, 2023 and 2022 we recognized revenue under the Novartis Agreement of $22.7 million and $9.5 million, respectively.
During the years ended December 31, 2024 and 2023 we recognized revenue under the Novartis Agreement of $6.4 million and $22.7 million, respectively.
The Upfront Payment of $10.0 million is comprised of (i) a $5.25 million cash payment that was paid to us on February 5, 2024, (ii) a $2.25 million cash payment that was paid to us on February 5, 2024 payable in exchange for 97,360 shares of our common stock, based on a price per share equal to 200% of the VWAP of our common stock for the 30 trading days prior to the date of the TG License Agreement, and (iii) a deferred cash payment of $2.5 million due within 12 months following the date of the TG License Agreement, payable in exchange for such number of shares of our common stock determined based on a price per share equal to the 92 greater of (A) 200% of the VWAP of our common stock for the 30 trading days prior to the date of payment or (B) a minimum price of $11.1660 determined in accordance with Nasdaq Listing Rule 5635(d) (the “Minimum Price”).
The Upfront Payment of $10.0 million is comprised of (i) a $5.25 million cash payment that was paid to us on February 5, 2024, (ii) a $2.25 million cash payment that was paid to us on February 5, 2024 in exchange for 97,360 shares of our common stock, based on a price per share equal to a 100% premium to the VWAP of our common stock for the 30 trading days prior to the date of the TG License Agreement, and (iii) a deferred cash payment of $2.5 million that was paid to us on January 6, 2025 in exchange for 220,712 shares of our common stock, based on a price per share equal to the greater of (A) 100% premium to the VWAP of our common stock for the 30 trading days prior to the date of payment or (B) a minimum price of $11.1660 determined in accordance with Nasdaq Listing Rule 5635(d) (the “Minimum Price”). 94 The Initial Milestone Payment of $7.5 million, if payable, will consist of (i) a $5.25 million cash milestone payment and (ii) a $2.25 million cash payment payable in exchange for such number of shares of our common stock determined based on a price per share equal to the greater of (A) 100% premium to the VWAP of our common stock for the 30 trading days prior to the achievement of such milestone or (B) the Minimum Price.
Cash used in operating activities during the year ended December 31, 2023 was $84.1 million, compared to $45.8 million during the year ended December 31, 2022.
Cash used in operating activities during the year ended December 31, 2024 was $58.4 million, compared to $84.1 million during the year ended December 31, 2023.
In connection with the TG License Agreement, we received upfront, and are also entitled to receive potential near-term economics, valued in the aggregate at $17.5 million.
In connection with the TG License Agreement, we received upfront, and are also entitled to receive potential near-term, economics valued in the aggregate at $17.5 million. We are also entitled to receive additional payments upon the achievement of additional specified milestones of up to $288.6 million.
For elements of collaboration arrangements that are accounted for pursuant to ASC 808, an appropriate recognition method is determined and applied consistently, generally by analogy to ASC 606. For those elements of the arrangement that are accounted for pursuant to ASC 606, we apply the five-step model described above.
For elements of collaboration arrangements that are accounted for pursuant to ASC 808, an appropriate recognition method is determined and applied consistently, generally by analogy to ASC 606.
See “ Risk Factors–– We will need substantial additional funding, and if we are unable to raise a sufficient amount of capital when needed on acceptable terms, or at all, we may be forced to delay, reduce or eliminate some or all of our research programs, product development activities and commercialization efforts. ” in Part I, Item 1A. of this Annual Report on Form 10-K for a further discussion of our ability to generate and obtain adequate amounts of funding in connection with our continuing operations.
As of the filing of this Annual Report on Form 10-K, we will be subject to the Baby Shelf Rule, as defined and described in “ Risk Factors – We will need substantial additional funding, and if we are unable to raise a sufficient amount of capital when needed on acceptable terms, or at all, we may be forced to delay, reduce or eliminate some or all of our research programs, product development activities and commercialization efforts. ” in Part I, Item 1A. of this Annual Report on Form 10-K.
Interest Income Interest income was $7.7 million during the year ended December 31, 2023 compared to $3.5 million during the year ended December 31, 2022.
Interest Income Interest income was $6.8 million during the year ended December 31, 2024 compared to $7.7 million during the year ended December 31, 2023.
On November 19, 2020, we entered into a development and license agreement with Eli Lilly and Company (“Lilly”) to collaborate to discover and develop in vivo gene editing products incorporating our ARCUS nucleases to utilize ARCUS for the research and development of potential in vivo therapies for genetic disorders.
On November 19, 2020, we entered into a development and license agreement with Eli Lilly and Company (“Lilly”) to collaborate to discover and develop in vivo gene editing products incorporating ARCUS nucleases to utilize ARCUS for the research and development of potential in vivo therapies for genetic disorders, which was subsequently assigned to Prevail Therapeutics Inc., a wholly-owned subsidiary of Lilly (“Prevail”), effective November 1, 2022 (the “Original Prevail Agreement”).
Loss from Discontinued Operations Loss from discontinued operations was $18.8 million during the year ended December 31, 2023 compared to $38.7 million during the year ended December 31, 2022.
Loss from Discontinued Operations There was no loss from discontinued operations during the year ended December 31, 2024 compared to a loss of $18.8 million during the year ended December 31, 2023.
Preclinical data from the PBGENE-HBV program was presented in April 2023 at an oral presentation at the Global Hepatitis Summit 2023, in June 2023 at an oral presentation at the European Association for Study of the Liver Congress 2023, and in November 2023 at the American Association for the Study of Liver Diseases Annual Meeting.
Preclinical data from the PBGENE-HBV program was presented in March 2025 at the Global Hepatitis Summit, in November 2024 at the American Association for the Study of Liver Diseases, and in June 2024 at a poster presentation and panel discussion at the European Association for the Study of the Liver Congress.
In patients with chronic HBV, genetic material of the virus is converted within infected liver cells into covalently closed circular DNA (“cccDNA”) that acts as a template to make HBV copies. HBV also inserts its DNA into the human genome of infected liver cells.
In patients with chronic HBV, genetic material of the virus is converted within infected liver cells into cccDNA that acts as a template to make HBV copies. HBV also inserts its DNA into the human genome of infected liver cells. Both cccDNA and integrated HBV DNA produce the viral protein, HBsAg, which is secreted in the blood.
If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be required to raise additional capital, potentially on terms that are unfavorable to us, or we may be unable to continue our operations at planned levels and be forced to reduce or terminate operations.
If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be required to raise additional capital, potentially on terms that are unfavorable to us, or we may be unable to continue our operations at planned levels and be forced to reduce or terminate operations. 102 Cash Flows Our cash, cash equivalents, and restricted cash totaled $108.5 million and $116.7 million as of December 31, 2024, and 2023, respectively.
Preclinical data from the PBGENE-PMM program presented in March 2024 at a poster presentation at the Mitochondrial Medicine – Therapeutic Development Annual Conference demonstrated ARCUS’ ability to efficiently eliminate mutant mitochondrial DNA without nuclear off-target editing. We expect to submit an IND and/or CTA application in 2025 with respect to PBGENE-PMM.
Preclinical data from the PBGENE-3243 program presented in June 2024 at the United Mitochondrial Disease Foundation’s Mitochondrial Medicine 2024 Conference and in March 2024 at a poster presentation at the Mitochondrial Medicine – Therapeutic Development Annual Conference demonstrated ARCUS’ ability to efficiently eliminate mutant mitochondrial DNA without nuclear off-target editing.
To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation.
To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. 105 At contract inception, once the contract is determined to be within the scope of ASC 606, we evaluate the performance obligations promised in the contract that are based on goods and services that will be transferred to the customer and determine whether those obligations are both (i) capable of being distinct and (ii) distinct in the context of the contract.
Sale of CAR T Platform to Imugene On August 15, 2023 we entered into an asset purchase agreement with Imugene (the “Imugene Purchase Agreement”).
Sale of CAR T Platform to Imugene On August 15, 2023 we entered into an asset purchase agreement (the “Imugene Purchase Agreement”) with Imugene Limited (“Imugene Limited”), and its wholly owned subsidiary Imugene (USA) Inc. (“Imugene US” and together with Imugene Limited, “Imugene”).
We, along with our collaboration partners, intend to continue to evaluate the ARCUS platform with regards to safety, on-target editing, gene insertion, complex gene edits, and compatibility with viral and non-viral delivery. In June 2023, we entered into an amended and restated development and license agreement (the “Prevail Agreement”) with Prevail Therapeutics, Inc.
We, along with our collaboration partners, intend to continue to evaluate the ARCUS platform with regards to safety, on-target editing, gene insertion, complex gene edits, and compatibility with viral and non-viral delivery. In partnership with iECURE, Inc.
Expected dividend yield is based on the fact that we have never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future. The fair value of each restricted stock unit is determined based on the closing market price of our common stock on the date of grant.
Expected dividend yield is based on the fact that we have never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future.
Share-Based Compensation We measure stock options and other share-based awards granted to our employees, directors, consultants and advisors based on the fair value on the date of the grant and recognize compensation expense for those awards, net of actual forfeitures, over the requisite service period, which is generally the vesting period of the respective award. 105 The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model, which uses as inputs the fair value of our common stock and assumptions we make for the expected volatility of our common stock, the expected term of the stock options, the risk-free interest rate for a period that approximates the expected term of the stock options and the our expected dividend yield.
The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model, which uses as inputs the fair value of our common stock and assumptions we make for the expected volatility of our common stock, the expected term of the stock options, the risk-free interest rate for a period that approximates the expected term of the stock options and the our expected dividend yield.
Revenue related to performance obligations satisfied over time could be materially impacted as a result of changes in the estimated research effort to satisfy performance obligations or changes in the transaction price related to variable consideration.
For those elements of the arrangement that are accounted for pursuant to ASC 606, we apply the five-step model described above. 106 Revenue related to performance obligations satisfied over time could be materially impacted as a result of changes in the estimated research effort to satisfy performance obligations or changes in the transaction price related to variable consideration.
Imugene has assumed ongoing clinical execution for azer-cel in the LBCL population who have relapsed following CAR T treatment. In January 2024, we entered into a license agreement with TG Cell Therapy, Inc. (“TG Subsidiary”) and its parent company TG Therapeutics, Inc. (“TG Parent” and, together with TG Subsidiary, “TG Therapeutics”) for non-oncological applications of azer-cel (the “TG License Agreement”).
In January 2024 we entered into a license agreement with TG Cell Therapy, Inc. (“TG Subsidiary”) and its parent company TG Therapeutics, Inc. (“TG Parent” and, together with TG Subsidiary, “TG Therapeutics”) for non-oncological applications of azercabtagene zapreleucel (“azer-cel”) (the “TG License Agreement”).
Additionally share based compensation expenses decreased $1.8 million due to forfeitures. General and Administrative Expenses General and administrative expenses were $39.1 million for the year ended December 31, 2023 compared to $41.3 million for the year ended December 31, 2022.
General and Administrative Expenses General and administrative expenses were $35.3 million for the year ended December 31, 2024 compared to $39.1 million for the year ended December 31, 2023.
As of December 31, 2023, the outstanding principal balance on the Revolving Line was $22.5 million, the stated interest rate was 9.25% and the effective interest rate was 10.3%.
As of December 31, 2024, the outstanding principal balance on the 2024 Term Loan was $22.5 million, the stated interest rate was 6.0% and the effective interest rate was 6.43%.
During the years ended December 31, 2023 and 2022, we recognized revenue under the Prevail Agreement of $26.0 million and $15.6 million, respectively.
During the years ended December 31, 2024 and 2023, we recognized revenue under the Prevail Agreement of $52.7 million and $26.0 million, respectively. The Company has no deferred revenue under the Prevail Agreement as of December 31, 2024, due to the termination.
Under the terms of the Novartis Agreement, we will develop an ARCUS nuclease and conduct in vitro characterization, with Novartis then assuming responsibility for all subsequent research, development, manufacturing and commercialization activities. In partnership with iECURE, Inc. (“iECURE”), an ARCUS-mediated gene insertion approach is being pursued as a potential treatment option for neonatal onset ornithine transcarbamylase (“OTC”) deficiency.
Under the terms of the Novartis Agreement, we will develop an ARCUS nuclease and conduct in vitro characterization, with Novartis then assuming responsibility for all subsequent research, development, manufacturing and commercialization activities.
We also shared data for another Prevail program during the R&D Day highlighting high efficiency gene insertion in adult non-human primates (“NHPs”). In June 2022, we announced we entered into an exclusive in vivo gene editing research and development collaboration and license agreement (the “Novartis Agreement”) with Novartis Pharma AG (“Novartis”).
In June 2022, we announced we entered into an exclusive in vivo gene editing research and development collaboration and license agreement (the “Novartis Agreement”) with Novartis Pharma AG (“Novartis”).
During the year ended December 31, 2023, we recorded a $0.6 million increase in the carrying value of our iECURE equity to adjust to fair value.
During the year ended December 31, 2023, we recorded a $0.6 million increase in the carrying value of our iECURE equity to adjust to fair value. 97 Components of Our Results of Operations Revenue To date, we have not generated any revenue from product sales and do not expect to generate any revenue from product sales in the foreseeable future.
Manufacturing initial clinical trial material for the first licensed product, which was previously our responsibility to conduct at Prevail’s expense, will instead be Prevail’s responsibility at Prevail’s expense.
Pursuant to the Prevail Agreement, manufacturing initial clinical trial material for the first licensed product, which was previously our responsibility to conduct at Prevail’s expense, instead became Prevail’s responsibility at Prevail’s expense. On April 11, 2024, we received written notice from Prevail of its termination of the Prevail Agreement.
While our significant accounting policies are described in more detail in the notes to our Financial Statements, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our Financial Statements. 103 Revenue Recognition Our revenues are generated primarily through collaborative research, license, development and commercialization agreements.
Our actual results may differ from these estimates under different assumptions or conditions. While our significant accounting policies are described in more detail in the notes to our Financial Statements, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our Financial Statements.
Accrued Research and Development Expenses As part of the process of preparing our financial statements, we are required to make certain estimates and judgements in our accrued research and development expenses.
Derivative warrant liabilities are classified as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities. Accrued Research and Development Expenses As part of the process of preparing our financial statements, we are required to make certain estimates and judgments in our accrued research and development expenses.
Research and Development Expenses Years ended December 31, (in thousands) 2023 2022 Change Direct research and development expenses by product candidate: PBGENE-HBV external development costs 9,261 804 8,457 PBGENE-PMM external development costs 352 — 352 Platform development and early-stage research expenses: Employee-related costs (other than share based compensation) 19,788 18,732 1,056 Share based compensation 3,642 5,410 (1,768 ) Laboratory supplies and services 5,741 8,585 (2,844 ) Outsourced research and development 4,682 3,458 1,224 CMOs and research organizations 71 45 26 Laboratory equipment and maintenance 938 1,049 (111 ) Facility-related costs 2,370 2,053 317 Depreciation and amortization 4,022 4,010 12 Licensing fees 2,468 1,968 500 Other research and development costs 40 8 32 Total research and development expenses $ 53,375 $ 46,122 $ 7,253 Research and development expenses for the year ended December 31, 2023 were $53.4 million, compared to $46.1 million for the year ended December 31, 2022.
Research and Development Expenses Years ended December 31, (in thousands) 2024 2023 Change Direct research and development expenses by product candidate: PBGENE-HBV external development costs 16,111 9,261 6,850 PBGENE-3243 external development costs 9,808 352 9,456 Platform development and early-stage research expenses: Employee-related costs (other than share-based compensation) 18,753 19,788 (1,035 ) Share-based compensation 2,560 3,642 (1,082 ) Laboratory supplies and services 3,016 5,741 (2,725 ) CMOs and outsourced research and development 1,083 4,753 (3,670 ) Facility-related costs, laboratory equipment, and maintenance 3,082 3,308 (226 ) Depreciation and amortization 2,718 4,022 (1,304 ) Licensing fees and other research and development costs 2,428 2,508 (80 ) Total research and development expenses $ 59,559 $ 53,375 $ 6,184 Research and development expenses for the year ended December 31, 2024 were $59.6 million, compared to $53.4 million for the year ended December 31, 2023.
Components of Our Results of Operations Revenue To date, we have not generated any revenue from product sales and do not expect to generate any revenue from product sales in the foreseeable future. We record revenue from collaboration agreements, including amounts related to upfront payments, milestone payments, fees for licenses of our intellectual property and research and development funding.
We record revenue from collaboration agreements, including amounts related to upfront payments, milestone payments, fees for licenses of our intellectual property and research and development funding. Research and Development Expenses Research and development expenses consist primarily of costs incurred for our research activities, including our discovery efforts and the development of our product candidates.
Interest Expense Interest expense was $2.2 million for the year ended December 31, 2023 compared to $1.1 million during the year ended December 31, 2022.
Interest Expense Interest expense was $1.8 million and $2.2 million for the years ended December 31, 2024 and 2023, respectively. The $0.4 million decrease in interest expense was the result of lower interest rates during the year ended December 31, 2024 as compared to the year ended December 31, 2023.
On the Maturity Date, the Imugene Convertible Note will be redeemed with cash, converted into ordinary shares of Imugene Limited at a conversion price based on the 10-day volume weighted average price of Imugene Limited’s ordinary shares prior to the date of conversion, or partially redeemed with cash and partially converted into shares, at Imugene’s discretion.
The ordinary shares of Imugene Limited were determined using a conversion price based on the 10-day volume weighted average price of Imugene Limited’s ordinary shares prior to the date of conversion.
Loss on Disposal of Assets Loss on disposal of assets represents the remaining net book value of disposed assets at the time of their disposal and impairment recognized on assets held for sale. 97 Gain (Loss) on Changes in Fair Value The change in fair value of represents the assessed changes in fair value of assets and liabilities carried at fair value.
Interest Income Interest income consists of interest income earned on our cash and cash equivalents and note receivable from Elo. Loss on Disposal of Assets Loss on disposal of assets represents the remaining net book value of disposed assets at the time of their disposal and impairment recognized on assets held for sale.
The high specificity and single component nature of our mitoARCUS nucleases are designed to enable specific editing of mutant mitochondrial DNA while allowing normal (wild-type) mitochondrial DNA to repopulate in the mitochondria and restore normal function.
The highly specific mitochondria-targeted ARCUS nucleases are designed to shift heteroplasmy by editing and eliminating mutant mitochondrial DNA while allowing normal (wild-type) mitochondrial DNA to repopulate in the mitochondria, thus improving cellular function.
Loss from Equity Method Investment Loss from equity method investment represents our proportionate share of the net loss of our equity method investee, Elo Life Systems, Inc. (“Elo”). Interest Expense Interest expense consists of interest payments incurred and discount amortization on debt outstanding.
Loss from Equity Method Investment Loss from equity method investment represents our proportionate share of the net loss of our equity method investee, Elo Life Systems, Inc. (“Elo”). Gain on Changes in Fair Value The change in fair value represents the assessed changes in assets and liabilities carried at fair value.
The increase of $23.6 million in revenue during the year ended December 31, 2023 was primarily the result of a $10.4 million increase in revenue recognized under the Prevail Agreement.
The increase of $20.0 million in revenue during the year ended December 31, 2024 was primarily the result of a $26.7 million increase in revenue related to the Prevail Agreement as the remaining deferred revenue under the agreement was recognized during the year ended December 31, 2024 following conclusion of the collaboration in April 2024.
Results of Operations Comparison of the Years Ended December 31, 2023 and December 31, 2022 The following table summarizes our results of operations for the years ended December 31, 2023 and December 31, 2022, together with the changes in those items in dollars: Years ended December 31, (in thousands) 2023 2022 Change Revenue $ 48,727 $ 25,098 $ 23,629 Operating expenses: Research and development 53,375 46,122 7,253 General and administrative 39,088 41,284 (2,196 ) Total operating expenses 92,463 87,406 5,057 Loss from operations (43,736 ) (62,308 ) 18,572 Other income (expense), net: Impairment charges — (10,844 ) 10,844 Loss on disposal of assets (461 ) (30 ) (431 ) Gain (loss) on changes in fair value 1,145 (510 ) 1,655 Loss from equity method investment (4,931 ) (1,579 ) (3,352 ) Interest expense (2,230 ) (1,111 ) (1,119 ) Interest income 7,686 3,473 4,213 Total other income (expense), net 1,209 (10,601 ) 11,810 Loss from continuing operations (42,527 ) (72,909 ) 30,382 Loss from discontinued operations (including gain on disposal of $8,446 during the year ended December 31, 2023) (18,792 ) (38,728 ) 19,936 Net loss $ (61,319 ) $ (111,637 ) $ 50,318 Revenue Revenue for the year ended December 31, 2023 was $48.7 million, compared to $25.1 million for the year ended December 31, 2022.
Loss from Discontinued Operations Loss from discontinued operations represents the gain on the sale of our CAR T infrastructure to Imugene and the results of operations of our historical cell therapy operations. 99 Results of Operations Comparison of the Years Ended December 31, 2024 and December 31, 2023 The following table summarizes our results of operations for the years ended December 31, 2024 and December 31, 2023, together with the changes in those items in dollars: Years ended December 31, (in thousands) 2024 2023 Change Revenue $ 68,696 $ 48,727 $ 19,969 Operating expenses: Research and development 59,559 53,375 6,184 General and administrative 35,299 39,088 (3,789 ) Total operating expenses 94,858 92,463 2,395 Loss from operations (26,162 ) (43,736 ) 17,574 Other income (expense), net: Loss from equity method investment (1,084 ) (4,931 ) 3,847 Gain on changes in fair value 258 1,145 (887 ) Gain on change in fair value of warrant liability 29,610 — 29,610 Interest expense (1,782 ) (2,230 ) 448 Interest income 6,763 7,686 (923 ) Loss on disposal of assets (436 ) (461 ) 25 Total other income, net 33,329 1,209 32,120 Income (loss) from continuing operations 7,167 (42,527 ) 49,694 Loss from discontinued operations (including gain on disposal of $8,446 during the year ended December 31, 2023) — (18,792 ) 18,792 Net income (loss) $ 7,167 $ (61,319 ) $ 68,486 Revenue Revenue for the year ended December 31, 2024 was $68.7 million, compared to $48.7 million for the year ended December 31, 2023.
This integrated HBV DNA produces the viral protein, hepatitis B surface antigen (“HBsAg”), which is secreted in the blood. Presence of HBsAg is associated with poorer outcomes and elimination of HBsAg is necessary for functional cure of chronic hepatitis B.
Presence of HBsAg is associated with poorer outcomes and suppression of HBsAg is necessary for functional cure of chronic hepatitis B.
The $9.1 million net increase in cash provided by investing activities was primarily driven by $8.0 million in proceeds received from Imugene as partial consideration for assets acquired under the Purchase Agreement and a $1.4 million decrease in cash paid to purchase property, equipment and software during the year ended December 31, 2023 compared to the year ended December 31, 2022.
The $45.1 million increase in cash provided by financing activities during the year ended December 31, 2024 was primarily due to a $44.4 million increase in net proceeds from offerings of common stock in the year ended December 31, 2024 as compared to the year ended December 31, 2023 and $0.9 million in net proceeds from the issuance of common stock to TG Therapeutics in the year ended December 31, 2024.
Gain (Loss) on Changes in Fair Value 99 Gain from changes in fair value was $1.1 million for the year ended December 31, 2023, which is primarily the result of an increase in the assessed fair value of the iECURE equity investment as iECURE has progressed towards a clinical trial for OTC deficiency.
Gain on changes in fair value was $1.1 million for the year ended December 31, 2023, which was attributed to an increase in the fair value of the Imugene Convertible Note.
The $4.2 million increase in interest income was primarily driven by higher interest rates on our cash and cash equivalents during the year ended December 31, 2023 as compared to the year ended December 31, 2022.
The $0.9 million decrease in interest income was the result of lower interest rates during the year ended December 31, 2024 as compared to the year ended December 31, 2023 Loss on Disposal of Assets Loss on disposal of assets was $0.4 million and $0.5 million during the years ended December 31, 2024 and 2023, respectively.

… 129 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+0 added−0 removed1 unchanged
Item 7A. Quantitative and Qualitat ive Disclosures About Market Risk. We are exposed to market risks in the ordinary course of our business. These risks primarily include interest rate sensitivities. Our interest-earning assets consist of cash and cash equivalents, which are denominated in U.S. dollars.
Item 7A. Quantitative and Qualitat ive Disclosures About Market Risk. We are exposed to market risks in the ordinary course of our business. These risks primarily include interest rate sensitivities. Our interest-earning assets consist of cash, cash equivalents, and restricted cash which are denominated in U.S. dollars.
A hypothetical 10% change in existing interest rates would not have had a material impact on the value of our cash and cash equivalents as of December 31, 2023.
A hypothetical 10% change in existing interest rates would not have had a material impact on the value of our cash and cash equivalents as of December 31, 2024.
We had cash and cash equivalents of $116.7 million, or 73% of our total assets, on December 31, 2023 and $189.6 million, or 80% of our total assets, on December 31, 2022. Interest income earned on our assets was $7.7 million and $3.5 million for the years ended December 31, 2023 and December 31, 2022, respectively.
We had cash, cash equivalents, and restricted cash of $108.5 million, or 80% of our total assets, on December 31, 2024 and $116.7 million, or 73% of our total assets, on December 31, 2023. Interest income earned on our assets was $6.8 million and $7.7 million for the years ended December 31, 2024 and December 31, 2023, respectively.

Other DTIL 10-K year-over-year comparisons