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What changed in Jasper Therapeutics, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Jasper Therapeutics, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+406 added−583 removedSource: 10-K (2024-03-05) vs 10-K (2023-03-08)

Top changes in Jasper Therapeutics, Inc.'s 2023 10-K

406 paragraphs added · 583 removed · 318 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

116 edited+35 added−136 removed157 unchanged
Biggest changeCompetitors for our briquilimab CD117 targeted therapeutic program include the following: ● Celldex Therapeutics, Inc., which is developing an antibody to CD117 that is being studied in mast cell diseases; ● Acelyrin, Inc., which is developing an antibody to CD117 for mast cell diseases; ● Third Harmonic, Inc., which is developing small molecule inhibitors to CD117 for mast cell diseases; ● Allakos, Inc., which is developing an antibody to Siglec-8 for mast cell diseases; ● Novartis, Inc., which is developing a small molecule inhibitor to Bruton’s Tyrosine Kinase for mast cell diseases; ● Sanofi Aventis, Inc., which is developing an antibody to the Interleukin 4 receptor for mast cell diseases; ● Gilead Sciences, Inc., which is developing an antibody to CD117 that may be used in combination with an antibody to CD47 for stem cell transplants; ● Actinium Pharmaceuticals, Inc., which is developing an antibody to CD45 that is fused to iodine-131 radioisotope for stem cell transplant; ● Beam Therapeutics, Inc., which is developing an antibody to CD117 that may be used in combination with their gene modified stem cells for gene therapy; and ● Molecular Templates Inc., which is developing an antibody to CD45 that is fused to an engineered Shiga-like toxin for stem cell transplant.
Biggest changeCompetitors for our briquilimab c-Kit targeted therapeutic program include the following: ● Celldex Therapeutics, Inc., which is developing an antibody to c-Kit that is being studied in mast cell diseases; ● Acelyrin, Inc., which is developing an antibody to c-Kit for mast cell diseases; ● Third Harmonic, Inc., which is developing small molecule inhibitors to c-Kit for mast cell diseases; ● Allakos, Inc., which is developing an antibody to Siglec-6 for mast cell diseases; ● Novartis, Inc., which is developing a small molecule inhibitor to Bruton’s Tyrosine Kinase for mast cell diseases; ● Sanofi Aventis, Inc., which is developing an antibody to the Interleukin 4 receptor alpha for mast cell diseases; ● Escient Pharmaceuticals, Inc., which is developing a small molecule antagonist of MRGPRX2 in mast cell driven diseases; and ● Evommune, Inc., which is developing a small-molecule antagonist of MRGPRX2 in mast cell driven diseases. 12 Sales and Marketing We do not currently have sales and marketing infrastructure to support commercial launch of our product candidates, if approved.
However, its use is limited because of the associated serious adverse effects and limited efficacy of current conditioning agents used to deplete stem cells in preparation for transplantation. Briquilimab for CGD patients will be evaluated in a clinical trial collaboration with the National Institute of Allergy and Infectious Diseases. Enrollment in this study is ongoing.
However, its use is limited because of the associated serious adverse effects and limited efficacy of current conditioning agents used to deplete stem cells in preparation for transplantation. Briquilimab for CGD patients will be evaluated in a clinical trial in collaboration with the National Institute of Allergy and Infectious Diseases. Enrollment in this study is ongoing.
Additional studies may be required after approval. ● Phase 1 clinical trials are initially conducted in a limited population to test the product candidate for safety, including adverse effects, dose tolerance, absorption, metabolism, distribution, excretion, and pharmacodynamics in healthy humans or, on occasion, in patients, such as cancer patients. 23 ● Phase 2 clinical trials are generally conducted in a limited patient population to identify possible adverse effects and safety risks, evaluate the efficacy of the product candidate for specific targeted indications and determine dose tolerance and optimal dosage.
Additional studies may be required after approval. ● Phase 1 clinical trials are initially conducted in a limited population to test the product candidate for safety, including adverse effects, dose tolerance, absorption, metabolism, distribution, excretion, and pharmacodynamics in healthy humans or, on occasion, in patients, such as cancer patients. ● Phase 2 clinical trials are generally conducted in a limited patient population to identify possible adverse effects and safety risks, evaluate the efficacy of the product candidate for specific targeted indications and determine dose tolerance and optimal dosage.
The clinical trial application must be accompanied by an investigational medicinal product dossier with supporting information prescribed by Directive 2001/20/EC and Directive 2005/28/EC and corresponding national laws of the member states and further detailed in applicable guidance documents. In April 2014, the European Union adopted a new Clinical Trials Regulation (EU) No 536/2014, which became effective on January 31, 2022.
The clinical trial application must be accompanied by an investigational medicinal product dossier with supporting information prescribed by Directive 2001/20/EC and Directive 2005/28/EC and corresponding national laws of the member states and further detailed in applicable guidance documents. 19 In April 2014, the European Union adopted a new Clinical Trials Regulation (EU) No 536/2014, which became effective on January 31, 2022.
Other potential consequences include, among other things: ● restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls; ● fines, warning letters or holds on post-approval clinical trials; ● refusal of the FDA to approve pending applications or supplements to approved applications, or suspension or revocation of product license approvals; ● product recall, seizure or detention, or refusal to permit the import or export of products; or ● injunctions or the imposition of civil or criminal penalties.
Other potential consequences include, among other things: ● restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls; ● fines, warning letters or holds on post-approval clinical trials; 18 ● refusal of the FDA to approve pending applications or supplements to approved applications, or suspension or revocation of product license approvals; ● product recall, seizure or detention, or refusal to permit the import or export of products; or ● injunctions or the imposition of civil or criminal penalties.
Any patents that grant from these applications would be expected to expire in 2042 or 2044, absent any applicable patent term extensions. Additional Intellectual Property We also rely on trade secrets, including know-how, confidential information, unpatented technologies and other proprietary information, to strengthen or enhance our competitive position, and prevent competitors from reverse engineering or copying our technologies.
Any patents that grant from these applications would be expected to expire in 2042 to 2044, absent any applicable patent term extensions. 11 Additional Intellectual Property We also rely on trade secrets, including know-how, confidential information, unpatented technologies and other proprietary information, to strengthen or enhance our competitive position, and prevent competitors from reverse engineering or copying our technologies.
The conduct of such a clinical trial could be expensive and result in delays in our commercialization efforts. 29 In the European Union, pricing and reimbursement schemes vary widely from country to country. Some countries provide that products may be marketed only after a reimbursement price has been agreed.
The conduct of such a clinical trial could be expensive and result in delays in our commercialization efforts. In the European Union, pricing and reimbursement schemes vary widely from country to country. Some countries provide that products may be marketed only after a reimbursement price has been agreed.
The incidence of SCID is estimated at one in 80,000 live births across all ethnic groups. Due to the toxicities associated with the chemotherapy regimens used in standard allogeneic HCT to deplete endogenous HSC, some centers do not use conditioning regimens.
The incidence of SCID is estimated at one in 80,000 live births across all ethnic groups. Due to the toxicities associated with the current chemotherapy regimens used in standard allogeneic HCT to deplete endogenous HSC, some centers do not use conditioning regimens.
Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing and integrating our existing and additional employees. The principal purposes of our equity incentive plans are to attract, retain and motivate selected employees, consultants and directors through the granting of stock-based compensation awards.
Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing and integrating our existing and additional employees. The principal purposes of our equity incentive plans are to attract, retain and motivate selected employees and directors through the granting of stock-based compensation awards.
Patients who receive full or reduced doses of busulfan (a DNA damaging drug) tend to engraft well and have full lymphocyte reconstitution. However, due to busulfan’s off-target toxic effects, these patients experience both short- and long-term complications.
Patients who receive full or reduced doses of busulfan conditioning (a DNA damaging drug) tend to engraft well and have full lymphocyte reconstitution. However, due to busulfan’s off-target toxic effects, these patients experience both short- and long-term complications.
The FDA will seek to ensure the sponsor of a breakthrough therapy product candidate receives intensive guidance on an efficient drug development program, intensive involvement of senior managers and experienced staff on a proactive, collaborative and cross-disciplinary review and rolling review. ● Priority review.
The FDA will seek to ensure the sponsor of a breakthrough therapy product candidate receives intensive guidance on an efficient drug development program, intensive involvement of senior managers and experienced staff on a proactive, collaborative and cross-disciplinary review and rolling review. 17 ● Priority review.
The European Commission grants or refuses marketing authorization in light of the opinion delivered by the EMA. 28 Under the centralized procedure, the CHMP established at the EMA is responsible for conducting an initial assessment of a product.
The European Commission grants or refuses marketing authorization in light of the opinion delivered by the EMA. Under the centralized procedure, the CHMP established at the EMA is responsible for conducting an initial assessment of a product.
Since these patients receive busulfan as infants, they experience chronic complications such as growth retardation, cognitive defects, craniofacial abnormalities, liver toxicity, seizures and endocrine defects, including infertility, and increased cancer risk.
Since these patients typically receive busulfan as infants, they experience chronic complications such as growth retardation, cognitive defects, craniofacial abnormalities, liver toxicity, seizures and endocrine defects, including infertility, and increased cancer risk.
Certain exceptions and waivers are available for some of these fees, such as an exception from the application fee for products with orphan designation and a waiver for certain small businesses. 24 The FDA has 60 days after submission of the application to conduct an initial review to determine whether it is sufficient to accept for filing based on the agency’s threshold determination that it is sufficiently complete to permit substantive review.
Certain exceptions and waivers are available for some of these fees, such as an exception from the application fee for products with orphan designation and a waiver for certain small businesses. 16 The FDA has 60 days after submission of the application to conduct an initial review to determine whether it is sufficient to accept for filing based on the agency’s threshold determination that it is sufficiently complete to permit substantive review.
We make available, free of charge through our Internet website, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after we electronically file or furnish this information to the SEC. 31
We make available, free of charge through our Internet website, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after we electronically file or furnish this information to the SEC. 23
The results of the preclinical tests, together with manufacturing information and analytical data, are submitted to the FDA as part of an IND application. 22 An IND is an exemption from the FDCA that allows an unapproved product candidate to be shipped in interstate commerce for use in an investigational clinical trial and a request for FDA authorization to administer such investigational product to humans.
The results of the preclinical tests, together with manufacturing information and analytical data, are submitted to the FDA as part of an IND application. 14 An IND is an exemption from the FDCA that allows an unapproved product candidate to be shipped in interstate commerce for use in an investigational clinical trial and a request for FDA authorization to administer such investigational product to humans.
The two primary efficacy endpoints in Phase 2 are the proportion of patients achieving adequate donor HSC engraftment and the proportion of patients achieving naïve CD4+ T cell production greater than or equal to 85 cells/uL, a level expected to provide immune reconstitution, during weeks 36 to 104 post-transplant.
The two primary efficacy endpoints defined in the Phase 2 study are the proportion of patients achieving adequate donor HSC engraftment and the proportion of patients achieving naïve CD4+ T cell production greater than or equal to 85 cells/uL, a level expected to provide immune reconstitution, during weeks 36 to 104 post-transplant.
This group may recommend continuation of the trial as planned, changes in trial conduct, or cessation of the trial at designated check points based on certain available data from the trial to which only the DSMB has access. Clinical trials typically are conducted in three sequential phases, but the phases may overlap or be combined.
This group may recommend continuation of the trial as planned, changes in trial conduct, or cessation of the trial at designated check points based on certain available data from the trial to which only the DSMB or IDMC has access. 15 Clinical trials typically are conducted in three sequential phases, but the phases may overlap or be combined.
As of February 26, 2023, this patent portfolio includes three issued U.S. patents and one European patent, as well as granted patents in Australia, Canada, Japan, and Mexico, and pending patent applications in Europe and Hong Kong. The issued U.S. and European patents would be expected to expire in 2027, absent any applicable patent term extensions.
As of February 26, 2024, this patent portfolio includes three issued U.S. patents and one European patent, as well as granted patents in Australia, Canada, Japan, and Mexico, and pending patent applications in Europe and Hong Kong. The issued U.S. and European patents would be expected to expire in 2027, absent any applicable patent term extensions.
Patients with IPSS-R scores of low or very low are not typically referred for a stem cell transplant due to the risk of transplant-related toxicities from current conditioning regiments, infection and Graft vs Host Disease (“GvHD”) outweighing the patient’s expected survival with drug therapies.
Patients with IPSS-R scores of low or very low are not typically referred to stem cell transplant due to the risk of transplant-related toxicities from current conditioning regiments, infection and graft vs host Disease (“GvHD”) outweighing the patient’s expected survival with drug therapies.
We believe that our intellectual property, proprietary scientific knowledge, development experience and partnerships will provide us with competitive advantages in the market we operate in. We are aware of competing stem cell transplant and conditioning products and adjacent therapies, not limited to small molecules, biologics and cell therapies, that address the same domain of conditions we are targeting.
We believe that our intellectual property, proprietary scientific knowledge, development experience and partnerships will provide us with competitive advantages in the market we operate in. We are aware of competing products and adjacent therapies, not limited to small molecules, biologics and cell therapies, that address the same domain of conditions we are targeting.
Dysfunctional regulation and activation of mast cells is thought to be a significant driver of multiple diseases, including urticarias, asthma, prurigo nodularis, allergic eye disease and others. Each of these diseases has been shown to have local concentrations of mast cells, cellular response consistent with mast cell degranulation and disease modification with use of anti-histamines.
Dysfunctional regulation and activation of mast cells is thought to be a significant driver of multiple diseases, including urticarias, asthma, prurigo nodularis, allergic eye disease and others. Each of these diseases has been shown to have local concentrations of mast cells, cellular response consistent with mast cell degranulation and disease modification with use of antihistamines.
Unfortunately, currently approved agents targeting mast cells in these diseases are ineffective in many patients, leading to continued high disease burden. Briquilimab blocks signaling on the CD117 receptor by inhibiting the binding of SCF, the ligand for the CD117 receptor. The interaction of SCF/CD117 on mast cells is critical for development, proliferation and survival.
Unfortunately, currently approved agents targeting mast cells in these diseases are ineffective in many patients, leading to continued high disease burden. Briquilimab blocks signaling on the c-Kit receptor by inhibiting the binding of SCF, the ligand for the c-Kit receptor. The interaction of SCF/c-Kit on mast cells is critical for development, proliferation and survival.
Form and strengthen strategic collaborations with leading industry and academic organizations to further develop our pipeline, unlock the commercial potential of our portfolio and provide enabling technologies for gene therapy collaborators.
Form and strengthen strategic collaborations with leading industry and academic organizations to further develop our pipeline, unlock the commercial potential of our portfolio and provide enabling technologies for collaborators.
Clinical testing also must satisfy extensive GCP rules and the requirements for informed consent. Additionally, some clinical trials are overseen by an independent group of qualified experts organized by the clinical trial sponsor, known as a data safety monitoring board (“DSMB”).
Clinical testing also must satisfy extensive GCP rules and the requirements for informed consent. Additionally, some clinical trials are overseen by an independent group of qualified experts organized by the clinical trial sponsor, known as a data safety monitoring board (“DSMB”) or Independent Data Safety Monitoring Committee (“IDMC”).
Among the 31 patients enrolled to date, there have been four cases of grade 2 acute GvHD, one case of late onset grade 3 GvHD, four cases of mild chronic GvHD and four cases of moderate chronic GvHD.
Among the 31 patients enrolled, there have been four cases of grade 2 acute GvHD, one case of late onset grade 3 GvHD, four cases of mild chronic GvHD and four cases of moderate chronic GvHD.
As of February 26, 2023, this patent portfolio includes one issued U.S. patent and two European patents, as well as pending U.S., European and Hong Kong patent applications. The issued U.S. and European patents would be expected to expire in 2027, absent any applicable patent term extensions.
As of February 26, 2024, this patent portfolio includes two issued U.S. patents and two European patents, as well as pending U.S., European, and Hong Kong patent applications. The issued U.S. and European patents would be expected to expire in 2027, absent any applicable patent term extensions.
The failure to comply with the applicable U.S. requirements at any time during the product development process, including preclinical testing, clinical testing, the approval process, or post-approval process, may subject an applicant to delays in the conduct of the study, regulatory review, and approval, and/or administrative or judicial sanctions. 21 An applicant seeking approval to market and distribute a new biologic in the United States generally must satisfactorily complete each of the following steps: ● preclinical laboratory tests, animal studies, and formulation studies all performed in accordance with the FDA’s good laboratory practice (“GLP”) regulations; ● completion of the manufacture, under cGMP conditions, of the drug substance and drug product that the sponsor intends to use in human clinical trials along with required analytical and stability testing; ● submission to the FDA of an IND application for human clinical testing, which must become effective before human clinical trials may begin; ● approval by an IRB representing each clinical site before each clinical trial may be initiated; ● performance of adequate and well-controlled human clinical trials to establish the safety, potency, and purity of the product candidate for each proposed indication, in accordance with cGCPs; ● preparation and submission to the FDA of a biologics license application (“BLA”) for a biologic product requesting marketing for one or more proposed indications, including submission of detailed information on the manufacture and composition of the product in clinical development and proposed labelling; ● review of the product by an FDA advisory committee, where appropriate or if applicable; ● satisfactory completion of one or more FDA inspections of the manufacturing facility or facilities, including those of third parties, at which the product, or components thereof, are produced to assess compliance with cGMP requirements and to assure that the facilities, methods, and controls are adequate to preserve the product’s identity, strength, quality, and purity; ● satisfactory completion of any FDA audits of the preclinical studies and clinical trial sites to assure compliance with GLP, as applicable, and good clinical practices (“GCP”), and the integrity of clinical data in support of the BLA; ● payment of user Prescription Drug User Fee Act (“PDUFA”) securing FDA approval of the BLA and licensure of the new biologic product; and ● compliance with any post-approval requirements, including the potential requirement to implement a Risk Evaluation and Mitigation Strategy (“REMS”) and any post-approval studies or other post-marketing commitments required by the FDA.
An applicant seeking approval to market and distribute a new biologic in the United States generally must satisfactorily complete each of the following steps: ● preclinical laboratory tests, animal studies, and formulation studies all performed in accordance with the FDA’s good laboratory practice (“GLP”) regulations; ● completion of the manufacture, under cGMP conditions, of the drug substance and drug product that the sponsor intends to use in human clinical trials along with required analytical and stability testing; ● submission to the FDA of an IND application for human clinical testing, which must become effective before human clinical trials may begin; ● approval by an IRB representing each clinical site before each clinical trial may be initiated; ● performance of adequate and well-controlled human clinical trials to establish the safety, potency, and purity of the product candidate for each proposed indication, in accordance with cGCPs; ● preparation and submission to the FDA of a biologics license application (“BLA”) for a biologic product requesting marketing for one or more proposed indications, including submission of detailed information on the manufacture and composition of the product in clinical development and proposed labelling; ● review of the product by an FDA advisory committee, where appropriate or if applicable; ● satisfactory completion of one or more FDA inspections of the manufacturing facility or facilities, including those of third parties, at which the product, or components thereof, are produced to assess compliance with cGMP requirements and to assure that the facilities, methods, and controls are adequate to preserve the product’s identity, strength, quality, and purity; ● satisfactory completion of any FDA audits of the preclinical studies and clinical trial sites to assure compliance with GLP, as applicable, and good clinical practices (“GCP”), and the integrity of clinical data in support of the BLA; ● payment of user Prescription Drug User Fee Act (“PDUFA”) securing FDA approval of the BLA and licensure of the new biologic product; and ● compliance with any post-approval requirements, including the potential requirement to implement a Risk Evaluation and Mitigation Strategy (“REMS”) and any post-approval studies or other post-marketing commitments required by the FDA.
Briquilimab for Fanconi Anemia FA is a rare but serious blood disorder that prevents bone marrow from making sufficient new red blood cells. It can also cause the bone marrow to make abnormal blood cells. FA typically presents at birth or early in childhood between five and ten years of age.
Briquilimab for Fanconi Anemia Patients Undergoing Stem Cell Transplantation FA is a rare but serious blood disorder that prevents bone marrow from making sufficient new red blood cells. It can also cause the bone marrow to make abnormal blood cells. FA typically presents at birth or early in childhood between five and ten years of age.
In connection with the Business Combination, AMHC changed its name from Amplitude Healthcare Acquisition Corporation to Jasper Therapeutics, Inc. Website Access to SEC Filings We file annual, quarterly and special reports, proxy statements and other information with the SEC.
In connection with the Business Combination, AMHC changed its name from Amplitude Healthcare Acquisition Corporation to Jasper Therapeutics, Inc. Website Access to SEC Filings We file annual, quarterly and special reports, proxy statements and other information with the Securities and Exchange Commission (the “SEC”).
State and foreign laws also govern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), thus complicating compliance efforts. 30 Employees and Human Capital As of December 31, 2022, we employed 35 full-time employees.
State and foreign laws also govern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), thus complicating compliance efforts. 22 Employees and Human Capital As of December 31, 2023, we employed 45 full-time employees.
Our R&D team has played key roles in discovering and developing a number of promising candidates over the past 20 plus years while at Jasper, and while at Johnson & Johnson, AstraZeneca, Bristol-Myers Squibb, Portola, Amgen, Alexion and others.
Our R&D team has played key roles in discovering and developing a number of promising candidates over the past 20 plus years while at Jasper, and while at Alexion, Amgen, Arcus, AstraZeneca, Bayer, BeiGene, Bristol-Myers Squibb, Genentech, Gilead, Johnson & Johnson, Portola, and others.
SCID patients who fail to achieve durable donor cell engraftment from a first transplant may not be candidates for a second transplant using current conditioning agents due to the toxicity of the conditioning regimen and fragile nature of most SCID patients.
Other studies have shown that SCID patients who fail to achieve durable donor cell engraftment from a first transplant may not be candidates for a second transplant using current conditioning agents due to the toxicity of the conditioning regimen and fragile nature of most SCID patients.
Briquilimab for GATA-2 MDS GATA-2 MDS is a type of MDS characterized by mutations in the GATA-2 gene resulting in complex phenotypes including increased risk of infection, deficiencies of immune cells such as B- and NK-cells and overall poor prognosis.
Briquilimab for GATA-2 MDS Patients Undergoing Stem Cell Transplantation GATA-2 MDS is a type of MDS characterized by mutations in the GATA-2 gene resulting in complex phenotypes including increased risk of infection, deficiencies of immune cells such as B- and NK-cells and overall poor prognosis.
Clinical Data for Briquilimab for Acute Myeloid Leukemia and Myelodysplastic Syndrome We have an ongoing open label Phase 1 clinical trial to evaluate the safety and tolerability of briquilimab conditioning, in combination with low dose radiation (200-300 cGy) and fludarabine, in patients with AML or MDS undergoing blood stem cell transplantation.
Enrollment in this study is ongoing. 9 Briquilimab for Acute Myeloid Leukemia and Myelodysplastic Syndrome We have completed an open label Phase 1 clinical trial to evaluate the safety and tolerability of briquilimab conditioning, in combination with low dose radiation (200-300 cGy) and fludarabine, in patients with AML or MDS undergoing blood stem cell transplantation.
However, with certain diseases, such as CSU, chronic inducible urticaria, allergic asthma, prurigo nodularis and eosinophilic esophagitis, the mast cell response is dysregulated and may lead to unwanted responses such as hives, airway constriction or conjunctivitis.
However, with certain diseases, such as CSU, CIndU, allergic asthma, prurigo nodularis and eosinophilic esophagitis, the mast cell response is dysregulated and may lead to unwanted responses such as hives, itching, airway constriction or conjunctivitis.
Allogeneic stem cell transplant may be used to cure these patients; however, use of current conditioning agents can be difficult due to the fragile health status of these patients. Briquilimab-based conditioning for GATA-2 MDS patients will be evaluated in a clinical trial collaboration with the National Cancer Institute (“NCI”). We expect this study to start enrollment in 2022.
Allogeneic stem cell transplant may be used to cure these patients; however, the use of current conditioning agents can be difficult due to the fragile health status of these patients. Briquilimab-based conditioning for GATA-2 MDS patients will be evaluated in a clinical trial in collaboration with the National Cancer Institute (“NCI”).
Briquilimab for Chronic Granulomatous Disease CGD is a rare, inherited disease of the immune system that develops in infancy or early childhood and results in severe and sometimes life-threatening infections. Allogeneic hematopoietic stem cell transplant is a proven cure for CGD.
Additional enrollment is ongoing. Briquilimab for Chronic Granulomatous Disease Patients Undergoing Stem Cell Transplantation CGD is a rare, inherited disease of the immune system that develops in infancy or early childhood and results in severe and sometimes life-threatening infections. Allogeneic hematopoietic stem cell transplant is a proven cure for CGD.
Current therapeutic approaches to controlling mast cell response include anti-histamines to counteract the release of histamine by activated mast cells and anti-IgE antibody therapy to try to eliminate the antibodies responsible for triggering mast cell activation.
Current therapeutic approaches to controlling mast cell response include antihistamines to counteract the release of histamine by activated mast cells and anti-IgE antibody therapy to try to eliminate the antibodies responsible for a trigger of mast cell activation.
Through December 31, 2022 in this open label clinical trial, ten T-B- SCID re-transplant patients have been treated in the ongoing SCID Phase 1/2 study. Seven of the ten transplanted patients have shown engraftment of donor cells and production of functional immune cells with up to three years of follow up.
Through December 31, 2023 in this open label clinical trial, eleven T-B- SCID re-transplant patients have been treated in the ongoing SCID Phase 1/2 study. Seven of the eleven transplanted patients with 1 - 5 years of follow-up have shown engraftment of donor cells and production of functional immune cells.
We exercised the Option to Stanford docket S06-265 “Antibody-based clearance of endogenous stem cell niches prior to transplantation of bone marrow or hematopoietic stem cells (c-kit)” granted by Stanford under the ISRA on June 2, 2020. As a result, we have worldwide exclusive rights to develop and commercialize briquilimab.
We exercised the Option to Stanford docket S06-265 “Antibody-based clearance of endogenous stem cell niches prior to transplantation of bone marrow or HSCs (c-kit)” granted by Stanford under the ISRA on June 2, 2020. As a result, we have worldwide exclusive rights to develop and commercialize briquilimab in all indications, including stem cell transplants.
Patients with CSU experience swelling, redness and itching of the skin that lasts at least six weeks due to either an unknown cause, Type I autoimmunity with Immunoglobulin E antibodies (“IgE”) against self or Type IIb autoimmunity with activating antibodies directed at mast cells. The U.S.
CSU is a disorder of mast cells in the skin in which patients experience swelling, redness and itching of the skin that lasts at least six weeks due to either an unknown cause, Type I autoimmunity with Immunoglobulin E antibodies (“IgE”) against self or Type IIb autoimmunity with activating antibodies directed at mast cells.
Stem cell transplantation is among the most widely practiced forms of cellular therapy and has the potential to cure a wide variety of diseases, including cancers, genetic disorders and autoimmune diseases.
Briquilimab in Other Stem Cell Transplant Regimens Stem cell transplantation is among the most widely practiced forms of cellular therapy and has the potential to cure a wide variety of diseases, including cancers, genetic disorders and autoimmune diseases.
Without continued signaling through CD117, mast cells will undergo apoptosis and die. We have shown that a subcutaneous dosing of briquilimab leads to depletion of mast cells in the skin of healthy human volunteers for at least 29 days after a single administration.
Without continued signaling through c-Kit, mast cells will undergo apoptosis and die. We have shown that a single subcutaneous dose of briquilimab leads to depletion of mast cells in the skin of healthy human volunteers for at least 29 days.
The following list of competitors indicate companies that are directly competing with our two product candidates.
The following list of competitors indicate companies that are directly competing with our product candidate.
Mast cells store a number of different chemical mediators such as tryptase, histamine, interleukins and heparin in granules found throughout the cell. When triggered by an allergen specific to membrane-bound IgE antibodies, the mast cells are activated and release the content of the granules into the surrounding tissue.
Mast cells store a number of different chemical mediators such as tryptase, histamine, interleukins and heparin in granules found throughout the cell. When a mast cell is triggered, such as by an allergen specific to membrane-bound Immunoglobulin E (“IgE”) antibodies, the mast cell is activated and releases the content of the granules into the surrounding tissue.
The 35 full-time employees were engaged in research and development, operations, finance, and business development. Eleven employees held Ph.D. degrees; one held M.D. degrees; and one held a VMD. Our employees are not represented by labor unions or covered under any collective bargaining agreements. We consider our relationship with our employees to be good.
The 45 full-time employees were engaged in research and development, operations, finance, and business development. Seven employees held Ph.D. degrees and three held an M.D. degree. Our employees are not represented by labor unions or covered under any collective bargaining agreements. We consider our relationship with our employees to be good.
We are bringing together a team of biotech veterans, leading academic institutions and a strong syndicate of healthcare-focused investors to achieve our vision of developing improved therapeutics for mast and stem cell diseases and improved stem cell transplantation. Advance the development of briquilimab as a chronic therapeutic targeted at mast and stem cell diseases.
We are bringing together a team of biotech veterans, leading academic institutions and a strong syndicate of healthcare-focused investors to achieve our vision of developing and commercializing therapeutics with a focus on mast cell driven diseases. Advance the development of briquilimab as a chronic therapeutic targeted primarily at mast cell driven diseases.
The interaction of SCF and CD117 is required for mast and stem cells to survive. By blocking SCF from binding to CD117 and disrupting critical survival signals, briquilimab leads to the depletion of mast cells in the skin and stem cells in the bone marrow.
The interaction of SCF and c-Kit is required for mast cells to survive and for HSCs to remain in the bone marrow. By blocking SCF from binding to c-Kit and disrupting these critical signals, briquilimab leads to the depletion of mast cells in the skin and the differentiation of stem cells in the bone marrow.
The monoclonal antibody isotype and other modifications of briquilimab were also chosen carefully to retain high affinity binding to the CD117 receptor and SCF signal blockade without recruiting other immune cells that could lead to receptor activation, mast cell degranulation or other off-target toxicities.
Briquilimab is designed to bind to c-Kit with a greater affinity than SCF. The monoclonal antibody isotype and other modifications of briquilimab were chosen carefully to retain high affinity binding to the c-Kit receptor and SCF signal blockade without recruiting other immune cells that could lead to receptor activation, mast cell degranulation or other off-target toxicities.
If approved, we plan to bring our product candidates to the American, European and Japanese markets, focusing on the top physicians and accredited transplant centers and hospital-based prescribers who administer the majority of mast and stem cell therapies.
Commercialize our product candidates to expand the use of effective and safe mast cell therapies for patients and physicians in our target markets. If approved, we plan to bring our product candidates to the American, European and Japanese markets, focusing on the top physicians and accredited transplant centers and hospital-based prescribers who administer the majority of mast cell therapies.
At clinical trial entry for the dose finding portion, all patients were transplant eligible but most still had evidence of measurable residual disease (MRD positive) as detected by cytogenetics, flow cytometry or next-generation sequencing.
At clinical trial entry for the dose finding portion, all patients were transplant eligible but most still had evidence of measurable residual disease (MRD positive) as detected by cytogenetics, flow cytometry or next-generation sequencing. The primary endpoints are to evaluate the safety, tolerability and pharmacokinetic parameters of briquilimab.
While we have confidence in the measures we take to protect and preserve our trade secrets, such measures can be breached, and we may not have adequate remedies for any such breach.
While we have confidence in the measures we take to protect and preserve our trade secrets, such measures can be breached, and we may not have adequate remedies for any such breach. In addition, our trade secrets may otherwise become known or be independently discovered by competitors.
In-licensed Amgen Portfolio We have exclusively licensed a patent family from Amgen applicable to our targeted conditioning program that contains patents and applications directed to humanized c-kit antibody.
In-licensed Amgen Portfolio We have exclusively licensed a patent family from Amgen applicable to our clinical development programs that contain patents and applications directed to humanized c-kit antibody.
Ultimately, it can lead to serious complications, including bone marrow failure, severe aplastic anemia and cancers such as AML and MDS. Treatment may include blood transfusions or medicine to create more red blood cells, but HCT is the only cure. Briquilimab for FA patients is being evaluated in a clinical trial collaboration with Stanford.
Ultimately, it can lead to serious complications, including bone marrow failure, severe aplastic anemia and cancers such as AML and MDS. Treatment may include blood transfusions or medicine to create more red blood cells, but HCT is the only cure.
We are also developing briquilimab as a one-time conditioning therapy in various stem cell transplant settings such as severe combined immunodeficiency (“SCID”) for which we are currently conducting a Phase 1/2 clinical trial in patients who have failed a previous stem cell transplant.
We are also developing briquilimab as a one-time conditioning therapy for severe combined immunodeficiency (“SCID”) patients undergoing a second stem cell transplant for which we are currently conducting a Phase 1/2 clinical trial.
They have leveraged experience, insights and capabilities to optimize development, along with fostering collaboration with external partners to innovate and expand into potential additional indications. Our current development-stage portfolio consists of two product candidates discovered through collaboration and our internal research efforts. Manufacturing We do not currently own or operate any manufacturing facility.
They have leveraged experience, insights and capabilities to optimize development, along with fostering collaboration with external partners to innovate and expand into potential additional indications. Our current development-stage portfolio consists of briquilimab in mast and stem cell diseases. Manufacturing We do not currently own or operate any manufacturing facility.
Patients with allergic asthma may have an increased number of mast cells in the bronchi and may be responsive to agents that modulate mast cell response, including anti-histamines and anti IgE monoclonal antibody therapy.
Patients with allergic asthma may have an increased number of mast cells in the bronchi and may be responsive to agents that modulate mast cell response, including antihistamines and anti IgE monoclonal antibody therapy. Atopic dermatitis is a chronic disease that causes inflammation, redness, and irritation of the skin.
Mice xenografted with higher-risk MDS HSCs were treated with anti-human CD117 monoclonal antibody (“mAb”), SR-1 (the parent clone to briquilimab). Initial studies showed administration of either SR-1 or briquilimab resulted in well-tolerated and sustained depletion of MDS cells obtained from lower-risk MDS patients. Treatment of mice xenografted with higher-risk MDS HSCs cells resulted in transient depletion (Figure 4).
Initial studies showed administration of either SR-1 or briquilimab resulted in well-tolerated and sustained depletion of MDS cells obtained from lower-risk MDS patients. Treatment of mice xenografted with higher-risk MDS HSCs cells resulted in transient depletion (Figure 5).
(B) Normal stem cell engraftment occurs after stem cell depletion as shown by greater than 95% cytogenetically normal CD45+ cells 12 weeks after transplant in four higher-risk MDS-xenografted mice.
Figure 5: (A) c-Kit mAb depletes MDS stem cells as demonstrated by decreasing HSC chimerism over time. (B) Normal stem cell engraftment occurs after stem cell depletion as shown by greater than 95% cytogenetically normal CD45+ cells 12 weeks after transplant in four higher-risk MDS-xenografted mice.
In order to secure coverage and reimbursement for any product that might be approved for sale, a company may need to conduct expensive pharmacoeconomic studies in order to demonstrate the medical necessity and cost-effectiveness of the product, in addition to the costs required to obtain FDA or other comparable marketing approvals.
Third-party payors may limit coverage to specific products on an approved list, also known as a formulary, which might not include all of the approved products for a particular indication. 20 In order to secure coverage and reimbursement for any product that might be approved for sale, a company may need to conduct expensive pharmacoeconomic studies in order to demonstrate the medical necessity and cost-effectiveness of the product, in addition to the costs required to obtain FDA or other comparable marketing approvals.
In addition to other benefits, such as the ability to have greater interactions with the FDA, the FDA may initiate review of sections of a Fast Track application before the application is complete, a process known as rolling review. 25 Any product candidate submitted to the FDA for marketing, including under a Fast Track program, may be eligible for other types of FDA programs intended to expedite development and review, such as breakthrough therapy designation, priority review and accelerated approval. ● Breakthrough therapy designation.
Any product candidate submitted to the FDA for marketing, including under a Fast Track program, may be eligible for other types of FDA programs intended to expedite development and review, such as breakthrough therapy designation, priority review and accelerated approval. ● Breakthrough therapy designation.
Given the transient depletion of higher-risk MDS cells, studies were conducted to determine whether an anti-CD117 antibody followed by a normal human HSC allograft would lead to long-term disease amelioration of higher-risk disease.
Given the transient depletion of higher-risk MDS cells, studies were conducted to determine whether an anti-c-Kit antibody followed by a normal human HSC allograft would lead to long-term disease amelioration of higher-risk disease. Results showed greater than 95% cytogenetically normal CD45+ cells 12 weeks after allograft transplant (Figure 5).
Briquilimab as a Primary Therapeutic for Proliferative Disorders of the Stem Cells A transforming event in hematopoietic stem cells can produce several different malignancies. Cancer stem cells can self-renew, have a prolonged survival rate and have the ability to give rise to cells with more differentiated characteristics.
Briquilimab as a Primary Therapeutic for Lower Risk Myelodysplastic Syndrome A transforming event in HSCs can produce several different malignancies. Cancer stem cells can self-renew, have a prolonged survival rate and have the ability to give rise to cells with more differentiated characteristics. The idea that cancer is primarily driven by a smaller population of stem cells has important implications.
In addition, our trade secrets may otherwise become known or be independently discovered by competitors. 19 We intend to pursue additional intellectual property protection to the extent we believe it would advance our business objectives, which may include objectives within and outside the United States.
We intend to pursue additional intellectual property protection to the extent we believe it would advance our business objectives, which may include objectives within and outside the United States.
Briquilimab is also being studied by our academic and institutional partners, Stanford University and National Institutes of Health (“NIH”), in other transplant settings, including Fanconi Anemia (“FA”), sickle cell disease (“SCD”), chronic granulomatous disease (“CGD”) and GATA-2 Type MDS. We are planning to evaluate briquilimab as a therapeutic in patients with CSU, a disorder of mast cells in the skin.
Briquilimab is also being studied by our academic and institutional partners, Stanford University and the National Institutes of Health, in other transplant settings, including Fanconi Anemia (“FA”), sickle cell disease (“SCD”), chronic granulomatous disease and GATA-2 Type MDS. We intend to become a fully integrated discovery, development and commercial company in the field of mast cell therapeutics.
Depending upon the conditioning regimen, fitness of the patient, and compatibility between the donor and recipient, the risk of transplant-related mortality ranges from 10% to more than 50% in older patients.
These toxicities include a range of acute and chronic effects to the gastrointestinal tract, kidneys, liver, lung and endocrine and neurologic tissues. Depending upon the conditioning regimen, fitness of the patient, and compatibility between the donor and recipient, the risk of transplant-related mortality ranges from 10% to more than 50% in older patients.
Younger, fitter patients capable of surviving these toxic side effects are typically given myeloablative, or high-intensity, conditioning whereas older or less fit patients are typically given reduced intensity, but still toxic, conditioning which leads to less effective transplants. These toxicities include a range of acute and chronic effects to the gastrointestinal tract, kidneys, liver, lung, endocrine and neurologic tissues.
Younger, fitter patients capable of surviving these toxic side effects are typically given myeloablative, or high-intensity, conditioning whereas older or less fit patients are typically given reduced intensity, but still toxic, conditioning which can lead to less effective transplants.
SCID patients with poor transplant outcomes are typically dependent on external therapies such as intravenous immunoglobin (“IVIG”) and often have poor immunity, leading to chronic infections and decreased lifespans.
SCID patients with poor transplant outcomes are typically dependent on external therapies such as intravenous immunoglobin (“IVIG”) and often have poor immunity, leading to chronic infections and decreased lifespans. SCID patients who fail transplant are not usually given a second transplant due to their fragile health and the significant toxicities of current conditioning agents.
There can be no assurance that any country that has price controls or reimbursement limitations for pharmaceutical products will allow favorable reimbursement and pricing arrangements for any of our products, if approved in those countries.
There can be no assurance that any country that has price controls or reimbursement limitations for pharmaceutical products will allow favorable reimbursement and pricing arrangements for any of our products, if approved in those countries. 21 Healthcare Law and Regulation Healthcare providers and third-party payors play a primary role in the recommendation and prescription of drug products that are granted marketing approval.
The federal government has levied large civil and criminal fines against companies for alleged improper promotion and has also requested that companies enter into consent decrees or permanent injunctions under which specified promotional conduct is changed or curtailed. 27 Regulation and Procedures Governing Approval of Medicinal Products in the European Union In order to market any product outside of the United States, a company must also comply with numerous and varying regulatory requirements of other countries and jurisdictions regarding quality, safety, and efficacy, and governing, among other things, clinical trials, marketing authorization, commercial sales, and distribution of drug products.
Regulation and Procedures Governing Approval of Medicinal Products in the European Union In order to market any product outside of the United States, a company must also comply with numerous and varying regulatory requirements of other countries and jurisdictions regarding quality, safety, and efficacy, and governing, among other things, clinical trials, marketing authorization, commercial sales, and distribution of drug products.
Autologous transplants also include stem cell gene therapies, where cells are collected from the patient, edited to either enable a functioning gene or correct a defective gene, and then transplanted into the patient via infusion.
Autologous transplants also include stem cell gene therapies, where cells are collected from the patient, edited to either enable a functioning gene or correct a defective gene, and then transplanted into the patient via infusion. 8 Currently, patients must receive highly toxic and potentially life-threatening conditioning agents to prepare their bone marrow for transplantation with either donor stem cells or their own gene-edited stem cells.
Mast cells are immune cells that play a key role in the inflammatory response to pathogens or injury and are typically found in the skin, lungs, digestive track, conjunctiva of the eye and the mucosal linings of the mouth and nose.
Figure 2 – Healthy volunteers administered single doses of briquilimab at the indicated doses and routes received punch skin biopsies to evaluate the number of mast cells present at the indicated time points. 3 Briquilimab in Chronic Urticaria Mast cells are immune cells that play a key role in the inflammatory response to pathogens or injury and are typically found in the skin, lungs, digestive track, conjunctiva of the eye and the mucosal linings of the mouth and nose.
(C) Normal blood formation results after stem cell engraftment with human cell lineages for T cells (CD3+), B cells (CD19+) and myeloid cells (CD13/33+) in the bone marrow of the four high-risk mice.
(C) Normal blood formation results after stem cell engraftment with human cell lineages for T cells (CD3+), B cells (CD19+) and myeloid cells (CD13/33+) in the bone marrow of the four high-risk mice. We are evaluating briquilimab as a therapeutic for certain MDS patients. IPSS-R is a clinical assessment tool used to evaluate risk and prognosis of newly diagnosed patients.
We intend to study briquilimab monotherapy in lower-risk MDS patients with documented cytopenia who are refractory to ESA therapy. We are also developing briquilimab for SCID. Due to genetic errors at birth, SCID patients do not possess fully functional immune systems, which results in chronic infections, failure to thrive and significantly decreased lifespans.
Due to genetic errors at birth, SCID patients do not possess fully functional immune systems, which results in chronic infections, failure to thrive and significantly decreased lifespans.
HSC depletion lasted up to 21 days in most animals and more than 42 days in one NHP receiving the highest dose. 9 Briquilimab for Severe Combined Immunodeficiency SCID is a genetically heterogeneous group of over 20 monogenic conditions of the immune system characterized by the lack of normal T lymphocyte development, in addition to deficiencies of B cells, NK cells, or both in some forms which is currently curable only by hematopoietic cell transplant.
SCID is a genetically heterogeneous group of over 20 monogenic conditions of the immune system characterized by the lack of normal T lymphocyte development, in addition to deficiencies of B cells, NK cells, or both in some forms which is currently curable only by HCT.
Licensure and Regulation of Biologics in the United States In the United States, our product candidates are regulated as biological products, or biologics, under the Public Health Service Act (“PHSA”) and the Food, Drug, and Cosmetic Act (“FDCA”) and its implementing regulations and guidance.
The processes for obtaining marketing approvals in the United States and in foreign countries and jurisdictions, along with subsequent compliance with applicable statutes and regulations and other regulatory authorities, require the expenditure of substantial time and financial resources. 13 Licensure and Regulation of Biologics in the United States In the United States, our product candidates are regulated as biological products, or biologics, under the Public Health Service Act (“PHSA”) and the Food, Drug, and Cosmetic Act (“FDCA”) and its implementing regulations and guidance.
We expect to complete enrollment in this Phase 1/2 clinical trial in 2023. The FDA has granted rare pediatric disease designation to briquilimab as a conditioning treatment for patients with SCID. In addition, both the FDA and the European Medicines Agency (“EMA”) have granted orphan drug designation to briquilimab for conditioning treatment prior to hematopoietic stem cell transplantation.
In addition, both the FDA and the European Medicines Agency (“EMA”) have granted orphan drug designation to briquilimab for conditioning treatment prior to hematopoietic stem cell transplantation.
Patients develop severe itch and firm bumps on the skin, called nodules, that may lead to loss of sleep and bleeding due to scratching. Degranulation of mast cells in the skin is thought to trigger peripheral sensory neurons in the skin leading to itch. Various medications are used to treat Prurigo Nodularis including anti-itch creams and topical steroids.
Degranulation of mast cells in the skin is thought to trigger peripheral sensory neurons in the skin leading to itch. Various medications are used to treat Prurigo Nodularis including anti-itch creams and topical steroids. For cases that remain uncontrolled physicians may prescribe antihistamines or biologics such as dupilumab.
We believe that novel targeting approaches to stem cell conditioning have the potential to reduce toxicities associated with current regimens and expand the use of allogeneic and gene modified transplant in multiple diseases. 1 Our lead product candidate, briquilimab, is a monoclonal antibody designed to block stem cell factor (“SCF”) from binding to and signaling through the CD117 receptor on mast and stem cells.
We believe that novel targeting approaches to stem cell conditioning have the potential to reduce toxicities associated with current regimens and expand the use of allogeneic and gene modified transplants in multiple diseases.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAlthough we and others have demonstrated the ability to improve the specificity of gene alterations in a laboratory setting, we cannot be certain that off-target alterations will not occur in any of our planned or future clinical trials, and the lack of observed side effects in preclinical studies does not guarantee that such side effects will not occur in human clinical trials. 42 If any product candidates we develop are associated with serious adverse events, undesirable side effects or unexpected characteristics, we may need to abandon their development or limit development to certain uses or subpopulations in which the serious adverse events, undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective, any of which would have a material adverse effect on our business, financial condition, results of operations, and prospects.
Biggest changeTreatment-related side effects could also affect patient recruitment or the ability of enrolled patients to complete the trials or result in potential product liability claims. 33 If any product candidates we develop are associated with serious adverse events, undesirable side effects or unexpected characteristics, we may need to abandon their development or limit development to certain uses or subpopulations in which the serious adverse events, undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective, any of which would have a material adverse effect on our business, financial condition, results of operations, and prospects.
In the event of a loss of this manufacturer, or a failure by such manufacturer to comply with the FDA regulations, we may not be able to find an alternative source on commercially reasonable terms, or at all.
In the event of a loss of this manufacturer, or a failure by such manufacturer to comply with FDA regulations, we may not be able to find an alternative source on commercially reasonable terms, or at all.
If a prolonged government shutdown occurs, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business.
If a prolonged government shutdown occurs, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business.
Noncompliance events that could result in abandonment or lapse of a patent or patent application include, but are not limited to, failure to respond to official actions within prescribed time limits, non-payment of fees and failure to properly legalize and submit formal documents.
Noncompliance events that could result in abandonment or lapse of a patent or patent application include, but are not limited to, failure to respond to official actions within prescribed time limits, non-payment of fees and failure to properly legalize and submit formal documents.
We and our collaborators, if any, may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent our ability to receive marketing approval or commercialize any product candidates, including: ● delays in reaching a consensus with regulators on trial design; ● regulators, IRBs, independent ethics committees or scientific review boards may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site; ● delays in reaching or failing to reach agreement on acceptable clinical trial contracts or clinical trial protocols with prospective CROs and clinical trial sites; ● clinical trials of product candidates may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development or research programs; ● difficulty in designing well-controlled clinical trials due to ethical considerations that may render it inappropriate to conduct a trial with a control arm that can be effectively compared to a treatment arm; ● difficulty in designing clinical trials and selecting endpoints for diseases that have not been well-studied and for which the natural history and course of the disease is poorly understood; ● the number of patients required for clinical trials of briquilimab and any other product candidates we may develop may be larger than we anticipate; enrollment of suitable participants in these clinical trials, which may be particularly challenging for some of the rare genetically defined diseases we are targeting in our most advanced programs, may be delayed or slower than we anticipate; or patients may drop out of these clinical trials at a higher rate than we anticipate; ● our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; ● regulators, IRBs or independent ethics committees may require that we or our investigators suspend or terminate clinical research or clinical trials for various reasons, including noncompliance with regulatory requirements, a finding of undesirable side effects or other unexpected characteristics, or that the participants are being exposed to unacceptable health risks or after an inspection of our clinical trial operations or trial sites; ● the cost of clinical trials may be greater than we anticipate; 51 ● the supply or quality of product candidates or other materials necessary to conduct clinical trials may be insufficient or inadequate, including as a result of delays in the testing, validation, manufacturing and delivery of product candidates to the clinical sites by us or by third parties with whom we have contracted to perform certain of those functions; ● delays in having patients complete participation in a trial or return for post-treatment follow-up; ● clinical trial sites dropping out of a trial; ● selection of clinical endpoints that require prolonged periods of clinical observation or analysis of the resulting data; ● occurrence of serious adverse events associated with product candidates that are viewed to outweigh their potential benefits; ● occurrence of serious adverse events in trials of the same class of agents conducted by other sponsors; and ● changes in regulatory requirements and guidance that require amending or submitting new clinical protocols.
We and our collaborators, if any, may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent our ability to receive marketing approval or commercialize any product candidates, including: ● delays in reaching a consensus with regulators on trial design; ● regulators, IRBs, independent ethics committees or scientific review boards may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site; ● delays in reaching or failing to reach agreement on acceptable clinical trial contracts or clinical trial protocols with prospective CROs and clinical trial sites; ● clinical trials of product candidates may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development or research programs; ● difficulty in designing well-controlled clinical trials due to ethical considerations that may render it inappropriate to conduct a trial with a control arm that can be effectively compared to a treatment arm; ● difficulty in designing clinical trials and selecting endpoints for diseases that have not been well-studied and for which the natural history and course of the disease is poorly understood; ● the number of patients required for clinical trials of briquilimab and any other product candidates we may develop may be larger than we anticipate; enrollment of suitable participants in these clinical trials, which may be particularly challenging for some of the rare genetically defined diseases we are targeting in our most advanced programs, may be delayed or slower than we anticipate; or patients may drop out of these clinical trials at a higher rate than we anticipate; ● our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; ● regulators, IRBs or independent ethics committees may require that we or our investigators suspend or terminate clinical research or clinical trials for various reasons, including noncompliance with regulatory requirements, a finding of undesirable side effects or other unexpected characteristics, or that the participants are being exposed to unacceptable health risks or after an inspection of our clinical trial operations or trial sites; ● the cost of clinical trials may be greater than we anticipate; 41 ● the supply or quality of product candidates or other materials necessary to conduct clinical trials may be insufficient or inadequate, including as a result of delays in the testing, validation, manufacturing and delivery of product candidates to the clinical sites by us or by third parties with whom we have contracted to perform certain of those functions; ● delays in having patients complete participation in a trial or return for post-treatment follow-up; ● clinical trial sites dropping out of a trial; ● selection of clinical endpoints that require prolonged periods of clinical observation or analysis of the resulting data; ● occurrence of serious adverse events associated with product candidates that are viewed to outweigh their potential benefits; ● occurrence of serious adverse events in trials of the same class of agents conducted by other sponsors; and ● changes in regulatory requirements and guidance that require amending or submitting new clinical protocols.
Our ability to generate future revenue from product sales depends heavily on our, or our future collaborators’, ability to successfully: ● identify product candidates and complete research and preclinical and clinical development of any product candidates we may identify; ● seek and obtain regulatory and marketing approvals for any product candidates for which we complete clinical trials; ● launch and commercialize any product candidates for which we obtain regulatory and marketing approval by establishing a sales force, marketing and distribution infrastructure or, alternatively, collaborating with a commercialization partner; ● qualify for coverage and adequate reimbursement by government and third-party payors for any product candidates for which we obtain regulatory and marketing approval; ● develop, maintain, and enhance a sustainable, scalable, reproducible, and transferable manufacturing process for the product candidates we may develop; ● establish and maintain supply and manufacturing relationships with third parties that can provide adequate, in both amount and quality, products and services to support clinical development and the market demand for any product candidates for which we obtain regulatory and marketing approval; ● obtain market acceptance of product candidates as viable treatment options; ● address competing technological and market developments; ● implement internal systems and infrastructure, as needed; ● negotiate favorable terms in any collaboration, licensing or other arrangements into which we may enter, and perform our obligations in such arrangements; ● maintain, protect, enforce, defend and expand our portfolio of intellectual property rights, including patents, trade secrets and know-how, in the United States and internationally; ● avoid and defend against third-party interference, infringement and other intellectual property claims in the United States and internationally; and ● attract, hire and retain qualified personnel. 37 Even if one or more of the product candidates we develop are approved for commercial sale, we anticipate incurring significant costs associated with commercializing any approved product candidate.
Our ability to generate future revenue from product sales depends heavily on our, or our future collaborators’, ability to successfully: ● identify product candidates and complete research and preclinical and clinical development of any product candidates we may identify; ● seek and obtain regulatory and marketing approvals for any product candidates for which we complete clinical trials; ● launch and commercialize any product candidates for which we obtain regulatory and marketing approval by establishing a sales force, marketing and distribution infrastructure or, alternatively, collaborating with a commercialization partner; ● qualify for coverage and adequate reimbursement by government and third-party payors for any product candidates for which we obtain regulatory and marketing approval; ● develop, maintain, and enhance a sustainable, scalable, reproducible, and transferable manufacturing process for the product candidates we may develop; ● establish and maintain supply and manufacturing relationships with third parties that can provide adequate, in both amount and quality, products and services to support clinical development and the market demand for any product candidates for which we obtain regulatory and marketing approval; ● obtain market acceptance of product candidates as viable treatment options; ● address competing technological and market developments; ● implement internal systems and infrastructure, as needed; ● negotiate favorable terms in any collaboration, licensing or other arrangements into which we may enter, and perform our obligations in such arrangements; ● maintain, protect, enforce, defend and expand our portfolio of intellectual property rights, including patents, trade secrets and know-how, in the United States and internationally; ● avoid and defend against third-party interference, infringement and other intellectual property claims in the United States and internationally; and ● attract, hire and retain qualified personnel. 29 Even if one or more of the product candidates we develop are approved for commercial sale, we anticipate incurring significant costs associated with commercializing any approved product candidate.
Collaborations involving our current or future product candidates or research programs pose numerous risks to us, including the following: ● Collaborators may not pursue development and commercialization of our product candidates or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the collaborator’s strategic focus or available funding or external factors such as an acquisition that diverts resources or creates competing priorities. ● Collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing. ● Collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our product candidates if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours. ● Collaborators with marketing and distribution rights to one or more products may not commit sufficient resources to the marketing and distribution of such products. 62 ● Collaborators may not properly obtain, maintain, enforce or defend our intellectual property or proprietary rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our proprietary information or expose us to potential litigation. ● Disputes may arise between the collaborators and us that result in the delay or termination of the research, development or commercialization of our products or product candidates or that result in costly litigation or arbitration that diverts management attention and resources. ● We may lose certain valuable rights under circumstances identified in our collaborations, including if we undergo a change of control; and ● Collaboration agreements may not lead to development or commercialization of product candidates in the most efficient manner or at all.
Collaborations involving our current or future product candidates or research programs pose numerous risks to us, including the following: ● Collaborators may not pursue development and commercialization of our product candidates or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the collaborator’s strategic focus or available funding or external factors such as an acquisition that diverts resources or creates competing priorities. ● Collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing. ● Collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our product candidates if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours. ● Collaborators with marketing and distribution rights to one or more products may not commit sufficient resources to the marketing and distribution of such products. 50 ● Collaborators may not properly obtain, maintain, enforce or defend our intellectual property or proprietary rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our proprietary information or expose us to potential litigation. ● Disputes may arise between the collaborators and us that result in the delay or termination of the research, development or commercialization of our products or product candidates or that result in costly litigation or arbitration that diverts management attention and resources. ● We may lose certain valuable rights under circumstances identified in our collaborations, including if we undergo a change of control; and ● Collaboration agreements may not lead to development or commercialization of product candidates in the most efficient manner or at all.
Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation; 75 ● the federal false statements statute, which prohibits knowingly and willfully falsifying, concealing, or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items, or services; ● the federal Food, Drug, and Cosmetic Act, which among other things, strictly regulates drug marketing, prohibits manufacturers from marketing such products for off-label use and regulates the distribution of samples; ● federal laws that require pharmaceutical manufacturers to report certain calculated product prices to the government or provide certain discounts or rebates to government authorities or private entities, often as a condition of reimbursement under government healthcare programs; ● the federal 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 CMS within the U.S.
Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation; 63 ● the federal false statements statute, which prohibits knowingly and willfully falsifying, concealing, or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items, or services; ● the federal Food, Drug, and Cosmetic Act, which among other things, strictly regulates drug marketing, prohibits manufacturers from marketing such products for off-label use and regulates the distribution of samples; ● federal laws that require pharmaceutical manufacturers to report certain calculated product prices to the government or provide certain discounts or rebates to government authorities or private entities, often as a condition of reimbursement under government healthcare programs; ● the federal 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 CMS within the U.S.
Regardless of merit or eventual outcome, liability claims may result in: ● the inability to commercialize any products that we may develop; ● decreased demand for our product candidates or products that we may develop; 48 ● injury to our reputation and significant negative media attention; ● withdrawal of clinical trial participants; ● significant time and costs to defend the related litigation; ● substantial monetary awards to trial participants or patients; and ● loss of revenue.
Regardless of merit or eventual outcome, liability claims may result in: ● the inability to commercialize any products that we may develop; ● decreased demand for our product candidates or products that we may develop; ● injury to our reputation and significant negative media attention; ● withdrawal of clinical trial participants; ● significant time and costs to defend the related litigation; ● substantial monetary awards to trial participants or patients; and ● loss of revenue.
In addition, the GDPR provides that European Union member states may make their own further laws and regulations limiting the processing of personal data, including genetic, biometric or health data. Further, Brexit has led and could also lead to legislative and regulatory changes and may increase our compliance costs.
In addition, the GDPR provides that European Union member states may make their own further laws and regulations limiting the processing of personal data, including genetic, biometric or health data. 67 Further, Brexit has led and could also lead to legislative and regulatory changes and may increase our compliance costs.
Food and Drug Administration (“FDA”), the European Medical Agency (the “EMA”) and other comparable foreign regulatory authorities; ● the cost and timing of completion of commercial-scale outsourced manufacturing activities; ● the cost of establishing sales, marketing and distribution capabilities for any product candidates for which we may receive regulatory approval in regions where we choose to commercialize our products on our own; and ● the costs of operating as a public company. 35 Conducting preclinical testing and clinical trials is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product sales.
Food and Drug Administration (the “FDA”), the European Medical Agency (the “EMA”) and other comparable foreign regulatory authorities; ● the cost and timing of completion of commercial-scale outsourced manufacturing activities; ● the cost of establishing sales, marketing and distribution capabilities for any product candidates for which we may receive regulatory approval in regions where we choose to commercialize our products on our own; and ● the costs of operating as a public company. 27 Conducting preclinical testing and clinical trials is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product sales.
To those ends, in October 2020, the FDA issued final guidance that describes procedures drug manufacturers can follow to facilitate importation of prescription drugs, including biological products, that are FDA-approved, manufactured abroad, authorized for sale in any foreign country, and originally intended for sale in that foreign country. 77 At the state level, individual states are increasingly aggressive in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.
To those ends, in October 2020, the FDA issued final guidance that describes procedures drug manufacturers can follow to facilitate importation of prescription drugs, including biological products, that are FDA-approved, manufactured abroad, authorized for sale in any foreign country, and originally intended for sale in that foreign country. 65 At the state level, individual states are increasingly aggressive in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.
This may make comparison of our consolidated financial statements with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. 87 Even after we no longer qualify as an emerging growth company, we may continue to qualify as a “smaller reporting company,” which would allow us to continue to take advantage of many of the same exemptions from disclosure requirements, including reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.
This may make comparison of our consolidated financial statements with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. 76 Even after we no longer qualify as an emerging growth company, we may continue to qualify as a “smaller reporting company,” which would allow us to continue to take advantage of many of the same exemptions from disclosure requirements, including reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.
In addition, third-party manufacturers and any third-party collaborators may be unable to successfully scale-up manufacturing of our current or future product candidates in sufficient quality and quantity, which would delay or prevent us from developing our product candidates and commercializing approved products, if any. ● Risks Related to Our Intellectual Property, including, among others, that: ● We are highly dependent on intellectual property licensed from third parties, and termination of any of these licenses could result in the loss of significant rights, which would harm our business. ● Our commercial success depends on our ability to obtain, maintain and protect our intellectual property and proprietary technology. ● Risks Related to Ownership of Our Common Stock and Warrants, including, among others, that we will incur significant increased expenses and administrative burdens as a public company, which could negatively impact our business, financial condition and results of operations. 33 Risks Related to Our Financial Position and Need for Additional Capital We have incurred significant net losses and negative operating cash flows since our inception.
In addition, third-party manufacturers and any third-party collaborators may be unable to successfully scale-up manufacturing of our current or future product candidates in sufficient quality and quantity, which would delay or prevent us from developing our product candidates and commercializing approved products, if any. ● Risks Related to Our Intellectual Property, including, among others, that: ● We are highly dependent on intellectual property licensed from third parties, and termination of any of these licenses could result in the loss of significant rights, which would harm our business. ● Our commercial success depends on our ability to obtain, maintain and protect our intellectual property and proprietary technology. ● Risks Related to Ownership of Our Common Stock and Warrants, including, among others, that: ● We have incurred and will continue to incur significant increased expenses and administrative burdens as a public company, which could negatively impact our business, financial condition and results of operations. 25 Risks Related to Our Financial Position and Need for Additional Capital We have incurred significant net losses and negative operating cash flows since our inception.
Liabilities they incur pursuant to these laws and regulations could result in significant costs or an interruption in operations, which could have a material adverse effect on our business, financial condition, results of operations and prospects. 50 Risks Related to Regulatory Review If clinical trials of our product candidates fail to demonstrate safety and efficacy to the satisfaction of regulatory authorities or do not otherwise produce positive results, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of such product candidates.
Liabilities they incur pursuant to these laws and regulations could result in significant costs or an interruption in operations, which could have a material adverse effect on our business, financial condition, results of operations and prospects. 40 Risks Related to Regulatory Review If clinical trials of our product candidates fail to demonstrate safety and efficacy to the satisfaction of regulatory authorities or do not otherwise produce positive results, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of such product candidates.
Third parties may assert that we are employing their proprietary technology without authorization and may file patent infringement claims or lawsuits against us, and if we are found to infringe such third-party patents, we may be required to pay damages, cease commercialization of the infringing technology or obtain a license from such third parties, which may not be available on commercially reasonable terms or at all. 69 There may be third-party patents with patent rights to materials, formulations, methods of manufacture or methods of treatment related to the use or manufacture of our product candidates.
Third parties may assert that we are employing their proprietary technology without authorization and may file patent infringement claims or lawsuits against us, and if we are found to infringe such third-party patents, we may be required to pay damages, cease commercialization of the infringing technology or obtain a license from such third parties, which may not be available on commercially reasonable terms or at all. 57 There may be third-party patents with patent rights to materials, formulations, methods of manufacture or methods of treatment related to the use or manufacture of our product candidates.
The occurrence of any event or penalty described above may inhibit our ability to commercialize any product candidates we develop and adversely affect our business, financial condition, results of operations, and prospects. 74 Additionally, if any of our product candidates receives marketing approval, the FDA could require it to adopt a Risk Evaluation and Mitigation Strategy, to ensure that the benefits outweigh its risks, which may include, among other things, a medication guide outlining the risks of the product for distribution to patients and a communication plan to healthcare practitioners.
The occurrence of any event or penalty described above may inhibit our ability to commercialize any product candidates we develop and adversely affect our business, financial condition, results of operations, and prospects. 62 Additionally, if any of our product candidates receives marketing approval, the FDA could require it to adopt a Risk Evaluation and Mitigation Strategy, to ensure that the benefits outweigh its risks, which may include, among other things, a medication guide outlining the risks of the product for distribution to patients and a communication plan to healthcare practitioners.
If we do not establish commercialization capabilities successfully, either on our own or in collaboration with third parties, we will not be successful in commercializing our product candidates. 46 We face significant competition in an environment of rapid technological change, and there is a possibility that our competitors may achieve regulatory approval before us or develop therapies that are safer or more advanced or effective than ours, which may harm our financial condition and our ability to successfully market or commercialize our product candidates.
If we do not establish commercialization capabilities successfully, either on our own or in collaboration with third parties, we will not be successful in commercializing our product candidates. 37 We face significant competition in an environment of rapid technological change, and there is a possibility that our competitors may achieve regulatory approval before us or develop therapies that are safer or more advanced or effective than ours, which may harm our financial condition and our ability to successfully market or commercialize our product candidates.
If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, financial condition, results of operations and prospects, including the imposition of significant fines or other sanctions. 78 Laws and regulations governing any international operations we may have in the future may preclude us from developing, manufacturing and selling certain product candidates outside of the United States and require us to develop and implement costly compliance programs.
If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, financial condition, results of operations and prospects, including the imposition of significant fines or other sanctions. 66 Laws and regulations governing any international operations we may have in the future may preclude us from developing, manufacturing and selling certain product candidates outside of the United States and require us to develop and implement costly compliance programs.
Significant clinical trial delays also could shorten any periods during which we may have the exclusive right to commercialize product candidates, could allow our competitors to bring products to market before we do and could impair our ability to successfully commercialize product candidates, any of which may harm our business, financial condition, results of operations and prospects. 52 Further, disruptions at the FDA and other agencies may prolong the time necessary for new drugs to be reviewed and/or approved by necessary government agencies, which would adversely affect our business.
Significant clinical trial delays also could shorten any periods during which we may have the exclusive right to commercialize product candidates, could allow our competitors to bring products to market before we do and could impair our ability to successfully commercialize product candidates, any of which may harm our business, financial condition, results of operations and prospects. 42 Further, disruptions at the FDA and other agencies may prolong the time necessary for new drugs to be reviewed and/or approved by necessary government agencies, which would adversely affect our business.
If a court were to find the exclusive forum provision contained in our Certificate of Incorporation to be inapplicable or unenforceable in an action, we may incur further significant additional costs associated with resolving such action in other jurisdictions, all of which could seriously harm our business. 90 Any exercise of the outstanding warrants to purchase shares of our common stock would increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders.
If a court were to find the exclusive forum provision contained in our Certificate of Incorporation to be inapplicable or unenforceable in an action, we may incur further significant additional costs associated with resolving such action in other jurisdictions, all of which could seriously harm our business. 79 Any exercise of the outstanding warrants to purchase shares of our common stock would increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders.
Depending on what changes the FDA may make to its orphan drug regulations and policies, our business could be adversely impacted. 59 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.
Depending on what changes the FDA may make to its orphan drug regulations and policies, our business could be adversely impacted. 47 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.
Our future financial performance and our ability to commercialize our product candidates will depend, in part, on our ability to effectively manage any future growth, and our management may also have to divert a disproportionate amount of time to managing these growth activities. 82 We currently rely, and for the foreseeable future will continue to rely, in substantial part on certain independent organizations, advisors and consultants to provide certain services, including substantially all aspects of regulatory approval, clinical management and manufacturing.
Our future financial performance and our ability to commercialize our product candidates will depend, in part, on our ability to effectively manage any future growth, and our management may also have to divert a disproportionate amount of time to managing these growth activities. 70 We currently rely, and for the foreseeable future will continue to rely, in substantial part on certain independent organizations, advisors and consultants to provide certain services, including substantially all aspects of regulatory approval, clinical management and manufacturing.
Other jurisdictions outside the European Union are similarly introducing or enhancing privacy and data security laws, rules and regulations. 79 Similar actions are either in place or under way in the United States.
Other jurisdictions outside the European Union are similarly introducing or enhancing privacy and data security laws, rules and regulations. Similar actions are either in place or under way in the United States.
Some of these provisions include: ● a board of directors divided into three classes serving staggered three-year terms, such that not all members of our board of directors will be elected at one time; ● a prohibition on stockholder action through written consent, which requires that all stockholder actions be taken at a meeting of our stockholders; ● a requirement that special meetings of stockholders be called only by the chairman of our board of directors, the chief executive officer, the president, or by a majority of the total number of authorized directors; 89 ● advance notice requirements for stockholder proposals and nominations for election to our board of directors; ● a requirement that no member of our board of directors may be removed from office by our stockholders except for cause and, in addition to any other vote required by law, upon the approval of not less than two-thirds of all outstanding shares of our voting stock then entitled to vote in the election of directors; ● a requirement of approval of not less than two-thirds of all outstanding shares of our voting stock to amend any bylaws by stockholder action or to amend specific provisions of our Certificate of Incorporation; and ● the authority of our board of directors to issue preferred stock on terms determined by our board of directors without stockholder approval and which preferred stock may include rights superior to the rights of the holders of our common stock.
Some of these provisions include: ● a board of directors divided into three classes serving staggered three-year terms, such that not all members of our board of directors will be elected at one time; ● a prohibition on stockholder action through written consent, which requires that all stockholder actions be taken at a meeting of our stockholders; ● a requirement that special meetings of stockholders be called only by the chairperson of our board of directors, the chief executive officer, the president, or by a majority of the total number of authorized directors; 78 ● advance notice requirements for stockholder proposals and nominations for election to our board of directors; ● a requirement that no member of our board of directors may be removed from office by our stockholders except for cause and, in addition to any other vote required by law, upon the approval of not less than two-thirds of all outstanding shares of our voting stock then entitled to vote in the election of directors; ● a requirement of approval of not less than two-thirds of all outstanding shares of our voting stock to amend any bylaws by stockholder action or to amend specific provisions of our Certificate of Incorporation; and ● the authority of our board of directors to issue preferred stock on terms determined by our board of directors without stockholder approval and which preferred stock may include rights superior to the rights of the holders of our common stock.
If we or our collaborators have difficulty enrolling a sufficient number of patients to conduct our clinical trials as planned, we may need to delay, limit or terminate ongoing or planned clinical trials, any of which would have an adverse effect on our business, financial condition, results of operations and prospects. 44 We have never obtained regulatory approval for a drug, may never receive regulatory approval for any of our product candidates, and may therefore never generate revenues from product sales.
If we or our collaborators have difficulty enrolling a sufficient number of patients to conduct our clinical trials as planned, we may need to delay, limit or terminate ongoing or planned clinical trials, any of which would have an adverse effect on our business, financial condition, results of operations and prospects. 35 We have never obtained regulatory approval for a drug, may never receive regulatory approval for any of our product candidates, and may therefore never generate revenues from product sales.
We may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. 64 The patent application, prosecution, and enforcement processes are subject to numerous risks and uncertainties, and there can be no assurance that we, our licensors, or any of our future collaborators will be successful in protecting our product candidates by obtaining, defending, and/or asserting patent rights.
We may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. 52 The patent application, prosecution, and enforcement processes are subject to numerous risks and uncertainties, and there can be no assurance that we, our licensors, or any of our future collaborators will be successful in protecting our product candidates by obtaining, defending, and/or asserting patent rights.
This significant concentration of ownership may also adversely affect the trading price for our common stock because investors often perceive disadvantages in owning stock in companies with controlling stockholders. 85 We have incurred and will continue to incur significant increased expenses and administrative burdens as a public company, which could negatively impact our business, financial condition and results of operations.
This significant concentration of ownership may also adversely affect the trading price for our common stock because investors often perceive disadvantages in owning stock in companies with controlling stockholders. 74 We have incurred and will continue to incur significant increased expenses and administrative burdens as a public company, which could negatively impact our business, financial condition and results of operations.
The agreement sets out certain procedures for approval and recognition of medical products in each jurisdiction. 53 Since the regulatory framework for pharmaceutical products in the United Kingdom covering the quality, safety, and efficacy of pharmaceutical products, clinical trials, marketing authorization, commercial sales, and distribution of pharmaceutical products is derived from European Union directives and regulations, Brexit could materially impact the future regulatory regime that applies to products and the approval of product candidates in the United Kingdom.
The agreement sets out certain procedures for approval and recognition of medical products in each jurisdiction. 43 Since the regulatory framework for pharmaceutical products in the United Kingdom covering the quality, safety, and efficacy of pharmaceutical products, clinical trials, marketing authorization, commercial sales, and distribution of pharmaceutical products is derived from European Union directives and regulations, Brexit could materially impact the future regulatory regime that applies to products and the approval of product candidates in the United Kingdom.
Currently, a significant portion of our patents and patent applications are in-licensed, though similar risks would apply to any patents or patent applications that we now own or may own or in-license in the future. 65 It is possible that defects of form in the preparation or filing of our patents or patent applications may exist, or may arise in the future, for example with respect to proper priority claims, inventorship, claim scope or requests for patent term adjustments.
Currently, a significant portion of our patents and patent applications are in-licensed, though similar risks would apply to any patents or patent applications that we now own or may own or in-license in the future. 53 It is possible that defects of form in the preparation or filing of our patents or patent applications may exist, or may arise in the future, for example with respect to proper priority claims, inventorship, claim scope or requests for patent term adjustments.
If we do not have sufficient funds, we may not be able to develop product candidates or bring them to market and generate product revenue. 63 Risks Related to Our Intellectual Property We are highly dependent on intellectual property licensed from third parties, and termination of any of these licenses could result in the loss of significant rights, which would harm our business.
If we do not have sufficient funds, we may not be able to develop product candidates or bring them to market and generate product revenue. 51 Risks Related to Our Intellectual Property We are highly dependent on intellectual property licensed from third parties, and termination of any of these licenses could result in the loss of significant rights, which would harm our business.
In addition, given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. 66 Issued patents that we have or may obtain or license may not provide us with any meaningful protection, prevent competitors from competing with us or otherwise provide us with any competitive advantage.
In addition, given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. 54 Issued patents that we have or may obtain or license may not provide us with any meaningful protection, prevent competitors from competing with us or otherwise provide us with any competitive advantage.
Pursuant to the Shelf Registration Statement, we may offer from time to time up to an aggregate of $150.0 million of securities, including any combination of common stock, preferred stock, debt securities, warrants, rights, units and depositary shares. On November 10, 2022, we entered into a Controlled Equity Offering SM Sales Agreement with Cantor Fitzgerald & Co.
Pursuant to the Shelf Registration Statement, we may offer from time to time up to an aggregate of $250.0 million of securities, including any combination of common stock, preferred stock, debt securities, warrants, rights, units and depositary shares. On November 10, 2022, we entered into a Controlled Equity Offering SM Sales Agreement with Cantor Fitzgerald & Co.
We cannot be certain that our current or future licensors will comply with the disclosure or reporting requirements of the Bayh-Dole Act at all times, or be able to rectify any lapse in compliance with these requirements. 70 In addition, the U.S. government requires that any products embodying the subject invention or produced through the use of the subject invention be manufactured substantially in the United States.
We cannot be certain that our current or future licensors will comply with the disclosure or reporting requirements of the Bayh-Dole Act at all times, or be able to rectify any lapse in compliance with these requirements. 58 In addition, the U.S. government requires that any products embodying the subject invention or produced through the use of the subject invention be manufactured substantially in the United States.
Any such reductions could negatively impact our net product sales, if any of our product candidates are ever approved. 73 Any product candidate for which we obtain marketing approval could be subject to restrictions or withdrawal from the market, and we may be subject to substantial penalties if we fail to comply with regulatory requirements or if we experience unanticipated problems with our medicines, when and if any of them are approved.
Any such reductions could negatively impact our net product sales, if any of our product candidates are ever approved. 61 Any product candidate for which we obtain marketing approval could be subject to restrictions or withdrawal from the market, and we may be subject to substantial penalties if we fail to comply with regulatory requirements or if we experience unanticipated problems with our medicines, when and if any of them are approved.
Failure to comply with these requirements could result in reputational risk, public reprimands, administrative penalties, fines or imprisonment. 76 Healthcare and other reform legislation, may increase the difficulty and cost for us and any collaborators we may have to obtain marketing approval of and commercialize briquilimab and any other product candidates we may develop and affect the prices we, or they, may obtain.
Failure to comply with these requirements could result in reputational risk, public reprimands, administrative penalties, fines or imprisonment. 64 Healthcare and other reform legislation, may increase the difficulty and cost for us and any collaborators we may have to obtain marketing approval of and commercialize briquilimab and any other product candidates we may develop and affect the prices we, or they, may obtain.
Any of the above events could significantly harm our business, prospects, financial condition and results of operations and cause the price of our common stock to decline. 36 We have a limited operating history and no history of commercializing pharmaceutical products, which may make it difficult to evaluate the prospects for our future viability. We are a clinical stage company.
Any of the above events could significantly harm our business, prospects, financial condition and results of operations and cause the price of our common stock to decline. 28 We have a limited operating history and no history of commercializing pharmaceutical products, which may make it difficult to evaluate the prospects for our future viability. We are a clinical stage company.
Delisting may adversely impact the perception of our financial condition, cause reputational harm with investors, our employees and parties conducting business with us and limit our access to debt and equity financing. 86 Our failure to timely and effectively implement controls and procedures required by Section 404(a) of the Sarbanes-Oxley Act could negatively impact our business.
Delisting may adversely impact the perception of our financial condition, cause reputational harm with investors, our employees and parties conducting business with us and limit our access to debt and equity financing. 75 Our failure to timely and effectively implement controls and procedures required by Section 404(a) of the Sarbanes-Oxley Act could negatively impact our business.
Our failure or the failure of our CROs to comply with these regulations may require us to repeat clinical trials, which would delay the regulatory approval process and could also subject us to enforcement action. 60 Although we intend to design our planned clinical trials for our product candidates, for the foreseeable future CROs will conduct all of our planned clinical trials.
Our failure or the failure of our CROs to comply with these regulations may require us to repeat clinical trials, which would delay the regulatory approval process and could also subject us to enforcement action. 48 Although we intend to design our planned clinical trials for our product candidates, for the foreseeable future CROs will conduct all of our planned clinical trials.
The value received upon exercise of the Public Warrants (1) may be less than the value the holders would have received if they had exercised their Public Warrants at a later time where the underlying share price is higher and (2) may not compensate the holders for the value of the Public Warrants. 91 ITEM 1B. UNRESOLVED STAFF COMMENTS None.
The value received upon exercise of the Public Warrants (1) may be less than the value the holders would have received if they had exercised their Public Warrants at a later time where the underlying share price is higher and (2) may not compensate the holders for the value of the Public Warrants. 80 ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Factors affecting the trading price of our securities may include: ● adverse regulatory decisions; ● any delay in our regulatory filings for our product candidates and any adverse development or perceived adverse development with respect to the applicable regulatory authority’s review of such filings, including without limitation the FDA’s issuance of a “refusal to file” letter or a request for additional information; ● the impacts of the ongoing COVID-19 pandemic and related restrictions; ● the ongoing conflict between Ukraine and Russia and the global impact of restrictions and sanctions imposed on Russia and the impact thereof on the markets generally, including any adverse effects on macroeconomic conditions such as inflation; ● the commencement, enrollment or results of any future clinical trials we may conduct, or changes in the development status of our product candidates; ● adverse results from, delays in or termination of clinical trials; ● unanticipated serious safety concerns related to the use of our product candidates; ● lower than expected market acceptance of our product candidates following approval for commercialization; 84 ● changes in financial estimates by us or by any securities analysts who might cover our stock; ● changes in the market valuations of similar companies; ● stock market price and volume fluctuations of comparable companies and, in particular, those that operate in the biopharmaceutical industry; ● publication of research reports about us or our industry or positive or negative recommendations or withdrawal of research coverage by securities analysts; ● announcements by us or our competitors of significant acquisitions, strategic partnerships or divestitures; ● announcements of investigations or regulatory scrutiny of our operations or lawsuits filed against us; ● investors’ general perception of our business or management; ● recruitment or departure of key personnel; ● overall performance of the equity markets; ● disputes or other developments relating to intellectual property rights, including patents, litigation matters and our ability to obtain, maintain, defend, protect and enforce patent and other intellectual property rights for our technologies; ● significant lawsuits, including patent or stockholder litigation; ● proposed changes to healthcare laws in the U.S. or foreign jurisdictions, or speculation regarding such changes; ● general political and economic conditions; and ● other events or factors, many of which are beyond our control.
Factors affecting the trading price of our securities may include: ● adverse regulatory decisions; ● any delay in our regulatory filings for our product candidates and any adverse development or perceived adverse development with respect to the applicable regulatory authority’s review of such filings, including without limitation the FDA’s issuance of a “refusal to file” letter or a request for additional information; 73 ● the Israel-Hamas war, the ongoing conflict between Ukraine and Russia and the global impact of restrictions and sanctions imposed on Russia and the impact thereof on the markets generally, including any adverse effects on macroeconomic conditions such as inflation; ● the commencement, enrollment or results of any future clinical trials we may conduct, or changes in the development status of our product candidates; ● adverse results from, delays in or termination of clinical trials; ● unanticipated serious safety concerns related to the use of our product candidates; ● lower than expected market acceptance of our product candidates following approval for commercialization; ● changes in financial estimates by us or by any securities analysts who might cover our stock; ● changes in the market valuations of similar companies; ● stock market price and volume fluctuations of comparable companies and, in particular, those that operate in the biopharmaceutical industry; ● publication of research reports about us or our industry or positive or negative recommendations or withdrawal of research coverage by securities analysts; ● announcements by us or our competitors of significant acquisitions, strategic partnerships or divestitures; ● announcements of investigations or regulatory scrutiny of our operations or lawsuits filed against us; ● investors’ general perception of our business or management; ● recruitment or departure of key personnel; ● overall performance of the equity markets; ● disputes or other developments relating to intellectual property rights, including patents, litigation matters and our ability to obtain, maintain, defend, protect and enforce patent and other intellectual property rights for our technologies; ● significant lawsuits, including patent or stockholder litigation; ● proposed changes to healthcare laws in the U.S. or foreign jurisdictions, or speculation regarding such changes; ● general political and economic conditions; and ● other events or factors, many of which are beyond our control.
If we do not receive marketing approvals for briquilimab, we may not be able to continue our operations. 40 We may not be successful in our efforts to identify, develop and commercialize additional product candidates. If these efforts are unsuccessful, we may never become a commercial stage company or generate any revenues.
If we do not receive marketing approvals for briquilimab, we may not be able to continue our operations. 32 We may not be successful in our efforts to identify, develop and commercialize additional product candidates. If these efforts are unsuccessful, we may never become a commercial stage company or generate any revenues.
As widely reported, global credit and financial markets have experienced volatility and disruptions in the past several years and especially in 2020, 2021 and 2022 due to the impacts of the COVID-19 pandemic, and, more recently, the ongoing conflict between Ukraine and Russia and the global impact of restrictions and sanctions imposed on Russia, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates and uncertainty about economic stability.
As widely reported, global credit and financial markets have experienced volatility and disruptions in the past several years and especially in 2020, 2021 and 2022 due to the impacts of the COVID-19 pandemic, and, more recently, the Israel-Hamas war, the ongoing conflict between Ukraine and Russia and the global impact of restrictions and sanctions imposed on Russia, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates and uncertainty about economic stability.
The loss of the services of any of our executive officers, key employees, and scientific and medical advisors, and our inability to find suitable replacements, could result in delays in product development and harm our business. 81 We conduct our operations at our facility in the San Francisco Bay Area.
The loss of the services of any of our executive officers, key employees, and scientific and medical advisors, and our inability to find suitable replacements, could result in delays in product development and harm our business. 69 We conduct our operations at our facility in the San Francisco Bay Area.
These drugs may compete with our product candidates and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing. 71 Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions.
These drugs may compete with our product candidates and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing. 59 Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions.
Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations, and prospects. 67 Moreover, our trade secrets could otherwise become known or be independently discovered by our competitors or other third parties.
Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations, and prospects. 55 Moreover, our trade secrets could otherwise become known or be independently discovered by our competitors or other third parties.
As a result, our ability to obtain any alternative supplier of briquilimab may be further limited. 61 Third-party manufacturers may not be able to comply with cGMP regulations or similar regulatory requirements outside the United States.
As a result, our ability to obtain any alternative supplier of briquilimab may be further limited. 49 Third-party manufacturers may not be able to comply with cGMP regulations or similar regulatory requirements outside the United States.
We have the ability to redeem outstanding Public Warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per Public Warrant, provided that the last reported sales price of our common stock equals or exceeds $18.00 per share (as adjusted for share subdivisions, share dividends, rights issuances, subdivisions, reorganizations, recapitalizations, and the like) for any 20 trading days within a 30-trading-day period ending on the third trading day prior to the date we send the notice of redemption to the warrantholders.
We have the ability to redeem outstanding Public Warrants at any time after they become exercisable and prior to their expiration, at a price of $0.10 per Public Warrant, provided that the last reported sales price of our common stock equals or exceeds $180.00 per share (as adjusted for share subdivisions, share dividends, rights issuances, subdivisions, reorganizations, recapitalizations, and the like) for any 20 trading days within a 30-trading-day period ending on the third trading day prior to the date we send the notice of redemption to the warrantholders.
In this case, we could ultimately be forced to cease use of such trademarks. 68 We may not be successful in acquiring or in-licensing necessary rights to key technologies underlying briquilimab or any future product candidates we may develop.
In this case, we could ultimately be forced to cease use of such trademarks. 56 We may not be successful in acquiring or in-licensing necessary rights to key technologies underlying briquilimab or any future product candidates we may develop.
Any of the above could have a material adverse effect on our business, financial condition, results of operations or prospects. 83 Unstable market and economic conditions may have serious adverse consequences on our business, financial condition and share price.
Any of the above could have a material adverse effect on our business, financial condition, results of operations or prospects. 71 Unstable market and economic conditions may have serious adverse consequences on our business, financial condition and share price.
If a prolonged government shutdown occurs, or if global health concerns continue to prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities, it could significantly impact the ability of the FDA or other regulatory authorities to timely review and process our regulatory submissions, which could have a material adverse effect on our business.
If another government shutdown occurs, or if global health concerns prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities, it could significantly impact the ability of the FDA or other regulatory authorities to timely review and process our regulatory submissions, which could have a material adverse effect on our business.
Patents that remain under the jurisdiction of the UPC will be potentially vulnerable to a single UPC-based revocation challenge that, if successful, could invalidate the patent in all countries who are signatories to the UPC.
Patents that remain under the jurisdiction of the UPC may be potentially vulnerable to a single UPC-based revocation challenge that, if successful, could invalidate the patent in all countries who are signatories to the UPC.
In addition, on August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022, which, among other things, includes policies that are designed to have a direct impact on drug prices and reduce drug spending by the federal government, which shall take effect in 2023.
In addition, on August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022, which, among other things, includes policies that are designed to have a direct impact on drug prices and reduce drug spending by the federal government, took effect in 2023.
In addition, we may redeem your Public Warrants at any time after they become exercisable and prior to their expiration at a price of $0.10 per Public Warrant upon a minimum of 30 days’ prior written notice of redemption; provided that holders will be able to exercise their Public Warrants prior to redemption for a number of our common stock determined based on the redemption date and the fair market value of our common stock.
In addition, we may redeem your Public Warrants at any time after they become exercisable and prior to their expiration at a price of $1.00 per Public Warrant upon a minimum of 30 days’ prior written notice of redemption; provided that holders will be able to exercise their Public Warrants prior to redemption for a number of our common stock determined based on the redemption date and the fair market value of our common stock.
The success of our product candidates will depend on several factors, including the following: ● the acceptance of individual investigational review boards (“IRBs”) and scientific review committees at each clinical trial site as to the adequacy of the preclinical data package to support clinical development of briquilimab and their overall general agreement with the use of briquilimab in the intended patient population in the intended manner; ● the willingness of clinical investigators to place patients in the clinical trials, and the willingness of patients to enroll in a clinical trial studying a first-in-human cell therapy; 39 ● the initiation and successful patient enrollment and completion of additional clinical trials of briquilimab in CSU and LR-MDS on a timely basis; ● the frequency and severity of adverse events in the clinical trials; ● the successful and timely completion of our ongoing Phase 1/2 clinical trial of briquilimab for the treatment of SCID; ● maintaining and establishing relationships with contract research organizations (“CROs”) and clinical sites for the clinical development of briquilimab both in the United States and internationally; ● successful completion of toxicology studies, biodistribution studies and minimally efficacious dose studies in animals, where applicable; ● successful completion of clinical trials, under the FDA’s current Good Clinical Practices (“cGCPs”) and the FDA’s current Good Laboratory Practices; ● effective investigational new drug (“IND”) applications or Clinical Trial Authorizations that allow commencement of our planned clinical trials or future clinical trials for our product candidates; ● the results of clinical trials conducted by third parties in hematopoietic cell transplant (“HCT”) if such trials result in changes to the standard of care for HCT or otherwise cause us to change our clinical trial protocols; ● the efficacy, safety and tolerability profiles that are satisfactory to the FDA, EMA or any comparable foreign regulatory authority for marketing approval; ● the timely receipt of marketing approvals for our product candidates from applicable regulatory authorities; ● the extent of any required post-marketing approval commitments to applicable regulatory authorities; ● the maintenance of existing or the establishment of new supply arrangements with third-party suppliers and manufacturers for clinical development of briquilimab; ● the maintenance of existing, or the establishment of new, scaled production arrangements with third-party manufacturers to obtain finished products that are appropriate for commercial sale of briquilimab, if it is approved; ● obtaining and maintaining patent protection, trade secret protection and regulatory exclusivity, both in the United States and internationally; ● a continued acceptable safety profile following any marketing approval; ● commercial acceptance by patients, the medical community and third-party payors; ● our ability to obtain coverage and adequate reimbursement from third-party payors for our products, and patients’ willingness to pay out-of-pocket in the absence of such coverage and adequate reimbursement; and ● our ability to compete with other treatments.
The success of our product candidates will depend on several factors, including the following: ● the acceptance of individual investigational review boards (“IRBs”) and scientific review committees at each clinical trial site as to the adequacy of the preclinical data package to support clinical development of briquilimab and their overall general agreement with the use of briquilimab in the intended patient population in the intended manner; ● the initiation and successful patient enrollment and completion of additional clinical trials of briquilimab in CSU, CIndU, and LR-MDS on a timely basis; ● the frequency and severity of adverse events in the clinical trials; 31 ● the successful and timely completion of our ongoing Phase 1/2 clinical trial of briquilimab as a conditioning agent for SCID patients undergoing re-transplantation; ● maintaining and establishing relationships with contract research organizations (“CROs”) and clinical sites for the clinical development of briquilimab both in the United States and internationally; ● successful completion of toxicology studies, biodistribution studies and minimally efficacious dose studies in animals, where applicable; ● successful completion of clinical trials, under the FDA’s current Good Clinical Practices (“cGCPs”) and the FDA’s current Good Laboratory Practices; ● effective investigational new drug (“IND”) applications or Clinical Trial Authorizations that allow commencement of our planned clinical trials or future clinical trials for our product candidates; ● the results of clinical trials conducted by third parties in hematopoietic cell transplant (“HCT”) if such trials result in changes to the standard of care for HCT or otherwise cause us to change our clinical trial protocols; ● the efficacy, safety and tolerability profiles that are satisfactory to the FDA, EMA or any comparable foreign regulatory authority for marketing approval; ● the timely receipt of marketing approvals for our product candidates from applicable regulatory authorities; ● the extent of any required post-marketing approval commitments to applicable regulatory authorities; ● the maintenance of existing or the establishment of new supply arrangements with third-party suppliers and manufacturers for clinical development of briquilimab; ● the maintenance of existing, or the establishment of new, scaled production arrangements with third-party manufacturers to obtain finished products that are appropriate for commercial sale of briquilimab, if it is approved; ● obtaining and maintaining patent protection, trade secret protection and regulatory exclusivity, both in the United States and internationally; ● a continued acceptable safety profile following any marketing approval; ● commercial acceptance by patients, the medical community and third-party payors; ● our ability to obtain coverage and adequate reimbursement from third-party payors for our products, and patients’ willingness to pay out-of-pocket in the absence of such coverage and adequate reimbursement; and ● our ability to compete with other treatments.
If we are unable to mitigate these risks or to attract and retain highly qualified personnel, our revenue, operating results and financial condition may be adversely impacted. We will need to grow the size of our organization, and we may experience difficulties in managing this growth. As of December 31, 2022, we had 35 full-time employees.
If we are unable to mitigate these risks or to attract and retain highly qualified personnel, our revenue, operating results and financial condition may be adversely impacted. We will need to grow the size of our organization, and we may experience difficulties in managing this growth. As of December 31, 2023, we had 45 full-time employees.
We anticipate that our expenses will increase substantially if and as we: ● continue the clinical development of briquilimab in chronic diseases such as Chronic Spontaneous Urticaria (“CSU”), Lower to Intermediate Risk Myelodysplastic Syndrome (“LR-MDS”) and other indications; ● continue the open label Phase 1/2 clinical trial for briquilimab for Severe Combined Immunodeficiency (“SCID”), and the open label Phase 1 clinical trial for briquilimab in patients with myelodysplastic syndrome (“MDS”) or acute myeloid leukemia (“AML”); ● continue our current research programs and development of other potential product candidates from our current research programs; ● seek to identify additional product candidates and research programs; ● initiate preclinical testing and clinical trials for any other product candidates we identify and develop; ● maintain, expand, enforce, defend and protect our intellectual property portfolio, and provide reimbursement of third-party expenses related to our patent portfolio; ● seek marketing approvals for any product candidates that successfully complete clinical trials; ● ultimately establish a sales, marketing and distribution infrastructure to commercialize any product candidates for which we may obtain marketing approval; ● adapt our regulatory compliance efforts to incorporate requirements applicable to any approved product candidates; ● further develop our genome engineering capabilities; ● hire additional research and development and clinical personnel; ● hire commercial personnel and advance market access and reimbursement strategies; ● add operational, financial and management information systems and personnel, including personnel to support our product development; ● acquire or in-license product candidates, intellectual property and technologies; ● develop or in-license manufacturing and distribution technologies; ● should we decide to do so and receive approval for any of our product candidates, build and maintain, or purchase and validate, commercial-scale manufacturing facilities designed to comply with current Good Manufacturing Practices (“cGMP”) requirements; and ● incur additional legal, accounting and other expenses in operating as a public company. 34 As a company, we have not completed clinical development of any product candidate and expect that it will be several years, if ever, before we have a product candidate ready for commercialization.
We anticipate that our expenses will increase substantially if and as we: ● continue the clinical development of briquilimab in chronic diseases such as Chronic Spontaneous Urticaria (“CSU”), Chronic Inducible Urticaria (“CIndU”), Lower to Intermediate Risk Myelodysplastic Syndrome (“LR-MDS”) and other indications; ● continue the open label Phase 1/2 clinical trial for briquilimab for Severe Combined Immunodeficiency (“SCID”); ● continue our current research programs and development of other potential product candidates from our current research programs; ● seek to identify additional product candidates and research programs; ● initiate preclinical testing and clinical trials for any other product candidates we identify and develop; ● maintain, expand, enforce, defend and protect our intellectual property portfolio, and provide reimbursement of third-party expenses related to our patent portfolio; ● seek marketing approvals for any product candidates that successfully complete clinical trials; ● ultimately establish a sales, marketing and distribution infrastructure to commercialize any product candidates for which we may obtain marketing approval; ● adapt our regulatory compliance efforts to incorporate requirements applicable to any approved product candidates; ● hire additional research and development and clinical personnel; ● hire commercial personnel and advance market access and reimbursement strategies; ● add operational, financial and management information systems and personnel, including personnel to support our product development; ● acquire or in-license product candidates, intellectual property and technologies; ● develop or in-license manufacturing and distribution technologies; ● should we decide to do so and receive approval for any of our product candidates, build and maintain, or purchase and validate, commercial-scale manufacturing facilities designed to comply with current Good Manufacturing Practices (“cGMP”) requirements; and ● incur additional legal, accounting and other expenses in operating as a public company. 26 As a company, we have not completed clinical development of any product candidate and expect that it will be several years, if ever, before we have a product candidate ready for commercialization.
Our future financing requirements will depend on many factors, including: ● the initiation, progress, timing, costs and results of preclinical studies and clinical trials for our product candidates, including any COVID-19-related delays or other effects on our development programs; ● the costs of continuing to build our technology platform, including in-licensing additional genome engineering technologies for use in developing our product candidates; ● the costs of developing, acquiring or in-licensing additional targeted therapies to use in combination with briquilimab and other product candidates we may develop; ● the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property and proprietary rights and defending intellectual property-related claims in the United States and internationally; ● the number and characteristics of product candidates that we develop or may in-license; ● our ability to establish and maintain collaborations on favorable terms, if at all; ● the achievement of milestones or occurrence of other developments that trigger payments under any collaboration agreements we enter into; ● the outcome, timing and cost of meeting regulatory requirements established by the U.S.
Our future financing requirements will depend on many factors, including: ● the initiation, progress, timing, costs and results of preclinical studies and clinical trials for our product candidates; ● the costs of continuing to build our technology platform for use in developing our product candidates; ● the costs of developing, acquiring or in-licensing additional targeted therapies to use in combination with briquilimab and other product candidates we may develop; ● the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property and proprietary rights and defending intellectual property-related claims in the United States and internationally; ● the number and characteristics of product candidates that we develop or may in-license; ● our ability to establish and maintain collaborations on favorable terms, if at all; ● the achievement of milestones or occurrence of other developments that trigger payments under any collaboration agreements we enter into; ● the outcome, timing and cost of meeting regulatory requirements established by the U.S.
The degree of market acceptance of any product candidate we develop, if approved for commercial sale, will depend on a number of factors, including: ● the efficacy and safety of such product candidate as demonstrated in clinical trials; ● the efficacy and safety of other products that are used in combination or in sequence with our product candidates; ● the potential and perceived advantages of our product candidates compared to alternative treatments; ● the limitation to our targeted patient population and limitations or warnings contained in approved labeling by the FDA or other regulatory authorities; ● the ability to offer our products for sale at competitive prices; ● convenience and ease of administration compared to alternative treatments; ● the clinical indications for which the product candidate is approved by the FDA, the EMA or other regulatory agencies; ● public attitudes regarding genetic medicine generally and genome engineering technologies specifically; ● the willingness of the target patient population to try novel biologics and of physicians to prescribe these treatments, as well as their willingness to accept an intervention that involves the alteration of the patient’s gene; ● product labeling or product insert requirements of the FDA, the EMA or other regulatory authorities, including any limitations or warnings contained in a product’s approved labeling; 45 ● relative convenience and ease of administration; ● the strength of marketing and distribution support; ● availability of third-party coverage and sufficiency of reimbursement; and ● the prevalence and severity of any side effects.
The degree of market acceptance of any product candidate we develop, if approved for commercial sale, will depend on a number of factors, including: ● the efficacy and safety of such product candidate as demonstrated in clinical trials; ● the efficacy and safety of other products that are used in combination or in sequence with our product candidates; ● the potential and perceived advantages of our product candidates compared to alternative treatments; ● the limitation to our targeted patient population and limitations or warnings contained in approved labeling by the FDA or other regulatory authorities; ● the ability to offer our products for sale at competitive prices; ● convenience and ease of administration compared to alternative treatments; ● the clinical indications for which the product candidate is approved by the FDA, the EMA or other regulatory agencies; ● the willingness of the target patient population to try novel biologics and of physicians to prescribe these treatments, as well as their willingness to accept an intervention that involves the alteration of the patient’s gene; ● product labeling or product insert requirements of the FDA, the EMA or other regulatory authorities, including any limitations or warnings contained in a product’s approved labeling; 36 ● relative convenience and ease of administration; ● the strength of marketing and distribution support; ● availability of third-party coverage and sufficiency of reimbursement; and ● the prevalence and severity of any side effects.
Outstanding warrants to purchase an aggregate of 4,999,883 shares of our common stock became exercisable in accordance with the terms of the Warrant Agreement, dated November 19, 2019, between Continental Stock Transfer & Trust Company, as warrant agent, and us (the “Warrant Agreement”) commencing on October 24, 2021 (the “Public Warrants”).
Outstanding warrants to purchase an aggregate of 499,986 shares of our common stock became exercisable in accordance with the terms of the Warrant Agreement, dated November 19, 2019, between Continental Stock Transfer & Trust Company, as warrant agent, and us (the “Warrant Agreement”) commencing on October 24, 2021 (the “Public Warrants”).
In addition, our clinical trials to date have been limited in scope, and results received to date may not be replicated in expanded or additional future clinical trials. ● We have never obtained regulatory approval for a drug, may never receive regulatory approval for any of our product candidates, and may therefore never generate revenues from product sales. ● We face significant competition in an environment of rapid technological change, and there is a possibility that our competitors may achieve regulatory approval before us or develop therapies that are safer or more advanced or effective than ours, which may harm our financial condition and our ability to successfully market or commercialize our product candidates. ● Risks Related to Regulatory Review, including, among others, that: ● If clinical trials of our product candidates fail to demonstrate safety and efficacy to the satisfaction of regulatory authorities or do not otherwise produce positive results, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of such product candidates. ● Stem cell transplant is a high-risk procedure with curative potential that may result in complications or adverse events for patients in our clinical trials or for patients that use any of our product candidates, if approved. ● Risks Related to Our Relationships with Third Parties, including, among others, that: ● We rely on third parties to conduct our preclinical and clinical trials and will rely on them to perform other tasks for us.
In addition, our clinical trials to date have been limited in scope, and results received to date may not be replicated in expanded or additional future clinical trials. ● We have never obtained regulatory approval for a drug, may never receive regulatory approval for any of our product candidates, and may therefore never generate revenues from product sales. ● We face significant competition in an environment of rapid technological change, and there is a possibility that our competitors may achieve regulatory approval before us or develop therapies that are safer or more advanced or effective than ours, which may harm our financial condition and our ability to successfully market or commercialize our product candidates. ● Risks Related to Regulatory Review, including, among others, that: ● If clinical trials of our product candidates fail to demonstrate safety and efficacy to the satisfaction of regulatory authorities or do not otherwise produce positive results, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of such product candidates. ● Risks Related to Our Relationships with Third Parties, including, among others, that: ● We rely on third parties to conduct our preclinical and clinical trials and will rely on them to perform other tasks for us.
As of January 1, 2023, the California Consumer Privacy Act (as amended by the California Privacy Rights Act) is in full effect, with enforcement by California’s dedicated privacy enforcement agency expected to start later in 2023. While California was first among the states in adopting comprehensive data privacy legislation similar to the GDPR, many other states are following suit.
As of January 1, 2023, the California Consumer Privacy Act (as amended by the California Privacy Rights Act) is in full effect, while enforcement by California’s dedicated privacy enforcement agency began in 2023. While California was first among the states in adopting comprehensive data privacy legislation similar to the GDPR, many other states are following suit.
Our management believes that our existing cash and cash equivalents as of December 31, 2022, together with the cash proceeds received upon the closing of the public offering in January 2023, will be sufficient to fund our operating plan for at least twelve months from the date of filing of this Annual Report on Form 10-K.
Our management believes that our existing cash and cash equivalents as of December 31, 2023 together with the cash proceeds received upon the closing of the underwritten offering in February 2024, will be sufficient to fund our operating plan for at least twelve months from the date of filing of this Annual Report on Form 10-K.
On January 18, 2023, we received a letter from Nasdaq notifying us that we regained full compliance with Nasdaq Listing Rule 5550(a)(2) after the closing bid price of our common stock had been at $1.00 per share or greater for ten consecutive business days from January 3, 2023 through January 17, 2023.
On January 19, 2024, we received a letter from Nasdaq notifying us that we regained full compliance with Nasdaq Listing Rule 5550(a)(2) after the closing bid price of our common stock had been at $1.00 per share or greater for ten consecutive business days from January 4, 2024 through January 18, 2024.
We also rely on our license agreement with Stanford, whereby we license a patent portfolio applicable to our targeted conditioning and Stem Cell Graft programs that contains patent families directed to immunodepletion of endogenous stem cell niche for engraftment.
We also rely on our license agreement with Stanford, whereby we license a patent portfolio applicable to our targeted conditioning program that contains patent families directed to immunodepletion of endogenous stem cell niche for engraftment.
In addition, the Equity Incentive Plan and ESPP provide for annual automatic increases in the number of shares reserved thereunder, in each case, beginning on January 1, 2022. As a result of such annual increases, our stockholders may experience additional dilution, which could cause the price of our common stock to fall.
In addition, the Equity Incentive Plan and ESPP provide for annual automatic increases in the number of shares reserved thereunder, in each case, on January 1 of each year through and including January 1, 2031. As a result of such annual increases, our stockholders may experience additional dilution, which could cause the price of our common stock to fall.
On November 3, 2022, we received written notice from Nasdaq indicating that, for the last 30 consecutive business days, the bid price for our common stock had closed below the minimum $1.00 per share requirement for continued listing on the Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2).
On October 18, 2023, we received written notice from Nasdaq indicating that, for the last 30 consecutive business days, the bid price for our common stock had closed below the minimum $1.00 per share requirement for continued listing on the Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2).
Old Jasper was founded and commenced operations in March 2018. Our operations to date have been limited to organizing and staffing our company, business planning, raising capital, acquiring and developing our technology, identifying potential product candidates and undertaking preclinical studies and clinical trials.
We were founded and commenced operations in March 2018. Our operations to date have been limited to organizing and staffing our company, business planning, raising capital, acquiring and developing our technology, identifying potential product candidates and undertaking preclinical studies and clinical trials.
Our ability to utilize our net operating loss carryforwards and certain other tax attributes to offset taxable income or taxes may be limited. As of December 31, 2022, we had net operating loss carryforwards for federal income tax purposes of $68.8 million that can be carried forward indefinitely.
Our ability to utilize our net operating loss carryforwards and certain other tax attributes to offset taxable income or taxes may be limited. As of December 31, 2023, we had net operating loss carryforwards for federal income tax purposes of $91.3 million that can be carried forward indefinitely.
Patients may be unwilling to participate in our clinical trials because of negative publicity from adverse events related to the biotechnology, gene therapy or genome engineering fields, competitive clinical trials for similar patient populations, clinical trials in competing products or for other reasons.
Patients may be unwilling to participate in our clinical trials because of negative publicity from adverse events related to the biotechnology competitive clinical trials for similar patient populations, clinical trials in competing products or for other reasons.
As of December 31, 2022, we had net operating loss carryforwards for state income tax purposes of $120.0 million that begin to expire in 2038. Portions of these net operating loss carryforwards could expire unused and be unavailable to offset future income tax liabilities.
As of December 31, 2023, we had net operating loss carryforwards for state income tax purposes of $131.9 million that begin to expire in 2038. Portions of these net operating loss carryforwards could expire unused and be unavailable to offset future income tax liabilities.
As of December 31, 2022, our directors and executive officers and their affiliates beneficially owned approximately 28.8% of the outstanding shares of our common stock.
As of December 31, 2023, our directors and executive officers and their affiliates beneficially owned approximately 28.1% of the outstanding shares of our common stock.
Under the 2022 Inducement Plan, we can grant nonstatutory stock options, restricted stock awards, stock appreciation rights, restricted stock units, performance awards and other awards, but only to an individual, as a material inducement to such individual to enter into employment with us or an affiliate of ours, who (i) has not previously been an employee or director of ours or (ii) is rehired following a bona fide period of non-employment with us. 88 As of December 31, 2022, options to purchase an aggregate of 6,169,180 shares of our common stock and restricted stock units with respect to an aggregate of 2,617,445 shares were outstanding, and we have granted additional options to purchase shares of our common stock after this date.
Under the 2022 Inducement Plan, we can grant nonstatutory stock options, restricted stock awards, stock appreciation rights, restricted stock units, performance awards and other awards, but only to an individual, as a material inducement to such individual to enter into employment with us or an affiliate of ours, who (i) has not previously been an employee or director of ours or (ii) is rehired following a bona fide period of non-employment with us. 77 As of December 31, 2023, options to purchase an aggregate of 1,040,875 shares of our common stock and no restricted stock units were outstanding, and we have granted additional options to purchase shares of our common stock after this date.
As a result, the timeline for recruiting patients, conducting trials and obtaining regulatory approval of product candidates may be delayed. 43 Patient enrollment is also affected by other factors, including: ● severity of the disease under investigation; ● size of the patient population and process for identifying patients; ● design of the trial protocol; ● availability and efficacy of approved medications for the disease under investigation; ● availability of genetic testing for potential patients; ● ability to obtain and maintain patient informed consent; ● risk that enrolled patients will drop out before completion of the trial; ● eligibility and exclusion criteria for the trial in question; ● perceived risks and benefits of the product candidate under trial; ● perceived risks and benefits of genome engineering as a treatment approach; ● perceived risks and benefits of the companion therapeutics that may be administered in combination or in sequence with briquilimab; ● efforts to facilitate timely enrollment in clinical trials; ● potential disruptions caused by the COVID-19 pandemic, including difficulties in initiating clinical sites, enrolling and retaining participants, diversion of healthcare resources away from clinical trials, travel or quarantine policies that may be implemented, and other factors; ● patient referral practices of physicians; ● ability to monitor patients adequately during and after treatment; ● proximity and availability of clinical trial sites for prospective patients, especially for those conditions that have small patient pools; ● the requirement for HCT to be performed in centers that specialize in this procedure; and ● changes to diagnostic technologies, methodologies or criteria used to identify HCT patients at high risk for relapse.
As a result, the timeline for recruiting patients, conducting trials and obtaining regulatory approval of product candidates may be delayed. 34 Patient enrollment is also affected by other factors, including: ● severity of the disease under investigation; ● size of the patient population and process for identifying patients; ● design of the trial protocol; ● availability and efficacy of approved medications for the disease under investigation; ● availability of genetic testing for potential patients; ● ability to obtain and maintain patient informed consent; ● risk that enrolled patients will drop out before completion of the trial; ● eligibility and exclusion criteria for the trial in question; ● perceived risks and benefits of the product candidate under trial; ● perceived risks and benefits of the companion therapeutics that may be administered in combination or in sequence with briquilimab; ● efforts to facilitate timely enrollment in clinical trials; ● patient referral practices of physicians; ● ability to monitor patients adequately during and after treatment; ● proximity and availability of clinical trial sites for prospective patients, especially for those conditions that have small patient pools; ● the requirement for HCT to be performed in centers that specialize in this procedure; and ● changes to diagnostic technologies, methodologies or criteria used to identify HCT patients at high risk for relapse.
We cannot predict with certainty the long-term effects of any potential changes. 72 Risks Related to Other Legal Compliance Matters If any of our product candidates are approved, an unfavorable reimbursement determination in any of the major markets could have a negative impact on us.
We cannot predict with certainty the long-term effects of the new unitary patent system. 60 Risks Related to Other Legal Compliance Matters If any of our product candidates are approved, an unfavorable reimbursement determination in any of the major markets could have a negative impact on us.
Failures in the operational execution of the expected business plans may have a material impact on our commercial prospects. Further, if we are not able to attract and retain highly-qualified personnel, we may not be able to successfully implement our business strategy.
We and our management have a limited track record as an operating company. Failures in the operational execution of the expected business plans may have a material impact on our commercial prospects. Further, if we are not able to attract and retain highly-qualified personnel, we may not be able to successfully implement our business strategy.
Undesirable side effects or adverse events caused by briquilimab and our other product candidates, and our mRNA stem cell platform or other cell-based companion therapeutics we may develop, could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or comparable foreign regulatory authorities.
Undesirable side effects or adverse events caused by briquilimab or other therapeutics we may develop could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or comparable foreign regulatory authorities.
For example, the complexity and uncertainty of European patent laws have also increased in recent years. In Europe, a new unitary patent system will likely be introduced by the end of 2023, which would significantly impact European patents, including those granted before the introduction of such a system.
For example, the complexity and uncertainty of European patent laws have also increased in recent years. In Europe, in June 2023, a new unitary patent system was introduced, which will significantly impact European patents, including those granted before the introduction of the system.
We filed a registration statement on October 18, 2021, which was first amended on March 29, 2022 and further amended on October 7, 2022, in order to satisfy the foregoing obligations and we have currently registered for resale an aggregate of 36,019,362 shares of our common stock, including up to 4,999,863 shares of our common stock issuable upon exercise of our outstanding warrants.
We filed a registration statement on October 18, 2021, which was first amended on March 29, 2022 and further amended on October 7, 2022, in order to satisfy the foregoing obligations and we have currently registered for resale an aggregate of 3,601,936 shares of our common stock, including up to 499,986 shares of our common stock issuable upon exercise of our outstanding warrants.
Even if post-approval studies are not requested or required, after our products are approved and are on the market, there might be safety issues that emerge over time that require a change in product labeling, additional post-market studies or clinical trials, imposition of distribution and use restrictions under a REMS or withdrawal of the product from the market, which would cause our revenue to decline. 54 Additionally, any products that we may successfully develop will be subject to ongoing regulatory requirements after they are approved.
Even if post-approval studies are not requested or required, after our products are approved and are on the market, there might be safety issues that emerge over time that require a change in product labeling, additional post-market studies or clinical trials, imposition of distribution and use restrictions under a REMS or withdrawal of the product from the market, which would cause our revenue to decline.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS We are not currently a party to any material legal proceedings. From time to time, we may be subject to various legal proceedings and claims that arise in the ordinary course of our business activities. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 92 PART II
Biggest changeITEM 3. LEGAL PROCEEDINGS We are not currently a party to any material legal proceedings. From time to time, we may be subject to various legal proceedings and claims that arise in the ordinary course of our business activities. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 81 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeUnregistered Sales of Equity Securities None. Purchases of Equity Securities by the Issuer and Affiliated Purchasers None. ITEM 6. [RESERVED] 93
Biggest changeUnregistered Sales of Equity Securities None. Purchases of Equity Securities by the Issuer and Affiliated Purchasers None.
As of February 28, 2023, there were 15 holders of record of our common stock and 1 holder of record of our Public Warrants. Prior to the consummation of the Business Combination, AMHC’s Class A Common Stock, units and warrants were listed on Nasdaq under the symbols “AMHCU,” “AMHC” and “AMHCW,” respectively.
As of February 26, 2024, there were 15 holders of record of our common stock and 1 holder of record of our Public Warrants. Prior to the consummation of the Business Combination, AMHC’s Class A Common Stock, units and warrants were listed on Nasdaq under the symbols “AMHCU,” “AMHC” and “AMHCW,” respectively.

Item 7. Management's Discussion & Analysis

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

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Biggest changeResults of Operations Comparison of the Years Ended December 31, 2022 and 2021 The following table summarizes our results of operations for the years ended December 31, 2022 and 2021 (in thousands): Year Ended December 31, Change Change 2022 2021 $ % Operating expenses Research and development $ 34,627 $ 25,421 $ 9,206 36 General and administrative 16,569 11,412 5,157 45 Total operating expenses 51,196 36,833 14,363 39 Loss from operations (51,196 ) (36,833 ) (14,363 ) 39 Change in fair value of common stock warrant liability 7,200 500 6,700 * Change in fair value of earnout liability 5,725 9,277 (3,552 ) (38 ) Change in fair value of derivative liability — (3,501 ) 3,501 (100 ) Other income (expense), net 586 (80 ) 666 * Total other income, net 13,511 6,196 7,315 118 Net loss and comprehensive loss $ (37,685 ) $ (30,637 ) $ (7,048 ) 23 * not meaningful Research and Development Expenses The following table summarizes our research and development expenses for the periods indicated (in thousands): Year Ended December 31, Change Change 2022 2021 $ % External costs: CRO, CMO and other third-party preclinical studies and clinical trials $ 13,817 $ 15,271 $ (1,454 ) (10 ) Consulting costs 4,639 3,205 1,434 45 Other research and development costs, including laboratory materials and supplies 3,322 479 2,843 * Total external costs 21,778 18,955 2,823 15 Internal costs: Personnel-related costs 8,326 5,339 2,987 56 Facilities and overhead costs 4,523 1,127 3,396 301 Total internal costs 12,849 6,466 6,383 99 Total research and development expense: $ 34,627 $ 25,421 $ 9,206 36 * not meaningful 102 Research and development expenses increased by $9.2 million, from $25.4 million for the year ended December 31, 2021 to $34.6 million for the year ended December 31, 2022.
Biggest changeAs of December 31, 2023, the fair value of the earnout out liability was minimal due to the price of our common stock relative to the price that would trigger a release of the earnout shares. 87 Results of Operations Comparison of the Years Ended December 31, 2023 and 2022 The following table summarizes our results of operations for the years ended December 31, 2023 and 2022 (in thousands): Year Ended December 31, Change Change 2023 2022 $ % Operating expenses Research and development $ 51,785 $ 34,627 $ 17,158 50 General and administrative 17,076 16,569 507 3 Total operating expenses 68,861 51,196 17,665 35 Loss from operations (68,861 ) (51,196 ) (17,665 ) 35 Interest income 5,199 701 4,498 642 Change in fair value of earnout liability 18 5,725 (5,707 ) (100 ) Change in fair value of common stock warrant liability (575 ) 7,200 (7,775 ) (108 ) Other income (expense), net (246 ) (115 ) (131 ) 114 Total other income, net 4,396 13,511 (9,115 ) (67 ) Net loss and comprehensive loss $ (64,465 ) $ (37,685 ) $ (26,780 ) 71 Research and Development Expenses The following table summarizes our research and development expenses for the periods indicated (in thousands): Year Ended December 31, Change Change 2023 2022 $ % External costs: CRO, CMO and other third-party preclinical studies and clinical trials $ 30,116 $ 13,817 $ 16,299 118 Consulting costs 4,516 4,639 (123 ) (3 ) Other research and development costs, including laboratory materials and supplies 2,723 3,322 (599 ) (18 ) Total external costs 37,355 21,778 15,577 72 Internal costs: Personnel-related costs 9,866 8,326 1,540 18 Facilities and overhead costs 4,564 4,523 41 1 Total internal costs 14,430 12,849 1,581 12 Total research and development expense: $ 51,785 $ 34,627 $ 17,158 50 Research and development expenses increased by $17.2 million, from $34.6 million for the year ended December 31, 2022 to $51.8 million for the year ended December 31, 2023, mainly due to progression of our clinical trials, product development activities and the hiring of additional personnel.
We will pay a commission equal to 3.0% of the aggregate gross proceeds of any shares sold through the Agent pursuant to the Sales Agreement. We are not obligated to sell any shares under the Sales Agreement unless it is terminated earlier. The Sales Agreement will continue until all shares available under the Sales Agreement have been sold.
We will pay a commission equal to 3.0% of the aggregate gross proceeds of any shares sold through the Agent pursuant to the Sales Agreement. We are not obligated to sell any shares under the Sales Agreement. The Sales Agreement will continue until all shares available under the Sales Agreement have been sold unless it is terminated earlier.
The non-cash amounts consisted of $12.9 million net gain related to the changes in fair value of common stock warrant liability and the earnout liability, reduced by non-cash expenses, which included $4.1 million related to stock-based compensation expense, $1.0 million related to depreciation and amortization expense and $0.3 million non-cash lease expense.
The non-cash amounts consisted of $12.9 million net gain related to the changes in fair value of the common stock warrant liability and the earnout liability, reduced by non-cash expenses, which included $4.1 million related to stock-based compensation expense, $1.0 million related to depreciation and amortization expense and $0.3 million non-cash lease expense.
Our future financing requirements will depend on many factors, including: ● the timing, scope, progress, results and costs of research and development, preclinical and non-clinical studies and clinical trials for our current and future product candidates; ● the number, scope and duration of clinical trials required for regulatory approval of our current and future product candidates; ● the outcome, timing and costs of seeking and obtaining regulatory approvals from the FDA and comparable foreign regulatory authorities for our product candidates, including any requirement to conduct additional studies or generate additional data beyond that which we currently expect would be required to support a marketing application; 104 ● the costs of manufacturing clinical and commercial supplies of our current and future product candidates; ● the costs and timing of future commercialization activities, including product manufacturing, marketing, sales and distribution, for any of our product candidates for which we receive marketing approval; ● any product liability or other lawsuits related to our product candidates; ● the revenue, if any, received from commercial sales of any product candidates for which we may receive marketing approval; ● our ability to establish a commercially viable pricing structure and obtain approval for coverage and adequate reimbursement from third-party and government payers; ● the costs to establish, maintain, expand, enforce and defend the scope of our intellectual property portfolio, including the amount and timing of any payments we may be required to make, or that we may receive, in connection with licensing, preparing, filing, prosecuting, defending and enforcing our patents or other intellectual property rights; ● expenses incurred to attract, hire and retain skilled personnel; and ● the costs of operating as a public company.
Our future financing requirements will depend on many factors, including: ● the timing, scope, progress, results and costs of research and development, preclinical and non-clinical studies and clinical trials for our current and future product candidates; ● the number, scope and duration of clinical trials required for regulatory approval of our current and future product candidates; ● the outcome, timing and costs of seeking and obtaining regulatory approvals from the FDA and comparable foreign regulatory authorities for our product candidates, including any requirement to conduct additional studies or generate additional data beyond that which we currently expect would be required to support a marketing application; ● the costs of manufacturing clinical and commercial supplies of our current and future product candidates; ● the costs and timing of future commercialization activities, including product manufacturing, marketing, sales and distribution, for any of our product candidates for which we receive marketing approval; 90 ● any product liability or other lawsuits related to our product candidates; ● the revenue, if any, received from commercial sales of any product candidates for which we may receive marketing approval; ● our ability to establish a commercially viable pricing structure and obtain approval for coverage and adequate reimbursement from third-party and government payers; ● the costs to establish, maintain, expand, enforce and defend the scope of our intellectual property portfolio, including the amount and timing of any payments we may be required to make, or that we may receive, in connection with licensing, preparing, filing, prosecuting, defending and enforcing our patents or other intellectual property rights; ● expenses incurred to attract, hire and retain skilled personnel; and ● the costs of operating as a public company.
We expect to incur increased expenses associated with operating as a public company, including significant legal, audit, accounting, regulatory, tax-related, director and officer insurance, investor relations and other expenses. We have incurred significant losses and negative cash flows from operations since our inception.
We expect to incur increased expenses associated with operating as a public company, including significant legal, audit, accounting, regulatory, tax-related, director and officer insurance, investor relations and other expenses. 83 We have incurred significant losses and negative cash flows from operations since our inception.
Each party incurs its own costs under these agreements. 99 Components of Results of Operations Operating Expenses Research and Development The largest component of our total operating expenses since our inception has been research and development activities, including the preclinical and clinical development of our product candidates.
Each party incurs its own costs under these agreements. Components of Results of Operations Operating Expenses Research and Development The largest component of our total operating expenses since our inception has been research and development activities, including the preclinical and clinical development of our product candidates.
We are also obligated to pay late-stage clinical development milestones and first commercial sales milestone payments of up to $9.0 million in total. We will also pay low single-digit royalties on net sales of licensed products.
We are also obligated to pay late-stage clinical development milestone payments and first commercial sales milestone payments of up to $9.0 million in total. We will also pay low single-digit royalties on net sales of licensed products.
These contracts generally provide for termination on notice or may have a potential termination fee if a purchase order is cancelled within a specified time, and therefore are cancelable contracts. We do not expect any such contract terminations and do not have any non-cancellable obligations under these agreements as of December 31, 2022.
These contracts generally provide for termination on notice or may have a potential termination fee if a purchase order is cancelled within a specified time, and therefore are cancelable contracts. We do not expect any such contract terminations and do not have any non-cancellable obligations under these agreements as of December 31, 2023.
To the extent that geopolitical events adversely affect our business prospects, financial condition, and results of operations, they may also have the effect of exacerbating many of the other risks described or referenced in the section titled “Risk Factors” in this Annual Report on Form 10-K such as those relating to the supply of materials for our product candidates, and the timing and possible disruptions of our ongoing and future preclinical studies and clinical trials, and our access to the financial markets.
To the extent that geopolitical and macroeconomic factors adversely affect our business prospects, financial condition, and results of operations, they may also have the effect of exacerbating many of the other risks described or referenced in the section titled “Risk Factors” in this Annual Report on Form 10-K such as those relating to the supply of materials for our product candidates, and the timing and possible disruptions of our ongoing and future preclinical studies and clinical trials, and our access to the financial markets.
References herein to “emerging growth company” have the meaning associated with it in the JOBS Act. 108
References herein to “emerging growth company” have the meaning associated with it in the JOBS Act.
Since Old Jasper’s inception in March 2018, we have devoted substantially all of our resources to performing research and development, enabling manufacturing activities in support of our product development efforts, hiring personnel, acquiring and developing our technology and product candidates, performing business planning, establishing our intellectual property portfolio, raising capital and providing general and administrative support for these activities.
Since our inception, we have devoted substantially all of our resources to performing research and development, enabling manufacturing activities in support of our product development efforts, hiring personnel, acquiring and developing our technology and product candidates, performing business planning, establishing our intellectual property portfolio, raising capital and providing general and administrative support for these activities.
Stanford License Agreement In March 2021, we entered into the Stanford License Agreement, pursuant to which we are required to pay annual license maintenance fees, beginning on the first anniversary of the effective date of the agreement and ending upon the first commercial sale of a product, method, or service in the licensed field of use, as follows: $25,000 for each first and second year, $35,000 for each third and fourth year, and $50,000 at each anniversary thereafter ending upon the first commercial sale.
Pursuant to the Stanford License Agreement we are required to pay annual license maintenance fees, beginning on the first anniversary of the effective date of the agreement and ending upon the first commercial sale of a product, method, or service in the licensed field of use, as follows: $25,000 for each first and second year, $35,000 for each third and fourth year, and $50,000 at each anniversary thereafter ending upon the first commercial sale.
As consideration for the services performed by Stanford under this agreement, we will pay Stanford a total of $0.9 million over approximately three years upon the achievement of the first development and clinical milestone, including FDA filings and patients’ enrollment. The first $0.3 million milestone was achieved in 2020 and paid by us in February 2021.
As consideration for the services performed by Stanford under this agreement, we agreed to pay Stanford a total of $0.9 million over approximately three years upon the achievement of the first development and clinical milestone, including FDA filings and patient enrollment. The first $0.3 million milestone was achieved in 2020 and paid by us in February 2021.
As consideration for the services performed by Stanford under this sponsored research agreement, we will pay Stanford a total of $0.9 million over approximately 3 years upon the achievement of development and clinical milestones, including FDA filings and patients’ enrollment. In February 2021, we paid $0.3 million related to the achievement of the first milestone under this agreement.
As consideration for the services performed by Stanford under this sponsored research agreement, we agreed to pay Stanford a total of $0.9 million over approximately three years upon the achievement of development and clinical milestones, including FDA filings and patient enrollment. In February 2021, we paid $0.3 million related to the achievement of the first milestone under this agreement.
We believe that the Shelf Registration Statement will provide us with the flexibility to raise additional capital to finance our operations as needed. From time to time, we may offer securities under our Shelf Registration Statement in response to market conditions or other circumstances if we believe such a plan of financing is in the best interests of our stockholders.
We believe that the S-3 will provide us with the flexibility to raise additional capital to finance our operations as needed. From time to time, we may offer securities under the S-3 in response to market conditions or other circumstances if we believe such a plan of financing is in the best interests of our stockholders.
Briquilimab is also being studied by our academic and institutional partners, Stanford University and National Institutes of Health, in other transplant settings, including Fanconi Anemia, sickle cell disease (“SCD”), chronic granulomatous disease and GATA-2 Type myelodysplastic syndromes (“MDS”). We intend to become a fully integrated discovery, development and commercial company in the field of mast and stem cell therapeutics.
Briquilimab is also being studied by our academic and institutional partners, Stanford University and the National Institutes of Health, in other transplant settings, including Fanconi Anemia (“FA”), sickle cell disease (“SCD”), chronic granulomatous disease and GATA-2 Type MDS. We intend to become a fully integrated discovery, development and commercial company in the field of mast cell therapeutics.
JOBS Act The Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a U.S.
Emerging Growth Company and Smaller Reporting Company Status The Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a U.S.
The terms of any offering under the Shelf Registration Statement will be established at the time of such offering and will be described in a prospectus supplement to the Shelf Registration Statement filed with the SEC prior to the completion of any such offering.
The terms of any offering under the S-3 will be established at the time of such offering and will be described in a prospectus supplement to the S-3 filed with the SEC prior to the completion of any such offering.
The changes in our net operating assets and liabilities were primarily due to an increase of $2.9 million in accounts payable due to the timing of payments to our vendors, an increase of $1.0 million in accrued expenses and other current liabilities and a decrease of $0.6 million in other receivables, partially offset by $2.2 million increase in prepaid expenses and other current assets, a $0.3 million increase in other non-current assets, a decrease in other non-current liabilities of $0.2 million and a decrease in operating lease liability of $0.1 million.
The changes in our net operating assets and liabilities were primarily due to an increase of $2.8 million in accrued expenses and other current liabilities, an increase of $2.4 million in accounts payable, a decrease of $0.7 million in other receivables and a decrease of $0.8 million in prepaid expenses and other current assets, offset by a decrease of $0.9 million in operating lease liability, an increase of $0.6 million in other non-current assets, and a decrease of $0.1 million in other non-current liabilities.
As of December 31, 2022, our rent commitments under the lease agreement are $1.1 million within the next 12 months from December 31, 2022, and $3.1 million for the remainder of the lease term.
As of December 31, 2023, our rent commitments under the lease agreement are $1.2 million within the next 12 months from December 31, 2023, and $1.9 million for the remainder of the lease term.
Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.
Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
We recorded stock-based compensation expense of $4.1 million and $1.0 million for the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022, there was $8.2 million of total unrecognized compensation expense, which we expect to recognize over a remaining weighted-average period of 2.3 years.
We recorded stock-based compensation expense of $5.2 million and $4.1 million for the years ended December 31, 2023 and 2022, respectively. As of December 31, 2023, there was $9.4 million of total unrecognized compensation expense, which we expect to recognize over a remaining weighted-average period of 2.83 years.
Upon the closing of the Business Combination on September 24, 2021, we recognized earnout liability related to the Sponsor Earnout Shares placed in escrow. These shares will be released from escrow upon achieving agreed upon common stock price targets within the specified period.
Our earnout liability relates to the Sponsor Earnout Shares placed in escrow upon the closing of the Business Combination in September 2021. These shares will be released from escrow upon achieving agreed-upon common stock price targets within the specified period.
We have incurred significant losses and negative cash flows from operations since our inception. As of December 31, 2022, we had an accumulated deficit of $105.1 million.
We have incurred significant losses and negative cash flows from operations since our inception. As of December 31, 2023, we had an accumulated deficit of $169.6 million.
During the years ended December 31, 2022 and 2021, we incurred net losses of $37.7 million and $30.6 million, respectively. We generated negative operating cash flows of $45.9 million and $33.7 million for the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022, we had an accumulated deficit of $105.1 million.
During the years ended December 31, 2023 and 2022, we incurred net losses of $64.5 million and $37.7 million, respectively. We generated negative operating cash flows of $52.1 million and $45.9 million for the years ended December 31, 2023 and 2022, respectively. As of December 31, 2023, we had an accumulated deficit of $169.6 million.
Actual results may differ from these estimates under different assumptions or conditions. 106 While our significant accounting policies are described in more detail in Note 2 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our consolidated financial statements.
While our significant accounting policies are described in more detail in Note 2 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our consolidated financial statements.
External CRO, CMO and other third-party preclinical studies and clinical trials expenses decreased by $1.5 million, from $15.3 million for the year ended December 31, 2021 to $13.8 million for the year ended December 31, 2022.
External CRO, CMO and other third-party preclinical studies and clinical trials expenses increased by $16.3 million, from $13.8 million for the year ended December 31, 2022 to $30.1 million for the year ended December 31, 2023.
We are also developing briquilimab as a one-time conditioning therapy in various stem cell transplant settings such as severe combined immunodeficiency (“SCID”) for which we are currently conducting a Phase 1/2 clinical trial in patients who have failed a previous stem cell transplant.
We are also developing briquilimab as a one-time conditioning therapy in severe combined immunodeficiency (“SCID”) patients undergoing a second stem cell transplant for which we are currently conducting a Phase 1/2 clinical trial.
Employee payroll and related expenses increased by $2.9 million, from $2.3 million for the year ended December 31, 2021 to $5.2 million for the year ended December 31, 2022, as a result of $1.5 million of higher stock based compensation and continued hiring of executives and administrative employees.
Employee payroll and related expenses increased by $2.3 million, from $5.2 million for the year ended December 31, 2022 to $7.5 million for the year ended December 31, 2023, as a result of continued hiring of executives and administrative employees. Stock-based compensation expenses were $3.6 million and $2.7 million for the years ended December 31, 2023 and 2022, respectively.
In order to assist in funding our future operations, including our planned clinical trials, on October 7, 2022, we filed a universal shelf registration statement on Form S-3 with the SEC, and which was declared effective on October 18, 2022 and will expire on October 18, 2025 (the “Shelf Registration Statement”), which allows us to, from time to time, offer up to $150.0 million of securities, including any combination of common stock, preferred stock, debt securities, warrants, rights, units and depositary shares.
In order to assist in funding our future operations, including our planned clinical trials, on April 28, 2023, we filed a universal shelf registration statement on Form S-3 with the SEC, which was declared effective on May 5, 2023 and will expire on May 5, 2026 (the “S-3”), which allows us to, from time to time, offer up to $250.0 million of securities, including any combination of common stock, preferred stock, debt securities, warrants, rights, units and depositary shares.
All products are in development as of December 31, 2022, and no such royalties were due as of such date and no milestones were achieved. 105 Cash Flows The following table summarizes our sources and uses of cash for the periods presented (in thousands): Year ended December 31, 2022 2021 Net cash used in operating activities $ (45,858 ) $ (33,678 ) Net cash used in investing activities (576 ) (2,428 ) Net cash provided by financing activities 55 100,969 Net (decrease) increase in cash and cash equivalents and restricted cash $ (46,379 ) $ 64,863 Cash Flows from Operating Activities Net cash used in operating activities was $45.9 million and $33.7 million for the years ended December 31, 2022 and 2021, respectively.
All products are in development as of December 31, 2023, and no such royalties were due as of such date and no milestones were achieved. 91 Cash Flows The following table summarizes our sources and uses of cash for the periods presented (in thousands): Year ended December 31, 2023 2022 Net cash used in operating activities $ (52,067 ) $ (45,858 ) Net cash used in investing activities (267 ) (576 ) Net cash provided by financing activities 100,971 55 Net increase (decrease) in cash and cash equivalents and restricted cash $ 48,637 $ (46,379 ) Cash Flows from Operating Activities Net cash used in operating activities was $52.1 million and $45.9 million for the years ended December 31, 2023 and 2022, respectively.
Cash used in operating activities in the year ended December 31, 2021 was primarily due to our net loss for the period of $30.6 million adjusted by non-cash net gain charges of $4.7 million and a net change of $1.6 million in our net operating assets and liabilities.
Cash used in operating activities in the year ended December 31, 2023 was primarily due to our net loss for the period of $64.5 million, adjusted by non-cash net loss of $7.3 million and a net change of $5.1 million in our net operating assets and liabilities.
The decrease is primarily due to a $0.4 million decrease in CRO expenses, a $0.3 million decrease in expenses related to pre-clinical studies, a $0.2 million decrease in Chemistry, Manufacturing and Controls expenses and a $0.6 million decrease in other third-party research and development expenses.
The increase is primarily due to a $14.0 million increase in manufacturing expenses and a $2.6 million increase in CRO expenses, partially offset by a $0.2 million decrease in expenses related to pre-clinical studies, and a $0.2 million decrease in other third-party research and development expenses.
As a result of the uncertainties discussed above, we are unable to determine the duration and completion costs of our research and development projects or if, when and to what extent we will generate revenue from the commercialization and sale of our product candidates, if approved. 100 Our future research and development costs may vary significantly based on factors, such as: ● the scope, rate of progress, expense and results of our discovery and preclinical development activities; ● the costs and timing of our chemistry, manufacturing and controls activities, including fulfilling cGMP-related standards and compliance, and identifying and qualifying suppliers; ● per patient clinical trial costs; ● the number of trials required for approval; ● the number of sites included in our clinical trials; ● the countries in which the trials are conducted; ● delays in adding a sufficient number of trial sites and recruiting suitable patients to participate in our clinical trials; ● the number of patients that participate in the trials; ● the number of doses that patients receive; ● patient drop-out or discontinuation rates; ● potential additional safety monitoring requested by regulatory agencies; ● the duration of patient participation in the trials and follow up; ● the cost and timing of manufacturing our product candidates; ● the phase of development of our product candidates; ● the efficacy and safety profile of our product candidates; ● the timing, receipt, and terms of any approvals from applicable regulatory authorities, including the FDA and non-U.S. regulators; ● maintaining a continued acceptable safety profile of our product candidates following approval, if any, of our product candidates; ● significant and changing government regulation and regulatory guidance; ● changes in the standard of care on which a clinical development plan was based, which may require new or additional trials; ● the extent to which we establish additional strategic collaborations or other arrangements; and ● the impact of any business interruptions to our operations or to those of the third parties with whom we work, particularly in light of the current COVID-19 pandemic environment. 101 General and Administrative General and administrative expenses consist primarily of personnel costs and expenses, including salaries, employee benefits, stock-based compensation for our executive and other administrative personnel; legal services, including relating to intellectual property and corporate matters; accounting, auditing, consulting and tax services; insurance; and facility and other allocated costs not otherwise included in research and development expenses.
Our future research and development costs may vary significantly based on factors, such as: ● the scope, rate of progress, expense and results of our discovery and preclinical development activities; ● the costs and timing of our chemistry, manufacturing and controls activities, including fulfilling cGMP-related standards and compliance, and identifying and qualifying suppliers; ● per patient clinical trial costs; ● the number of trials required for approval; ● the number of sites included in our clinical trials; 86 ● the countries in which the trials are conducted; ● delays in adding a sufficient number of trial sites and recruiting suitable patients to participate in our clinical trials; ● the number of patients that participate in the trials; ● the number of doses that patients receive; ● patient drop-out or discontinuation rates; ● potential additional safety monitoring requested by regulatory agencies; ● the duration of patient participation in the trials and follow up; ● the cost and timing of manufacturing our product candidates; ● the phase of development of our product candidates; ● the efficacy and safety profile of our product candidates; ● the timing, receipt, and terms of any approvals from applicable regulatory authorities, including the FDA and non-U.S. regulators; ● maintaining a continued acceptable safety profile of our product candidates following approval, if any, of our product candidates; ● significant and changing government regulation and regulatory guidance; ● changes in the standard of care on which a clinical development plan was based, which may require new or additional trials; ● the extent to which we establish additional strategic collaborations or other arrangements; and ● the impact of any business interruptions to our operations or to those of the third parties with whom we work, particularly in light of geopolitical and macroeconomic trends.
General and Administrative Expenses General and administrative expenses increased by $5.2 million, from $11.4 million for the year ended December 31, 2021 to $16.6 million for the year ended December 31, 2022.
General and Administrative Expenses General and administrative expenses increased by $0.5 million, from $16.6 million for the year ended December 31, 2022 to $17.1 million for the year ended December 31, 2023.
Cash Flows from Investing Activities Cash used in investing activities was $0.6 million and $2.4 million for the years ended December 31, 2022 and 2021, respectively, which primarily consisted of purchases of the lab equipment and leasehold improvements.
Cash Flows from Investing Activities Cash used in investing activities was $0.3 million for the year ended December 31, 2023, which consisted of purchases of lab equipment and $0.6 million for the year ended December 31, 2022, which consisted of purchases of furniture and fixtures, lab equipment and leasehold improvements.
The non-cash charges consisted of $6.3 million net gain related to the changes in fair value of a derivative liability, common stock warrant liability and the earnout liability, reduced by non-cash expenses, which included $1.0 million related to stock-based compensation expense, $0.4 million related to depreciation and amortization expense and $0.2 million related to non-cash lease expense.
The non-cash amounts consisted of $5.2 million related to stock-based compensation expense, $1.1 million related to depreciation and amortization expense, $0.6 million net loss related to the changes in the fair value of the common stock warrant liability and the earnout liability, and $0.4 million non-cash lease expense.
Our external costs by program for the years ended December 31, 2022 and 2021 were as follows (in thousands): Year Ended December 31, 2022 2021 Briquilimab platform $ 11,358 $ 11,035 MDS/AML clinical trial 4,725 3,829 SCID clinical trial 2,566 2,840 Other 3,129 1,251 Total external costs $ 21,778 $ 18,955 Personnel-related costs, including employee payroll and related expenses increased by $3.0 million, from $5.3 million for the year ended December 31, 2021 to $8.3 million for the year ended December 31, 2022, as a result of hiring additional employees in our research and development organization.
Other external research and development costs decreased by $0.6 million from $3.3 million for the year ended December 31, 2022 to $2.7 million for the year ended December 31, 2023 due to decreases in purchases of laboratory materials, supplies and services and other miscellaneous costs. 88 Our external costs by program for the years ended December 31, 2023 and 2022 were as follows (in thousands): Year Ended December 31, 2023 2022 Briquilimab platform $ 25,698 $ 11,358 MDS/AML clinical trial 3,955 4,725 SCID clinical trial 2,917 2,566 Chronic Urticarias 3,557 — Other 1,228 3,129 Total external costs $ 37,355 $ 21,778 Personnel-related costs, including employee payroll and related expenses increased by $1.5 million, from $8.3 million for the year ended December 31, 2022 to $9.9 million for the year ended December 31, 2023, as a result of hiring additional employees in our research and development organization.
We recognized $7.2 million and $0.5 million of other income related to the decrease in the fair value of the common stock warrants for the years ended December 31, 2022 and 2021, respectively due to the decrease in the closing prices of the warrants during the respective period.
We recognized $0.6 million of other expense and $7.2 million of other income related to the change in the fair value of the common stock warrants for the years ended December 31, 2023 and 2022, respectively.
Expected Dividend — The Black-Scholes valuation model calls for a single expected dividend yield as an input. To date, we have not declared or paid any dividends. Common Stock Fair Value — We estimate the fair value of our common stock based on the closing quoted market price of our common stock as reported on the Nasdaq Capital Market.
To date, we have not declared or paid any dividends. 93 Common Stock Fair Value — We estimate the fair value of our common stock based on the closing quoted market price of our common stock as reported on the Nasdaq Capital Market.
Our ability to access capital when needed is not assured and, if capital is not available to us when, and in the amounts, needed, we may be required to significantly curtail, delay or discontinue one or more of our research or development programs or the commercialization of any product candidate, or be unable to expand our operations or otherwise capitalize on our business opportunities, as desired, which could materially harm our business, financial condition and results of operations. 96 We expect our expenses will increase substantially in connection with our ongoing and planned activities, as we: ● advance product candidates through preclinical studies and clinical trials; ● procure the manufacture of supplies for our preclinical studies and clinical trials; ● acquire, discover, validate, and develop additional product candidates; ● attract, hire and retain additional personnel; ● operate as a public company; ● implement operational, financial and management systems; ● pursue regulatory approval for any product candidates that successfully complete clinical trials; ● establish a sales, marketing, and distribution infrastructure to commercialize any product candidate for which we may obtain marketing approval and related commercial manufacturing build-out; and ● obtain, maintain, expand, and protect our portfolio of intellectual property rights.
We expect our expenses will increase substantially in connection with our ongoing and planned activities, as we: ● advance product candidates through preclinical studies and clinical trials; ● procure the manufacture of supplies for our preclinical studies and clinical trials; ● acquire, discover, validate, and develop additional product candidates; ● attract, hire and retain additional personnel; ● operate as a public company; ● implement operational, financial and management systems; ● pursue regulatory approval for any product candidates that successfully complete clinical trials; ● establish a sales, marketing, and distribution infrastructure to commercialize any product candidate for which we may obtain marketing approval and related commercial manufacturing build-out; and ● obtain, maintain, expand, and protect our portfolio of intellectual property rights.
(“Amgen”) for the development and commercialization of the briquilimab monoclonal antibody in all indications and territories worldwide. We also have an exclusive license agreement with Stanford for the right to use briquilimab in the clearance of stem cells prior to the transplantation of HSCs.
We also have an exclusive license agreement with Stanford University for the right to use briquilimab in the clearance of diseased stem cells prior to the transplantation of HSCs.
We also have a clinical trial agreement with the National Cancer Institute (“NCI”) for the clinical development of briquilimab for the treatment of GATA2 deficiency, whereby NCI will perform the preclinical studies and submit an IND for this indication to the FDA, and we will provide materials to use in such studies.
The third and final milestone in the amount of $0.3 million was achieved in July 2023. 85 Other Collaboration and Clinical Trial Agreements We have a clinical trial agreement with the National Cancer Institute (“NCI”) for the clinical development of briquilimab for the treatment of GATA2 deficiency, whereby NCI will perform the preclinical studies and submit an investigational new drug application (“IND”) for this indication to the FDA, and we will provide materials to use in such studies.
Patent Application Serial Number 12/447,634 (publication number US 2010/0226927 Al) and know-how for the purpose of depleting endogenous blood stem cells in patients for whom hematopoietic cell transplantation is indicated. 98 Collaboration and Clinical Trial Agreements Collaboration with Stanford University Effective September 2020, we entered into a sponsored research agreement with Stanford, pursuant to which Stanford will execute a Phase 1/2 clinical trial utilizing briquilimab to treat Fanconi Anemia patients in Bone Marrow Failure requiring allogeneic transplant with non-sibling donors at Stanford Lucile Packard Children’s Hospital.
Collaboration and Clinical Trial Agreements Collaboration with Stanford University Effective September 2020, we entered into a sponsored research agreement with Stanford, pursuant to which Stanford will execute a Phase 1/2 clinical trial utilizing briquilimab to treat Fanconi Anemia patients in Bone Marrow Failure requiring allogeneic transplant with non-sibling donors at Stanford Lucile Packard Children’s Hospital.
Management expects that our existing cash and cash equivalents, together with the total estimated net proceeds of $101.4 million from our public offering in January 2023 and the sale of shares pursuant to the ATM Offering in January 2023, will be sufficient to fund our operating plan for at least twelve months from the date of filing of this Annual Report on Form 10-K.
We expect that our existing cash and cash equivalents, together with the cash received from the underwritten offering in February 2024, will be sufficient to fund our operating plan for at least twelve months from the date of filing of this Annual Report on Form 10-K.
Other Income, Net Total other income, net increased by $7.3 million, from $6.2 million net income for the year ended December 31, 2021 to $13.5 million for the year ended December 31, 2022.
Total Other Income, Net Total other income, net decreased by $9.1 million, from $13.5 million net income for the year ended December 31, 2022 to $4.4 million net income for the year ended December 31, 2023.
Stock-Based Compensation We measure stock-based awards made to employees and non-employees based on the estimated fair values of the awards as of the grant dates using the Black-Scholes option-pricing model.
Stock-Based Compensation We measure stock-based awards made to employees and non-employees based on the estimated fair values of the awards as of the grant dates using the Black-Scholes option-pricing model. The model requires management to make a number of assumptions including common stock fair value, expected volatility, expected term, risk-free interest rate and expected dividend yield.
On November 10, 2022, we filed under the Shelf Registration Statement a prospectus supplement with the SEC in connection with the ATM Offering (the “ATM Prospectus Supplement”), pursuant to which we may offer and sell shares of common stock having an aggregate offering price of up to $15.5 million.
On May 5, 2023, we filed with the SEC a prospectus under the S-3 in connection with the ATM Offering (the “ATM Prospectus”), pursuant to which we may offer and sell shares of common stock having an aggregate offering price of up to $75.0 million. As of December 31, 2023, there have been no sales pursuant to the ATM Prospectus.
The second $0.3 million milestone was achieved in February 2022 and paid by us in March 2022. The third milestone is based on the progress of the clinical trials and will be recognized when achieved.
The second $0.3 million milestone was achieved in February 2022 and paid by us in March 2022.
These financial instruments were classified as liabilities in our consolidated balance sheets and re-measured at each reporting period end until they are exercised, settled or have expired.
Other Income (Expense), Net Other income (expense), net includes foreign currency transactions gains and losses, interest income, changes in the fair value of common stock warrant liability and earnout liability. These financial instruments were classified as liabilities in our consolidated balance sheets and re-measured at each reporting period end until they are exercised, settled or have expired.
We recognized $5.7 million of other income related to the decrease in the fair value of the earnout liability for the year ended December 31, 2022, primarily as a result of the decrease in our common stock price, which decreased the estimated liability.
We recognized less than $0.1 million and $5.7 million of other income related to the decrease in the fair value of the earnout liability for the years ended December 31, 2023 and 2022, respectively, mainly due to the decrease in our common stock price during the respective periods.
Our goal is to expand the use of therapeutic agents targeting mast and stem cells as well as to expand curative stem cell transplants and gene therapies for all patients, including children and the elderly. 94 Our lead product candidate, briquilimab, is a monoclonal antibody designed to block stem cell factor (“SCF”) from binding to and signaling through the CD117 receptor on mast and stem cells.
Our lead product candidate, briquilimab, is a monoclonal antibody designed to block stem cell factor (“SCF”) from binding to and signaling through the CD117 (“c-Kit”) receptor on mast and stem cells.
This liability is recorded at fair value using Monte Carlo simulation model and is re-measured at each period end until shares are released or forfeited. The significant inputs used in the Monte Carlo model include the expected volatility of our common stock and the expected term when shares will be released.
The significant inputs used in the Monte Carlo model include the expected volatility of our common stock and the expected term when shares will be released.
Business Impact of the Geopolitical Events We are unable to predict the effect that geopolitical events, including the conflict in Ukraine, global inflation and rising interest rates, may have on our operations.
Business Impact of the Geopolitical and Macroeconomic Factors We are unable to predict the effect that geopolitical and macroeconomic factors, including inflation, supply chain issues, rising interest rates, future bank failures, increased geopolitical tensions between the U.S. and China and the impact of the Russia-Ukraine conflict and the Israel-Hamas war, may have on our operations.
To develop the appropriate commercial infrastructure internally, we would have to invest financial and management resources, some of which would have to be deployed prior to any confirmation that briquilimab will be approved.
To develop the appropriate commercial infrastructure internally, we would have to invest financial and management resources, some of which would have to be deployed prior to any confirmation that briquilimab will be approved. 84 Because of the numerous risks and uncertainties associated with product development, we are unable to predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability.
Cash received was reduced by $5.3 million related to expenses paid by us related to the Business Combination. Critical Accounting Policies and Significant Judgments and Estimates Our critical accounting policies are disclosed in Note 2 of the notes to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Cash provided by financing activities for the year ended December 31, 2022 was $0.1 million, which primarily consisted of cash received from the exercise of stock options and the purchase of shares under our employee stock purchase plan. 92 Critical Accounting Policies and Significant Judgments and Estimates Our critical accounting policies are disclosed in Note 2 of the notes to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Our goal is to advance our product candidates through regulatory approval and bring them to the commercial market based on the data from our clinical trials and communications with regulatory agencies and payor communities. We expect to continue to advance our pipeline and innovate through our research platform. We have an exclusive license agreement with Amgen Inc.
We are developing our product candidates to be used individually or, in some cases, in combination with other therapeutics. Our goal is to advance our product candidates through regulatory approval and bring them to the commercial market based on the data from our clinical trials and communications with regulatory agencies and payor communities.
Other expenses, including insurance, office supplies, subscriptions and other miscellaneous expenses, increased by $0.4 million for the year ended December 31, 2022 as compared to expenses for the year ended December 31, 2021, as we continued expanding our operations to support our business strategy and product development.
Rent expenses decreased by $0.1 million for the year ended December 31, 2023 as compared to the year ended December 31, 2022. Other expenses, including insurance, office supplies, subscriptions and other miscellaneous expenses, decreased by $0.2 million for the year ended December 31, 2023 as compared to the year ended December 31, 2022, primarily related to decreased insurance expenses.
Expenses related to professional consulting services increased by $1.4 million, from $3.2 million for the year ended December 31, 2021 to $4.6 million for the year ended December 31, 2022. The increase was related to external consulting incurred to supplement our research and development personnel.
Expenses related to professional consulting services decreased by $0.1 million, from $4.6 million for the year ended December 31, 2022 to $4.5 million for the year ended December 31, 2023.
Cash Flows from Financing Activities Cash provided by financing activities for the year ended December 31, 2022 was $0.1 million, which primarily consisted of cash received from exercise of stock options and the purchase of shares under our employee stock purchase plan.
Cash Flows from Financing Activities Cash provided by financing activities for the year ended December 31, 2023 was $101.0 million, which consisted primarily of net proceeds from the issuance and sale of shares of common stock in an underwritten public offering and the ATM Offering of $101.5 million, cash received from the exercise of stock options of $0.4 million and cash received from the issuance of common stock upon employee stock purchase plan purchases of $0.1 million, partially offset by taxes withheld and paid related to net settlement of equity awards of $1.0 million.
Expected Term — Expected term represents the period that our stock-based awards are expected to be outstanding and is determined using the simplified method. Risk-Free Interest Rate — The risk-free interest rate is based on the U.S. Treasury zero-coupon issued in effect at the time of grant for periods corresponding with the expected term of the option.
Risk-Free Interest Rate — The risk-free interest rate is based on the U.S. Treasury zero-coupon issued in effect at the time of grant for periods corresponding with the expected term of the option. Expected Dividend — The Black-Scholes valuation model calls for a single expected dividend yield as an input.
The SCF/CD117 pathway is a survival signal for mast and stem cells and we believe that blocking this pathway may lead to depletion of these cells from skin and bone marrow environments. Currently, we are developing briquilimab as chronic therapy for CSU and LR-MDS.
The SCF/c-Kit pathway is a survival signal for mast cells and we believe that blocking this pathway may lead to depletion of these cells from skin, which could lead to significant clinical benefit for patients with mast-cell driven diseases such as chronic urticarias.
If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and may be forced to reduce our operations. 97 Business Impact of the COVID-19 Pandemic While conditions related to the COVID-19 pandemic improved in 2022 compared to 2021, the pandemic continues to be dynamic and near-term challenges across the economy remain.
Even if we are able to generate revenue from the sale of our product candidates, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and may be forced to reduce our operations.
Stock-based compensation expenses related to awards granted to our employees and directors increased by $0.7 million, from $0.6 million for the year ended December 31, 2021 to $1.3 million for the year ended December 31, 2022. Facilities and overheads include common facilities, human resources and information technology related expenses allocated to research and development.
Facilities and overheads include common facilities, human resources and information technology related expenses allocated to research and development and were steady during the year ended December 31, 2023 compared to year ended December 31, 2022.
The warrants were concluded to be derivative financial instruments and are measured at fair value at each reporting period end until these are exercised, have expired or are redeemed. These warrants are publicly traded, and the fair value is estimated using the closing price of a warrant at the period end.
These warrants are publicly traded, were classified as liabilities and were remeasured at fair value, which was the closing market price of a warrant, at the end of each reporting period until January 2023.
Expenses related to professional consulting services increased by $1.9 million, from $6.4 million for the year ended December 31, 2021 to $8.3 million for the year ended December 31, 2022 due to increased spending on consulting, recruiting, legal, audit, accounting and other services to support our growing operations as a public company.
Expenses related to professional consulting services decreased by $1.5 million, from $8.3 million for the year ended December 31, 2022 to $6.8 million for the year ended December 31, 2023 as we hired more internal employees for our administrative functions.
The model requires management to make a number of assumptions including common stock fair value, expected volatility, expected term, risk-free interest rate and expected dividend yield. 107 Expected Volatility — Expected volatility is estimated by studying the volatility of the prices of shares of common stock of comparable public companies for similar terms.
Expected Volatility — Expected volatility is estimated by studying the volatility of the prices of shares of common stock of comparable public companies for similar terms. Expected Term — Expected term represents the period that our stock-based awards are expected to be outstanding and is determined using the simplified method.
In February 2022, the second milestone was achieved, and we paid $0.3 million in March 2022. The third milestone is based on the progress of the clinical trials and will be recognized when achieved.
In February 2022, the second milestone was achieved, and we paid $0.3 million in March 2022. The third milestone in the amount of $0.3 million was achieved in July 2023 and was recognized as a research and development expense in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2023.
Other external research and development costs increased by $2.8 million from $0.5 million for the year ended December 31, 2021 to $3.3 million for the year ended December 31, 2022 due to increases in purchases of laboratory materials, supplies and services and other miscellaneous costs.
Interest income increased by $4.5 million, from $0.7 million for the year ended December 31, 2022 to $5.2 million for the year ended December 31, 2023, primarily due to higher cash balances invested in money market funds and higher interest rates.
Because of the numerous risks and uncertainties associated with product development, we are unable to predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability. Even if we are able to generate revenue from the sale of our product candidates, we may not become profitable.
As a result of the uncertainties discussed above, we are unable to determine the duration and completion costs of our research and development projects or if, when and to what extent we will generate revenue from the commercialization and sale of our product candidates, if approved.
We are focused on the development and commercialization of safer and more effective therapeutic agents for diseases such as Chronic Spontaneous Urticaria (“CSU”), Lower to Intermediate Risk Myelodysplastic Syndrome (“LR-MDS”) and novel conditioning regimens for stem cell transplantation and ex-vivo gene therapy, a technique in which genetic manipulation of cells is performed outside of the body prior to transplantation.
Overview We are a clinical-stage biotechnology company focused on developing therapeutics targeting mast cell driven diseases such as Chronic Spontaneous Urticaria (“CSU”) and Chronic Inducible Urticaria (“CIndU”). We also have ongoing programs in diseases where targeting diseased hemopoietic stem cells can provide benefits, such as Lower to Intermediate Risk Myelodysplastic Syndrome (“LR-MDS”), and stem cell transplant conditioning regimens.
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Overview We are a clinical-stage biotechnology company dedicated to enabling cures through therapeutics targeting mast and hemopoietic stem cells.
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To that end, we have commenced a Phase 1b/2a clinical study in CSU, are commencing a Phase 1b/2a clinical study in CIndU and are evaluating the potential for briquilimab in other mast cell driven diseases.
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Our drug development pipeline includes multiple product candidates designed to target mast and/or hematopoietic stem cells.
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We also believe that utilizing briquilimab to block SCF binding and signaling can result in the depletion of diseased hematopoietic stem cells (“HSCs”) from the bone marrow in certain hematologic malignancies such as myelodysplastic syndrome (“MDS”), and as a result, we are currently enrolling a Phase 1 trial evaluating briquilimab as a second-line therapy in patients with LR-MDS.
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Our lead product candidate, briquilimab (formerly known as JSP191), is in clinical development as a novel therapeutic antibody that targets mast and stem cells in various diseases and as a conditioning agent to clear hematopoietic stem cells from bone marrow in patients prior to undergoing allogeneic stem cell therapy or stem cell gene therapy.
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We expect to continue to broaden our pipeline with additional mast cell indications and next-generation products by leveraging our research organization. We have an exclusive license agreement with Amgen Inc. (“Amgen”) for the development and commercialization of the briquilimab monoclonal antibody in all indications and territories worldwide.
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We are also developing engineered hematopoietic stem cells product candidates reprogrammed using mRNA delivery (“mRNA stem cell platform”) and gene editing that have a competitive advantage over endogenous hematopoietic stem cells (“HSCs”) because they may permit higher levels of engraftment without the need for toxic conditioning.
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We had cash and cash equivalents of $86.9 million as of December 31, 2023. In February 2024, we sold 3,900,000 shares of our common stock in an underwritten offering for estimated net proceeds of $47.2 million.
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We also plan to continue to expand our pipeline to include other novel mast and stem cell therapies based on immune modulation, graft engineering or cell and gene therapies.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk We had cash and cash equivalents of $38.3 million as of December 31, 2022, which consisted of checking account and money market funds.
Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk We had cash and cash equivalents of $86.9 million as of December 31, 2023, which consisted of checking account and money market funds.
We believe that inflation has not had a material effect on our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.
We believe that inflation has not had a material effect on our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. 95
We believe a hypothetical 10% chance in exchange rates during any of the periods presented would not have a material effect on our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. Effects of Inflation Inflation generally affects us by increasing our cost of labor and in the future our clinical trial costs.
We believe a hypothetical 10% change in exchange rates during any of the periods presented would not have a material effect on our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. Effects of Inflation Inflation generally affects us by increasing our cost of labor and in the future our clinical trial costs.
We had no outstanding debt as of December 31, 2022. To minimize risk in the future, we intend to maintain our portfolio of cash equivalents in institutional market funds that are composed of U.S. Treasury and U.S. Treasury-backed repurchase agreements or short-term U.S. Treasury securities.
We had no outstanding debt as of December 31, 2023. To minimize risk in the future, we intend to maintain our portfolio of cash equivalents in institutional market funds that are composed of U.S. Treasury and U.S. Treasury-backed repurchase agreements or short-term U.S. Treasury securities.