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What changed in Kezar Life Sciences, Inc.'s 10-K — 2024 vs 2025

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

+357 added−404 removedSource: 10-K (2026-03-27) vs 10-K (2024-12-31)

Top changes in Kezar Life Sciences, Inc.'s 2025 10-K

357 paragraphs added · 404 removed · 260 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

66 edited+19 added−56 removed157 unchanged
Biggest changeDepartment of Health and Human Services, or HHS, to negotiate the price of certain high-expenditure, single-source drugs and biologics that have been on the market for at least seven years, covered under Medicare, and subject drug manufacturers to civil monetary penalties and a potential excise tax by offering a price that is not equal to or less than the negotiated “maximum fair price” for such drugs and biologics under the law, or the Medicare Drug Price Negotiation Program, and (ii) imposes rebates with respect to certain drugs and biologics covered under Medicare Part B or Medicare Part D to penalize price increases that outpace inflation.
Biggest changeHHS has also been empowered to negotiate the price of certain single-source drugs that have been on the market for at least seven (7) years and biologics that have been on the market for at least eleven (11) years covered under Medicare as part of the Medicare Drug Price Negotiation Program.
The current administration is pursuing policies to reduce regulations and expenditures across government including at HHS, the FDA, CMS and related agencies. These actions, presently directed by executive orders or memoranda from the Office of Management and Budget, may propose policy changes that create additional uncertainty for our business.
The current administration is pursuing policies to reduce regulations and expenditures across government agencies including at HHS, the FDA, CMS and related agencies. These actions, presently directed by executive orders or memoranda from the Office of Management and Budget, may propose policy changes that create additional uncertainty for our business.
Many of our existing or potential competitors have substantially greater financial, technical and human resources than we do and significantly greater experience in the discovery and development of product candidates, as well as in obtaining regulatory approvals of those product candidates in the United States and in foreign countries.
Many of our existing or potential competitors have substantially greater financial, technical and human resources than we do and significantly greater experience in the development of product candidates, as well as in obtaining regulatory approvals of those product candidates in the United States and in foreign countries.
If our operations 16 Table of Contents are found to be in violation of any of the federal and state laws described above or any other governmental regulations that apply to us, we may be subject to significant penalties, including administrative, criminal and civil monetary penalties, damages, fines, disgorgement, imprisonment, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, contractual damages, reputational harm, diminished profits and future earnings, disgorgement, exclusion from participation in government healthcare programs and the curtailment or restructuring of our operations.
If our operations are found to be in violation of any of the federal and state laws described above or any other governmental regulations that apply to us, we may be subject to significant penalties, including administrative, criminal and civil monetary penalties, damages, fines, disgorgement, imprisonment, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, contractual damages, reputational harm, diminished profits and future earnings, disgorgement, exclusion from participation in government healthcare programs and the curtailment or restructuring of our operations.
If the FDA approves a sponsor’s marketing application for a designated orphan drug for use in the rare disease or condition for which it was designated, the sponsor is eligible for a seven-year period of marketing exclusivity, during which the FDA may not approve another sponsor’s marketing application for a drug with the same active moiety and intended for the same use or indication as the approved orphan drug, except in limited circumstances, such as if a subsequent sponsor demonstrates its product is clinically superior.
If the FDA approves a sponsor’s marketing application for a designated orphan drug for use in the rare disease or condition for which it was designated, the sponsor is eligible for a seven-year period of marketing exclusivity, during which the FDA may not approve another sponsor’s marketing application for a drug with the same active moiety and intended for the same use or indication as the approved orphan drug, except in limited circumstances, such as if a subsequent sponsor 12 Table of Contents demonstrates its product is clinically superior.
In over 15 peer-reviewed publications, our selective inhibitors of the immunoproteasome and related compounds have demonstrated strong therapeutic potential by blocking disease progressions in animal models multiple immune-mediated diseases. Additionally, this immunomodulatory response was broadly seen across many cell types of the immune system, including both T-cells and B-cells, and was demonstrated in a non-immunosuppressive manner.
In over 15 peer-reviewed publications, our selective inhibitors of the immunoproteasome and related compounds have demonstrated strong therapeutic potential by blocking disease progressions in animal models multiple immune-mediated diseases. Additionally, this immunomodulatory response was broadly seen across many cell types of the immune system, including both T-cells and B-cells, and was demonstrated in a 6 Table of Contents non-immunosuppressive manner.
Item 1A titled “Risks Related to Our Intellectual Property.” Trademarks and Know-How In connection with the ongoing development and advancement of our products and services in the United States and various international jurisdictions, we seek to create protection for our marks and enhance their value by pursuing trademarks and service marks where available and when appropriate.
Item 1A titled “Risks Related to Our Intellectual Property.” Trademarks and Know-How In connection with the ongoing development and advancement of our products and services in the United States and various international jurisdictions, we seek to create protection for our marks and enhance their value by pursuing 9 Table of Contents trademarks and service marks where available and when appropriate.
We may also be subject to state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, as well as state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers, marketing expenditures or drug pricing.
We may also be subject to state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, as well as 15 Table of Contents state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers, marketing expenditures or drug pricing.
Our product candidate, zetomipzomib, is a first-in-class selective immunoproteasome inhibitor that we are evaluating for the treatment of severe autoimmune diseases of high unmet medical need. We believe that the immunoproteasome is a validated target for the treatment of a wide variety of immune-mediated diseases given its ability to regulate multiple drivers of the inflammatory disease process.
Our product candidate, zetomipzomib, is a first-in-class selective immunoproteasome inhibitor in development for the treatment of severe autoimmune diseases of high unmet medical need. We believe that the immunoproteasome is a validated target for the treatment of a wide variety of immune-mediated diseases given its ability to regulate multiple drivers of the inflammatory disease process.
Orphan drug exclusivity could block the approval of one of our products for seven years if a competitor obtains approval for a drug with the same active moiety intended for the same indication before we do, unless we are able to demonstrate that grounds for withdrawal 13 Table of Contents of the orphan drug exclusivity exist, or that our product is clinically superior.
Orphan drug exclusivity could block the approval of one of our products for seven years if a competitor obtains approval for a drug with the same active moiety intended for the same indication before we do, unless we are able to demonstrate that grounds for withdrawal of the orphan drug exclusivity exist, or that our product is clinically superior.
Commencing upon the first commercial sale of a licensed product, we must make royalty payments to Onyx on net sales of such licensed products based on tiered annual net sales thresholds at 7 Table of Contents varying royalty rates ranging in the mid to high single digits, subject to certain customary reductions.
Commencing upon the first commercial sale of a licensed product, we must make royalty payments to Onyx on net sales of such licensed products based on tiered annual net sales thresholds at varying royalty rates ranging in the mid to high single digits, subject to certain customary reductions.
Unless otherwise required by regulation, the pediatric data requirements do not apply to products with orphan designation. The FDA also may require submission of a risk evaluation and mitigation strategy, or REMS, plan to ensure that the benefits of the drug outweigh its risks.
Unless otherwise required by regulation, the pediatric data requirements do not apply to products with orphan designation. 11 Table of Contents The FDA also may require submission of a risk evaluation and mitigation strategy, or REMS, plan to ensure that the benefits of the drug outweigh its risks.
We require our employees, consultants and advisors to enter into confidentiality agreements prohibiting the disclosure of confidential information and requiring disclosure and assignment to us of intellectual property related to our business. For our product candidates, generally we initially pursue patent protection covering compositions of matter and methods of use.
We require our employees, consultants and advisors to enter into confidentiality agreements prohibiting the disclosure of confidential information and requiring disclosure and assignment to us of intellectual property related to our business. 8 Table of Contents For our product candidates, generally we initially pursue patent protection covering compositions of matter and methods of use.
An IND sponsor must submit the results of the nonclinical tests, together with 11 Table of Contents manufacturing information, analytical data and any available clinical data or literature, among other things, to the FDA as part of an IND application. Some nonclinical testing may continue even after the IND application is submitted.
An IND sponsor must submit the results of the nonclinical tests, together with manufacturing information, analytical data and any available clinical data or literature, among other things, to the FDA as part of an IND application. Some nonclinical testing may continue even after the IND application is submitted.
Post-Approval Requirements Drugs manufactured or distributed pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to recordkeeping, periodic reporting, product sampling and distribution, advertising and promotion and reporting of adverse experiences with the product.
Post-Approval Requirements Drugs manufactured or distributed pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to recordkeeping, periodic reporting, product sampling and 13 Table of Contents distribution, advertising and promotion and reporting of adverse experiences with the product.
The process required by the FDA before a drug may be marketed in the United States generally involves: • completion of preclinical laboratory tests, animal studies and formulation studies in compliance with the FDA’s good laboratory practice regulations; • submission to the FDA of an Investigational New Drug Application, or IND, which must become effective before human clinical trials may begin; • approval by an independent institutional review board, or IRB, at each clinical site before each trial may be initiated; • performance of adequate and well-controlled clinical trials, in accordance with good clinical practice, or GCP, requirements to establish the safety and efficacy of the proposed drug for each indication; • submission to the FDA of a New Drug Application, or NDA; • satisfactory completion of an FDA advisory committee review, if applicable; • satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product is produced to assess compliance with cGMP requirements, and to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity; • satisfactory completion of an FDA inspection of selected clinical sites to assure compliance with GCP and the integrity of the clinical data; • payment of user fees; and • FDA review and approval of the NDA.
The process required by the FDA before a drug may be marketed in the United States generally involves: • completion of preclinical laboratory tests, animal studies and formulation studies in compliance with the FDA’s good laboratory practice regulations; • submission to the FDA of an Investigational New Drug Application, or IND, which must become effective before human clinical trials may begin; • approval by an independent institutional review board, or IRB, at each clinical site before each trial may be initiated; • performance of adequate and well-controlled clinical trials, in accordance with good clinical practice, or GCP, requirements to establish the safety and efficacy of the proposed drug for each indication; • submission to the FDA of a New Drug Application, or NDA; • satisfactory completion of an FDA advisory committee review, if applicable; • satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product is produced to assess compliance with cGMP requirements, and to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity; • satisfactory completion of an FDA inspection of selected clinical sites to assure compliance with GCP and the integrity of the clinical data; • payment of user fees; and • FDA review and approval of the NDA. 10 Table of Contents Preclinical Studies Preclinical studies include laboratory evaluation of product chemistry, toxicity and formulation, as well as animal studies to assess potential safety and efficacy.
We expect to continue to file applications for new methods of treatment, clinical protocols, and other uses in view of results from ongoing drug discovery and development efforts.
We expect to continue to file applications for new methods of treatment, clinical protocols, and other uses in view of results from ongoing development efforts.
Further, the increased emphasis on managed healthcare in the United States and on country and regional pricing and reimbursement controls in the EU will put additional pressure on product pricing, reimbursement and usage, which may adversely affect our future product sales and results of operations.
Further, the increased emphasis on managed healthcare in the United States and on country and regional pricing and reimbursement controls in the EU will put additional pressure on product pricing, reimbursement and usage, which may adversely affect 16 Table of Contents our future product sales and results of operations.
If 8 Table of Contents zetomipzomib is approved by any regulatory agency, we intend to enter into agreements with one or more CMOs for its commercial production. We are currently administering zetomipzomib as a lyophilized product candidate, meaning it is freeze-dried and must be reconstituted with water prior to delivery to a patient.
If zetomipzomib is approved by any regulatory agency, we intend to enter into agreements with one or more CMOs for its commercial production. We are currently administering zetomipzomib as a lyophilized product candidate, meaning it is freeze-dried and must be reconstituted with water prior to delivery to a patient.
In cells of the immune system, the immunoproteasome is the predominant form. While both forms of the proteasome mediate protein degradation, the two forms of the proteasome accomplish this utilizing 6 Table of Contents different active sites. These active sites are responsible for cleaving and degrading proteins.
In cells of the immune system, the immunoproteasome is the predominant form. While both forms of the proteasome mediate protein degradation, the two forms of the proteasome accomplish this utilizing different active sites. These active sites are responsible for cleaving and degrading proteins.
The SEC maintains a website that contains reports, proxy and information statements and other information regarding our filings at www.sec.gov. The information found on our website is not incorporated by reference into this Annual Report on Form 10-K or any other report we file with or furnish to the SEC. 20 Table of Contents
The SEC maintains a website that contains reports, proxy and information statements and other information regarding our filings at www.sec.gov. The information found on our website is not incorporated by reference into this Annual Report on Form 10-K or any other report we file with or furnish to the SEC.
In addition to patent and trademark protection, we rely upon know-how and continuing technological innovation to develop and maintain our competitive position. We seek 10 Table of Contents to protect our proprietary information, in part, using confidentiality agreements with our commercial partners, collaborators, employees and consultants, and invention assignment agreements with our employees and consultants.
In addition to patent and trademark protection, we rely upon know-how and continuing technological innovation to develop and maintain our competitive position. We seek to protect our proprietary information, in part, using confidentiality agreements with our commercial partners, collaborators, employees and consultants, and invention assignment agreements with our employees and consultants.
See the section titled “Risk Factors – Risks Related to Our Business Operations, Employee Matters and Managing Growth” for additional information about the laws and regulations to which we are or may become subject to and about the risks to our business associated with such laws and regulations.
See the section titled “Risk Factors – Risks Related to Our Business Operations and Employee Matters” for additional information about the laws and regulations to which we are or may become subject to and about the risks to our business associated with such laws and regulations.
In total, our patent portfolio, including patents licensed from Onyx, comprises more than five different patent families, filed in various jurisdictions worldwide, including families directed to composition of matter for selective immunoproteasome 9 Table of Contents inhibitors and protein secretion inhibitors.
In total, our patent portfolio, including patents licensed from Onyx, comprises more than four different patent families, filed in various jurisdictions worldwide, including families directed to composition of matter for selective immunoproteasome inhibitors and protein secretion inhibitors.
Zetomipzomib: Selective Immunoproteasome Inhibitor We believe that zetomipzomib is the only selective immunoproteasome inhibitor that is in clinical trials for the treatment of autoimmune disorders.
Zetomipzomib: Selective Immunoproteasome Inhibitor We believe that zetomipzomib is the only selective immunoproteasome inhibitor that has been studied in clinical trials for the treatment of autoimmune disorders.
The 20-year term of this family is August 2038, absent any patent term extensions available. KP-00-008—Patent application directed to formulations of zetomipzomib is pending, with an issued patent in Taiwan. The 20-year term of this family is October 2039, absent any patent term extensions available.
The 20-year term for this family is June 2037, absent any patent term extensions available. KP-00-008—Patent application directed to formulations of zetomipzomib is pending, with an issued patent in Taiwan. The 20-year term of this family is October 2039, absent any patent term extensions available.
Clinical Development of Zetomipzomib We are focusing the development of zetomipzomib in autoimmune hepatitis, or AIH, a rare, chronic disease in which the immune system attacks the liver and causes inflammation and tissue damage, severely impacting patients’ health and quality of life. Lifelong maintenance therapy is required to avoid relapse and burdensome adverse effects.
Clinical Development of Zetomipzomib Zetomipzomib is a clinical development candidate for AIH, a rare, chronic disease in which the immune system attacks the liver and causes inflammation and tissue damage, severely impacting patients’ health and quality of life. Lifelong maintenance therapy is required to avoid relapse and burdensome adverse effects.
Our patent portfolio includes issued patents in, among other jurisdictions, the United States, Australia, Canada, China, Europe, Japan, Mexico, Singapore and South Korea with expiration dates ranging from 2034 to 2039, absent any patent term extensions available. We have additional patent assets related to our research and discovery efforts.
Our patent portfolio includes issued patents in, among other jurisdictions, the United States, Australia, Canada, China, Europe, Japan, Mexico, Singapore and South Korea with expiration dates ranging from 2034 to 2039, absent any patent term extensions available.
The term of the Everest License Agreement will continue on a market-by-market basis until expiration of the relevant royalty term of the products, unless terminated earlier. Everest has the right to terminate the Everest License Agreement for convenience following completion, suspension or termination of the PALIZADE clinical trial.
The term of the Everest License Agreement will continue on a market-by-market basis until expiration of the relevant royalty term of the products, unless terminated earlier. Everest has the right to terminate the Everest License Agreement for convenience at any time following the October 2024 termination of the PALIZADE clinical trial.
Results from this early terminated trial provide evidence that the four fatalities occurred in patients with significant disease manifestations (pulmonary hypertension and anti-phospholipid syndrome), co-morbidities due to disease treatment (adrenal insufficiency) and/or the presence of systemic infections or septic shock.
Results from this early terminated trial provide evidence that the four fatalities occurred in patients with significant disease manifestations (pulmonary hypertension and anti-phospholipid syndrome), co-morbidities due to disease treatment (adrenal insufficiency) and/or the presence of systemic infections or septic shock. The safety profile of zetomipzomib in PALIZADE was similar across both dose levels.
A third-party payor’s decision to provide coverage for a drug product does not imply that an adequate reimbursement rate will be approved. Further, one third-party payor’s determination to provide coverage for a drug product does not assure that other payors will also provide coverage for the drug product.
Our product candidates may not be considered medically necessary or cost-effective. A third-party payor’s decision to provide coverage for a drug product does not imply that an adequate reimbursement rate will be approved. Further, one third-party payor’s determination to provide coverage for a drug product does not assure that other payors will also provide coverage for the drug product.
Additional state and local laws also require the registration of pharmaceutical sales and medical representatives. Because of the breadth of these laws and the narrowness of available statutory exceptions and regulatory safe harbors, it is possible that some of our business activities could be subject to challenge under one or more of such laws.
Because of the breadth of these laws and the narrowness of available statutory exceptions and regulatory safe harbors, it is possible that some of our business activities could be subject to challenge under one or more of such laws.
Food and Drug Administration, or FDA, Division of Rheumatology and Transplant Medicine following recommendation from the independent safety monitoring committee, based on review of 15 serious adverse events, or SAEs, including four fatalities: one in the placebo arm, two in the 30 mg zetomipzomib arm, and one in the 60 mg zetomipzomib arm.
In October 2024, t he study was placed on clinical hold by the FDA Division of Rheumatology and Transplant Medicine following the recommendation from the independent safety monitoring committee, based on review of 15 serious adverse events, or SAEs, including four fatalities: one in the placebo arm, two in the 30 mg zetomipzomib arm, and one in the 60 mg zetomipzomib arm.
There also are continuing annual user fee requirements for any marketed products and the establishments at which such products are manufactured, as well as application fees for supplemental applications with clinical data. 14 Table of Contents Even if the FDA approves a product, it may limit the approved indications for use of the product, require that contraindications, warnings or precautions be included in the product labeling, including a boxed warning, require that post-approval studies, including Phase 4 clinical trials, be conducted to further assess a drug’s safety after approval, require testing and surveillance programs to monitor the product after commercialization, or impose other conditions, including distribution restrictions or other risk management mechanisms under a REMS, which can materially affect the potential market and profitability of the product.
Even if the FDA approves a product, it may limit the approved indications for use of the product, require that contraindications, warnings or precautions be included in the product labeling, including a boxed warning, require that post-approval studies, including Phase 4 clinical trials, be conducted to further assess a drug’s safety after approval, require testing and surveillance programs to monitor the product after commercialization, or impose other conditions, including distribution restrictions or other risk management mechanisms under a REMS, which can materially affect the potential market and profitability of the product.
The federal Anti-Kickback Statute prohibits, among other things, knowingly and willfully offering, paying, soliciting or receiving remuneration to induce or in return for purchasing, leasing, ordering or arranging for or recommending the purchase, lease or order of any item or service reimbursable under Medicare, Medicaid or other federal healthcare programs.
These laws include anti-kickback and false claims laws and regulations, data privacy and security, and transparency laws and regulations, including, without limitation, those laws described below. 14 Table of Contents The federal Anti-Kickback Statute prohibits, among other things, knowingly and willfully offering, paying, soliciting or receiving remuneration to induce or in return for purchasing, leasing, ordering or arranging for or recommending the purchase, lease or order of any item or service reimbursable under Medicare, Medicaid or other federal healthcare programs.
These therapies can increase the risks of infection and malignancy and cause a wide variety of side effects. In many autoimmune diseases, immunosuppressive regimens do not always induce high rates of clinically meaningful responses. Even if these agents are initially effective, over time patients often experience loss of response.
In many autoimmune diseases, immunosuppressive regimens do not always induce high rates of clinically meaningful responses. Even if these agents are initially effective, over time patients often experience loss of response.
Following the completion of the MISSION trial, we initiated the PALIZADE trial, which compared the safety and efficacy of two dose levels of zetomipzomib to placebo in patients with active, proliferative LN who were receiving standard of care therapy, namely high dose prednisone and mycophenylate mofetil (CellCept™).
The safety and tolerability profile of zetomipzomib observed in the MISSION Phase 1b/2 clinical trial was favorable and consistent with the needs for a long-term therapy. 4 Table of Contents Following the completion of the MISSION trial, we initiated the PALIZADE trial, which compared the safety and efficacy of two dose levels of zetomipzomib to placebo in patients with active, proliferative LN who were receiving standard of care therapy, namely high dose prednisone and mycophenylate mofetil (CellCept™).
The safety profile of zetomipzomib in PALIZADE was similar across both dose levels. 4 Table of Contents PORTOLA Phase 2a Trial PORTOLA is a placebo-controlled, double-blind Phase 2a clinical trial of zetomipzomib in patients with AIH that were insufficiently responding to standard of care or have relapsed.
PORTOLA Phase 2a Trial PORTOLA was a placebo-controlled, double-blind Phase 2a clinical trial of zetomipzomib in patients with AIH that were insufficiently responding to standard of care or have relapsed.
The FDA may request additional information rather than accept an NDA for filing. In this event, the application must be resubmitted with the additional information. The resubmitted application is also subject to review before the FDA accepts it for filing. Once the submission is accepted for filing, the FDA begins an in-depth substantive review.
The resubmitted application is also subject to review before the FDA accepts it for filing. Once the submission is accepted for filing, the FDA begins an in-depth substantive review.
We have observed encouraging clinical activity and biomarker data in the SLE and LN patients who received zetomipzomib in our MISSION Phase 1b/2 clinical trial. The safety and tolerability profile of zetomipzomib observed in the MISSION Phase 1b/2 clinical trial was favorable and consistent with the needs for a long-term therapy.
We have observed encouraging clinical activity and biomarker data in the SLE and LN patients who received zetomipzomib in our MISSION Phase 1b/2 clinical trial.
PALIZADE was a global trial that enrolled 84 patients prior to termination in 2024. The study was placed on clinical hold by the U.S.
PALIZADE was a global trial that enrolled 84 patients prior to termination in 2024.
We cannot provide any assurances that we will be able to obtain and maintain third-party payor coverage or adequate reimbursement for our product candidates in whole or in part.
The cost containment measures that third-party payors and healthcare providers are instituting and any healthcare reform could significantly reduce our revenues from the sale of any approved product candidates. We cannot provide any assurances that we will be able to obtain and maintain third-party payor coverage or adequate reimbursement for our product candidates in whole or in part.
Zetomipzomib has completed testing in healthy volunteers in multiple Phase 1a clinical studies and in the MISSION Phase 1b/2 clinical trial in patients with systemic lupus erythematosus, or SLE, with or without lupus nephritis, or LN.
There is a significant need for treatment regimens that reduce or remove patients’ dependency on daily corticosteroids and broad-based immunosuppressants. Zetomipzomib has completed testing in healthy volunteers in multiple Phase 1a clinical studies and in the MISSION Phase 1b/2 clinical trial in patients with systemic lupus erythematosus, or SLE, with or without lupus nephritis, or LN.
Legislative proposals to reform healthcare or reduce costs under government insurance programs may result in lower reimbursement for our products and product candidates or exclusion of our product candidates from coverage. The cost containment measures that third-party payors and healthcare providers are instituting and any healthcare reform could significantly reduce our revenues from the sale of any approved product candidates.
Legislative proposals to reform healthcare or reduce costs under government insurance programs may result in lower reimbursement for our products and product candidates or exclusion of our product candidates from coverage. Further, the U.S.
Regulatory approval in one country does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country may negatively impact the regulatory process in others.
The time required to obtain approval in other countries might differ from and be longer than that required to obtain FDA approval. Regulatory approval in one country does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country may negatively impact the regulatory process in others.
In January 2016, we incorporated our wholly owned Australian subsidiary, Kezar Life Sciences Australia Pty Ltd, which is a proprietary company limited by shares. Available Information Our website address is www.kezarlifesciences.com.
In January 2016, we incorporated our former wholly owned Australian subsidiary, Kezar Life Sciences Australia Pty Ltd, which was legally dissolved as of September 29, 2025. 18 Table of Contents Available Information Our website address is www.kezarlifesciences.com.
They are characterized by immune dysregulation, and the inappropriate activation of inflammatory cytokines is an underlying manifestation. These abnormal immune responses can lead to activation of inflammatory and cytotoxic T cells, which can cause further inflammation, activation of other inflammatory cells such as macrophages and results in tissue and organ damage.
These abnormal immune responses can lead to activation of inflammatory and cytotoxic T cells, which can cause further inflammation, activation of other inflammatory cells such as macrophages and results in tissue and organ damage. Autoimmune disease is a subset of immune-mediated diseases whereby an immune response is directed against the body’s own healthy cells and tissues.
Practices that involve remuneration that may be alleged to be intended to induce prescribing, purchases or recommendations may be subject to scrutiny if they do not qualify for an exception or safe harbor.
Although there are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution, the exceptions and safe harbors are drawn narrowly. Practices that involve remuneration that may be alleged to be intended to induce prescribing, purchases or recommendations may be subject to scrutiny if they do not qualify for an exception or safe harbor.
We may need to conduct expensive pharmacoeconomic studies in order to demonstrate the medical necessity and cost-effectiveness of our products, in addition to the costs required to obtain the FDA approvals. Our product candidates may not be considered medically necessary or cost-effective.
Third-party payors are increasingly challenging the price and examining the medical necessity and cost-effectiveness of medical products and services, in addition to their safety and efficacy. We may need to conduct expensive pharmacoeconomic studies in order to demonstrate the medical necessity and cost-effectiveness of our products, in addition to the costs required to obtain the FDA approvals.
PALIZADE was a Phase 2b global, placebo-controlled, double-blind clinical trial evaluating the efficacy and safety of two dose-levels of zetomipzomib in patients with active LN. Target enrollment was 279 patients, randomly assigned (1:1:1) to receive 30 mg of zetomipzomib, 60 mg of zetomipzomib or placebo subcutaneously once weekly for 52 weeks, in addition to standard background therapy.
Target enrollment was 279 patients, randomly assigned (1:1:1) to receive 30 mg of zetomipzomib, 60 mg of zetomipzomib or placebo subcutaneously once weekly for 52 weeks, in addition to standard background therapy. The decision to terminate PALIZADE was made after the trial was placed on clinical hold by FDA.
This is distinct from other agents currently used to treat autoimmunity, which typically target a single cytokine or immune cell type or are broadly immunosuppressive. KZR-261: First-in-Class Protein Secretion Inhibitor KZR-261 is a novel, first-in-class protein secretion inhibitor that acts through direct interaction and inhibition of Sec61 translocon activity.
This is distinct from other agents currently used to treat autoimmunity, which typically target a single cytokine or immune cell type or are broadly immunosuppressive.
Immune-Mediated Diseases and Selective Inhibition of the Immunoproteasome We are focusing our development efforts on immune-mediated diseases of high unmet need and intend to identify additional indications to develop zetomipzomib. Immune-mediated diseases are conditions which result from abnormal activity of the body’s immune system.
Immune-Mediated Diseases and Selective Inhibition of the Immunoproteasome We have focused our development efforts on immune-mediated diseases of high unmet need. Immune-mediated diseases are conditions which result from abnormal activity of the body’s immune system. They are characterized by immune dysregulation, and the inappropriate activation of inflammatory cytokines is an underlying manifestation.
For example, in the EU, we must obtain authorization of a clinical trial application in each member state in which we intend to conduct a clinical trial. 19 Table of Contents Whether or not we obtain FDA approval for a drug, we would need to obtain the necessary approvals by the comparable regulatory authorities of foreign countries before we can commence clinical trials or marketing of the drug in those countries.
Whether or not we obtain FDA approval for a drug, we would need to obtain the necessary approvals by the comparable regulatory authorities of foreign countries before we can commence clinical trials or marketing of the drug in those countries. The approval process varies from country to country and can involve additional product testing and additional administrative review periods.
In August 2024, we announced that we had stopped enrollment in the KZR-261 Phase 1 clinical study, and we reallocated clinical resources toward development of zetomipzomib. No objective responses were observed in the KZR-261 Phase 1 study. We plan to report data from the trial at a future medical conference.
In August 2024, we announced that we had stopped enrollment in the KZR-261 Phase 1 clinical trial and ceased our Sec-61 research program, and we reallocated clinical resources toward development of zetomipzomib.
For example, federal and state governments reimburse covered prescription drugs at varying rates generally below average wholesale price. These restrictions and limitations influence the purchase of 17 Table of Contents healthcare services and products.
For example, federal and state governments reimburse covered prescription drugs at varying rates generally below average wholesale price. These restrictions and limitations influence the purchase of healthcare services and products. Third-party payors may limit coverage to specific drug products on an approved list, or formulary, which might not include all of the FDA-approved drug products for a particular indication.
These inflammatory disorders are currently treated one cytokine or cell type at a time with biologic agents or with powerful synthetic immunosuppressive agents. Across all immune-mediated diseases, both large and small, there remain significant unmet medical needs and indications with no approved drugs beyond broadly prescribed corticosteroids and similar immunosuppressive agents.
Across all immune-mediated diseases, both large and small, there remain significant unmet medical needs and indications with no approved drugs beyond broadly prescribed corticosteroids and similar immunosuppressive agents. These therapies can increase the risks of infection and malignancy and cause a wide variety of side effects.
In addition, either party may terminate the Everest License Agreement for the other party’s uncured breach or insolvency, and the Everest License Agreement will automatically terminate in the event of termination of the Onyx License Agreement.
In addition, either party may terminate the Everest License Agreement for the other party’s uncured breach or insolvency, and the Everest License Agreement will automatically terminate in the event of termination of the Onyx License Agreement. 7 Table of Contents Manufacturing We do not own or operate manufacturing facilities compliant with current good manufacturing practices, or cGMP, and we do not have plans to develop our own cGMP manufacturing operations in the foreseeable future.
The Loper Bright decision could result in additional legal challenges to current regulations and guidance issued by federal agencies applicable to our operations, including those issued by the FDA. Congress may introduce and ultimately pass health care related legislation that could impact the drug approval process and make changes to the Medicare Drug Price Negotiation Program created under the IRA.
Congress may introduce and ultimately pass health care related legislation that could impact the drug approval process and make changes to the Medicare Drug Price Negotiation Program.
The REMS plan could include medication guides, physician communication plans, assessment plans, and/or elements to assure safe use, such as restricted distribution methods, patient registries or other risk minimization tools. 12 Table of Contents The FDA conducts a preliminary review of all NDAs within the first 60 days after submission, before accepting them for filing, to determine whether they are sufficiently complete to permit substantive review.
The REMS plan could include medication guides, physician communication plans, assessment plans, and/or elements to assure safe use, such as restricted distribution methods, patient registries or other risk minimization tools.
The AASLD also recommends a taper of corticosteroid therapy to 5-10 mg/day and withdrawal if appropriate in patients achieving a CR. In accordance with the AASLD treatment guidelines, and supported by our PORTOLA results described below, we expect to design our next AIH clinical trial to have an efficacy endpoint of patients achieving a CR with a successful steroid taper.
The AASLD also recommends a taper of corticosteroid therapy to 5-10 mg/day and withdrawal if appropriate in patients achieving a CR. In March 2025, we reported topline data from the PORTOLA trial.
In addition, KZR-261 modulates the tumor microenvironment by reducing angiogenic factor expression (e.g., VEGF) and reducing immune checkpoint expression. We studied KZR-261 in an open-label Phase 1 clinical study designed to evaluate safety and tolerability, pharmacokinetics and pharmacodynamics, as well to explore preliminary anti-tumor activity.
We previously studied an oncology product candidate, KZR-261, in an open-label Phase 1 clinical trial designed to evaluate safety and tolerability, pharmacokinetics and pharmacodynamics, as well to explore preliminary anti-tumor activity. KZR-261 was discovered as part of our Sec61-based research program.
Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing and integrating our existing and additional employees.
Employees and Human Capital Resources As of March 23, 2026, we had 9 full-time employees. None of our employees is represented by a labor union and we consider our employee relations to be good. Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing and integrating our existing and additional employees.
In August 2011, the Budget Control Act of 2011 was signed into law which, among other things, included aggregate reductions to Medicare payments to providers of 2% per fiscal year beginning in 2013 and, following passage of subsequent legislation, including the Bipartisan Budget Act of 2015, will continue until 2032 unless additional Congressional action is taken.
In addition, other legislative changes have been proposed and adopted since the PPACA was enacted. These changes include aggregate reductions to Medicare payments to providers of 2% per fiscal year, which began in 2013 and will remain in effect until 2032 unless additional Congressional action is taken.
We expect to present the full results of this trial at a medical conference in the second half of 2025. PALIZADE Phase 2b Trial In October 2024, we announced the termination of our PALIZADE Phase 2b clinical trial evaluating zetomipzomib in patients with LN.
PALIZADE Phase 2b Trial In October 2024, we announced the termination of our PALIZADE Phase 2b clinical trial evaluating zetomipzomib in patients with LN. PALIZADE was a Phase 2b global, placebo-controlled, double-blind clinical trial evaluating the efficacy 5 Table of Contents and safety of two dose-levels of zetomipzomib in patients with active LN.
Autoimmune disease is a subset of immune-mediated diseases whereby an immune response is directed against the body’s own healthy cells and tissues. Approximately 50 million people in the United States suffer from more than 100 diagnosed autoimmune diseases according to the American Autoimmune Related Diseases Association, Inc.
Approximately 50 million people in the United States suffer from more than 100 diagnosed autoimmune diseases according to the American Autoimmune Related Diseases Association, Inc. These inflammatory disorders are currently treated one cytokine or cell type at a time with biologic agents or with powerful synthetic immunosuppressive agents.
Item 1. Business. Overview We are a clinical-stage biotechnology company developing novel small molecule therapeutics to treat unmet needs in immune-mediated diseases. We believe therapies that inhibit multiple drivers of disease by targeting fundamental upstream control processes within the cell have the potential for profound therapeutic benefit in a number of difficult-to-treat diseases.
Item 1. Business. Overview We are a clinical-stage biotechnology company developing novel small molecule therapeutics to treat unmet needs in immune-mediated diseases. In October 2025, we announced plans to explore strategic alternatives focused on maximizing stockholder value after being unable to align with the U.S.
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To that end, we are advancing a drug development program that harnesses a key regulator of cellular function by targeting the immunoproteasome, which is responsible for protein degradation in cells of the immune system and drives many key aspects of immune cell function. We believe targeting this fundamental regulator of cellular function offers an attractive approach to treating autoimmune diseases.
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Food and Drug Administration, or FDA, on a potential registrational clinical trial of zetomipzomib, a novel, selective inhibitor of the immunoproteasome in patients with relapsed and refractory autoimmune hepatitis, or AIH. Following this announcement, we have been implementing a restructuring plan and wind-down of our business operations to focus on strategic alternatives for zetomipzomib development.
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There is a significant need for treatment regimens that reduce or remove patients’ dependency on daily corticosteroids and broad-based immunosuppressants.
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In January 2026, we announced that the FDA Division of Hepatology and Nutrition granted us a new Type C meeting to discuss the development of zetomipzomib in patients with AIH. This Type C meeting would involve a review of a potential global, randomized Phase 2b clinical study of zetomipzomib in patients with relapsed and refractory AIH.
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In October 2024, following the clinical hold on PALIZADE, the FDA notified us that patients enrolled in PORTOLA could complete the double-blind treatment period, or DBTP, without modification. However, the FDA placed a partial clinical hold on PORTOLA, such that the four remaining patients in the DBTP could not continue to the open-label extension, or OLE, portion of the trial.
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As part of the briefing package submitted to the FDA, Kezar submitted pharmacokinetic and hepatic safety data analyses from previously conducted clinical trials to support a proposal for parallel AIH and hepatic impairment studies.
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Patients who were participating in the OLE could continue zetomipzomib treatment, but any OLE patients who fully tapered their steroid usage (to 0 mg/day) were required to raise their prednisone dose to 5 mg/day for the remainder of the OLE, and no other patients could taper below this amount. In March 2025, we reported topline data from the PORTOLA trial.
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Kezar also submitted additional safety data and an updated risk-mitigation plan aimed to modify the previous requirement issued from the FDA to require 48-hour in-unit patient monitoring in future AIH studies.
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Based on these data, we believe that zetomipzomib has an appropriate risk/benefit profile for the treatment of patients living with AIH. We plan to address the partial clinical hold with the FDA Division of Hepatology and Nutrition and if successful, to align with regulatory agencies on the design of a potential registrational study in AIH.
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In March 2026, we completed a successful Type C with the FDA during which the FDA provided constructive feedback and critical guidance on the regulatory pathway for development of zetomipzomib in AIH, including agreement with us on treatment duration, endpoints and enrollment criteria.
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We believe that CR with steroid taper to 5 mg/d or less represents an appropriate endpoint for studies in AIH and we expect to mandate that patients are on a minimum level of prednisone at screening, as an inclusion criterion for the next trial.
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In addition, the FDA provided additional guidance around safety monitoring that we believe will enable a technically feasible clinical trial of zetomipzomib in AIH. Zetomipzomib is currently the only investigative agent to have demonstrated steroid sparing clinical activity in AIH patients who are refractory or intolerant to standard of care therapies.
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The decision to terminate PALIZADE was made after the trial was 5 Table of Contents placed on clinical hold by FDA, following four Grade 5 (fatal) SAEs among patients enrolled in the Philippines and Argentina, including one patient on placebo. 84 patients were enrolled in PALIZADE prior to study termination.
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On March 6, 2026, we entered into an asset purchase agreement with Enodia Therapeutics SAS, or Enodia, pursuant to which Enodia (i) acquired all of our rights, title and interest in our Sec61-based discovery and development program assets, including KZR-261; and (ii) assumed liabilities from us related to certain transferred contracts and from the ownership, use, operation or maintenance of such assets under the asset purchase agreement.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn addition to the factors discussed in this “Risk Factors” section, the market price for our common stock may be influenced by the following: • the commencement, enrollment or results of our planned or future clinical trials of zetomipzomib and any future product candidates; • the clinical or commercial success of competitive drugs, therapies or technologies; • regulatory or legal developments in the United States and other countries; • disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain and maintain patent protection for our technologies; • negative or inconclusive results from our clinical trials, such as the May 2022 topline data from the PRESIDIO Phase 2 clinical trial; • failure or discontinuation of any of our clinical development or research programs, such as the termination of our PALIZADE Phase 2b clinical trial of zetomipzomib in patients with LN; • the recruitment or departure of key personnel; • the level of expenses related to our product candidates and clinical development or research programs; • our ability to discover, develop and broaden our pipeline beyond our current product candidates; • commencement or termination of collaborations for our research and development programs; • actual or anticipated changes in estimates as to financial results or development timelines; • changes in estimates or recommendations by securities analysts, if any, that cover our stock; • our inability to obtain or delays in manufacturing adequate supply for our clinical trials or the inability to do so at acceptable costs; • significant lawsuits, including patent or stockholder litigation or products liability claims; • variations in our financial results or those of companies that are perceived to be similar to us; • announcement, expectation or completion of additional financing efforts; • changes in the structure of healthcare payment systems; • market conditions in the pharmaceutical and biotechnology sectors; • general economic, political, and market conditions and overall fluctuations in the financial markets in the United States and abroad, including as a result of bank failures, public health crises or geopolitical tensions; and • investors’ general perception of us and our business. 58 Table of Contents These and other market and industry factors may cause the market price and demand for our common stock to fluctuate substantially, regardless of our actual operating performance, which may limit or prevent investors from selling their shares at or above the price paid for the shares and may otherwise negatively affect the liquidity of our common stock.
Biggest changeIn addition to the factors discussed in this “Risk Factors” section, the market price for our common stock may be influenced by the following: • the outcome of our evaluation of strategic alternatives, including our ability to identify and consummate any potential strategic transaction; • inability to obtain additional funding and deterioration of financing conditions in our industry; • our internal restructuring and workforce reduction; • the commencement, enrollment or results of clinical trials of any future product candidates; • the clinical or commercial success of competitive drugs, therapies or technologies; • regulatory or legal developments in the United States and other countries; • disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain and maintain patent protection for our technologies; • negative or inconclusive results from our clinical trials, such as the May 2022 topline data from the PRESIDIO Phase 2 clinical trial; • failure or discontinuation of any of our clinical development or research programs, such as the termination of our clinical development of zetomipzomib in patients with AIH following our failure to align with the FDA on a potential registrational clinical trial of zetomipzomib in patients with relapsed and refractory AIH; • the recruitment or departure of key personnel; • the level of expenses related to our product candidates and clinical development or research programs; • our ability to discover, develop and broaden our pipeline beyond our current product candidates; • commencement or termination of collaborations for our research and development programs; • actual or anticipated changes in estimates as to financial results or development timelines; • changes in estimates or recommendations by securities analysts, if any, that cover our stock; • our inability to obtain or delays in manufacturing adequate supply for our clinical trials or the inability to do so at acceptable costs; • significant lawsuits, including patent or stockholder litigation or products liability claims; • variations in our financial results or those of companies that are perceived to be similar to us; • announcement, expectation or completion of additional financing efforts; • changes in the structure of healthcare payment systems; • market conditions in the pharmaceutical and biotechnology sectors; • general economic, political, and market conditions and overall fluctuations in the financial markets in the United States and abroad, including as a result of bank failures, public health crises or geopolitical tensions; and 58 Table of Contents • investors’ general perception of us and our business.
Any delays to our preclinical studies or clinical trials, that occur as a result could shorten any period during which we may have the exclusive right to commercialize our product candidates and our competitors may be able to bring products to market before we do, and the commercial viability of our product candidates could be significantly reduced.
Any delays to preclinical studies or clinical trials that occur as a result could shorten any period during which we may have the exclusive right to commercialize our product candidates and our competitors may be able to bring products to market before we do, and the commercial viability of our product candidates could be significantly reduced.
Any inability to timely and successfully complete clinical development will increase our costs, slow our development plans and impair our ability to generate revenue from our product candidates.
Any inability to timely and successfully complete clinical development will increase our costs, slow our development plans and impair our ability to generate revenue from our product candidates.
If we seek to commercialize our product candidates outside of the United States, we expect that we will be subject to additional risks including: • different regulatory requirements for approval of therapies in foreign countries; • reduced protection for intellectual property rights; • unexpected changes in tariffs, trade barriers and regulatory requirements; 38 Table of Contents • economic weakness, including inflation, or political instability in particular foreign economies and markets; • compliance with tax, employment, immigration and labor laws for employees living or traveling abroad; • foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, and other obligations incident to doing business in another country; • foreign reimbursement, pricing and insurance regimes; • workforce uncertainty in countries where labor unrest is more common than in the United States; • production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and • business interruptions resulting from geopolitical actions, war, terrorism, natural disasters and public health epidemics.
If we seek to commercialize our product candidates outside of the United States, we expect that we will be subject to additional risks including: • different regulatory requirements for approval of therapies in foreign countries; • reduced protection for intellectual property rights; • unexpected changes in tariffs, trade barriers and regulatory requirements; • economic weakness, including inflation, or political instability in particular foreign economies and markets; • compliance with tax, employment, immigration and labor laws for employees living or traveling abroad; • foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, and other obligations incident to doing business in another country; 38 Table of Contents • foreign reimbursement, pricing and insurance regimes; • workforce uncertainty in countries where labor unrest is more common than in the United States; • production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and • business interruptions resulting from geopolitical actions, war, terrorism, natural disasters and public health epidemics.
Moreover, we may not be able to obtain any required license on commercially reasonable terms or at all. 49 Table of Contents The licensing or acquisition of third-party intellectual property rights is a competitive area, and more established companies may also pursue strategies to license or acquire third-party intellectual property rights that we may consider attractive or necessary.
Moreover, we may not be able to obtain any required license on commercially reasonable terms or at all. The licensing or acquisition of third-party intellectual property rights is a competitive area, and more established companies may also pursue strategies to license or acquire third-party intellectual property rights that we may consider 49 Table of Contents attractive or necessary.
The following examples are illustrative: • others may be able to make compounds or formulations that are similar to our product candidates but that are not covered by the claims of any patents, should they issue, that we own or control; • we or any strategic partners might not have been the first to make the inventions covered by the issued patents or pending patent applications that we own or control; • we might not have been the first to file patent applications covering certain of our inventions; • others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; • it is possible that our pending patent applications will not lead to issued patents; • issued patents that we own or control may not provide us with any competitive advantages, or may be held invalid or unenforceable as a result of legal challenges; • our competitors might conduct research and development activities in the United States and other countries that provide a safe harbor from patent infringement claims for certain research and development activities, as well as in countries where we do not have patent rights and then use the information learned from such activities to develop competitive drugs for sale in our major commercial markets; 52 Table of Contents • we may not develop additional proprietary technologies that are patentable; and • the patents of others may prevent us from fully exploiting our product candidates or technologies.
The following examples are illustrative: • others may be able to make compounds or formulations that are similar to our product candidates but that are not covered by the claims of any patents, should they issue, that we own or control; • we or any strategic partners might not have been the first to make the inventions covered by the issued patents or pending patent applications that we own or control; • we might not have been the first to file patent applications covering certain of our inventions; • others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; • it is possible that our pending patent applications will not lead to issued patents; 52 Table of Contents • issued patents that we own or control may not provide us with any competitive advantages, or may be held invalid or unenforceable as a result of legal challenges; • our competitors might conduct research and development activities in the United States and other countries that provide a safe harbor from patent infringement claims for certain research and development activities, as well as in countries where we do not have patent rights and then use the information learned from such activities to develop competitive drugs for sale in our major commercial markets; • we may not develop additional proprietary technologies that are patentable; and • the patents of others may prevent us from fully exploiting our product candidates or technologies.
The degree of market acceptance of zetomipzomib and any future product candidates, if approved for commercial sale, will depend on a number of factors, including but not limited to: • the efficacy and potential advantages compared to alternative treatments and therapies; • the effectiveness of sales and marketing efforts; • the strength of our relationships with patient communities; • the cost of treatment in relation to alternative treatments and therapies, including any similar generic treatments; • our ability to offer such drug for sale at competitive prices; • the convenience and ease of administration compared to alternative treatments and therapies; • the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies; • the strength of marketing and distribution support; • the availability of third-party coverage and adequate reimbursement; • the prevalence and severity of any side effects; and • any restrictions on the use of the drug together with other medications.
The degree of market acceptance of any future product candidates, if approved for commercial sale, will depend on a number of factors, including but not limited to: • the efficacy and potential advantages compared to alternative treatments and therapies; • the effectiveness of sales and marketing efforts; • the strength of our relationships with patient communities; • the cost of treatment in relation to alternative treatments and therapies, including any similar generic treatments; • our ability to offer such drug for sale at competitive prices; • the convenience and ease of administration compared to alternative treatments and therapies; • the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies; • the strength of marketing and distribution support; • the availability of third-party coverage and adequate reimbursement; • the prevalence and severity of any side effects; and • any restrictions on the use of the drug together with other medications.
Entering into future collaborations could subject us to a number of risks, including: • we may be required to relinquish important rights to and control over the development and commercialization of our product candidates; • we may be required to undertake the expenditure of substantial operational, financial and management resources; • we may be required to issue equity securities that would dilute our stockholders’ percentage ownership of our company; • we may be required to assume substantial actual or contingent liabilities; • we may not be able to control the amount and timing of resources that our strategic collaborators devote to the development or commercialization of our product candidates; • strategic collaborators may select indications or design clinical trials in a way that may be less successful or slower than if we were doing so; • strategic collaborators may delay clinical trials, provide insufficient funding, terminate a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new version of a product candidate for clinical testing; • strategic collaborators may not pursue further development and commercialization of products resulting from the strategic collaboration arrangement or may elect to discontinue research and development programs; • strategic collaborators may not commit adequate resources to the marketing and distribution of our product candidates, limiting our potential revenues from these products; • disputes may arise between us and our strategic collaborators that result in the delay or termination of the research, development or commercialization of our product candidates or that result in costly litigation or arbitration that diverts management’s attention and consumes resources; • strategic collaborators may experience financial difficulties; • strategic collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in a manner that could jeopardize or invalidate our proprietary information or expose us to potential litigation; • business combinations or significant changes in a strategic collaborator’s business strategy may adversely affect a strategic collaborator’s willingness or ability to complete its obligations under any arrangement; • strategic collaborators could decide to move forward with a competing product candidate developed either independently or in collaboration with others, including our competitors; and • strategic collaborators could terminate the arrangement or allow it to expire, which would delay the development and may increase the cost of developing our product candidates.
Entering into future collaborations could subject us to a number of risks, including: • we may be required to relinquish important rights to and control over the development and commercialization of our product candidates; • we may be required to undertake the expenditure of substantial operational, financial and management resources; • we may be required to issue equity securities that would dilute our stockholders’ percentage ownership of our company; • we may be required to assume substantial actual or contingent liabilities; • we may not be able to control the amount and timing of resources that our strategic collaborators devote to the development or commercialization of our product candidates; • strategic collaborators may select indications or design clinical trials in a way that may be less successful or slower than if we were doing so; • strategic collaborators may delay clinical trials, provide insufficient funding, terminate a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new version of a product candidate for clinical testing; • strategic collaborators may not pursue further development and commercialization of products resulting from the strategic collaboration arrangement or may elect to discontinue research and development programs; • strategic collaborators may not commit adequate resources to the marketing and distribution of our product candidates, limiting our potential revenues from these products; • disputes may arise between us and our strategic collaborators that result in the delay or termination of the research, development or commercialization of our product candidates or that result in costly litigation or arbitration that diverts management’s attention and consumes resources; • strategic collaborators may experience financial difficulties; • strategic collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in a manner that could jeopardize or invalidate our proprietary information or expose us to potential litigation; • business combinations or significant changes in a strategic collaborator’s business strategy may adversely affect a strategic collaborator’s willingness or ability to complete its obligations under any arrangement; • strategic collaborators could decide to move forward with a competing product candidate developed either independently or in collaboration with others, including our competitors; and 28 Table of Contents • strategic collaborators could terminate the arrangement or allow it to expire, which would delay the development and may increase the cost of developing our product candidates.
However, our operating plan may change as a result of many factors currently unknown to us, including as a result of the macroeconomic uncertainties and geopolitical tensions, and we may need to seek additional funds sooner than planned, through public or private equity or debt financings, third-party funding, marketing and distribution arrangements, as well as other collaborations, strategic alliances and licensing arrangements, or any combination of these approaches.
However, our operating plan may change as a result of many factors currently unknown to us, including as a result of the macroeconomic uncertainties and geopolitical tensions, and we will need to seek additional funds sooner than planned, through public or private equity or debt financings, third-party funding, marketing and distribution arrangements, as well as other collaborations, strategic alliances and licensing arrangements, or any combination of these approaches.
Federal Reserve has raised, and may again raise, interest rates in response to concerns about inflation, which coupled with reduced government spending and volatility in financial markets may have the effect of further increasing economic uncertainty and heightening these risks. A weak or declining economy could also strain our suppliers and manufacturers, possibly resulting in supply and clinical trial disruption.
Federal Reserve raised, and may again raise, interest rates in response to concerns about inflation, which coupled with reduced government spending and volatility in financial markets may have the effect of further increasing economic uncertainty and heightening these risks. A weak or declining economy could also strain our suppliers and manufacturers, possibly resulting in supply and clinical trial disruption.
If our information technology systems, or those third parties with whom we work, or our data are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; and other adverse consequences.
If our information technology systems, or those third parties with whom we work, or other data are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions; fines and penalties; disruptions or our business operations; reputational harm; loss of revenue or profits; and other adverse consequences.
The current Trump administration is pursuing policies to reduce regulations and expenditures across government including at HHS, the FDA, CMS and related agencies. These actions, presently directed by executive orders or memoranda from the Office of Management and Budget, may propose policy changes that create additional uncertainty for our business.
The current administration is pursuing policies to reduce regulations and expenditures across government agencies including at HHS, the FDA, CMS and related agencies. These actions, presently directed by executive orders or memoranda from the Office of Management and Budget, may propose policy changes that create additional uncertainty for our business.
If we do not raise additional capital in sufficient amounts, or on terms acceptable to us, we may be prevented from pursuing discovery, development and commercialization efforts, which will harm our business, operating results and prospects. Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish proprietary rights.
If we do not raise additional capital in sufficient amounts, or on terms acceptable to us, we may be prevented from pursuing development and commercialization efforts, which will harm our business, operating results and prospects. Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish proprietary rights.
If our CMOs are unable to successfully manufacture our product candidates in sufficient quantity in a timely manner, our planned clinical trials may be delayed or modified and we may also be unable to fulfill our obligations under the Everest License Agreement, allowing Everest to terminate its collaboration or other potential adverse consequences as provided in the Everest License Agreement.
If our CMOs are unable to successfully manufacture our product candidates in sufficient quantity in a timely manner, our clinical trials may be delayed or modified and we may also be unable to fulfill our obligations under the Everest License Agreement, allowing Everest to terminate its collaboration or other potential adverse consequences as provided in the Everest License Agreement.
If we encounter such difficulties, or fail to meet quality standards, our ability to meet clinical timelines and expand our development strategy could be impacted. • Our product candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval, limit the commercial potential or result in significant negative consequences following any potential marketing approval. • We may not be able to obtain or maintain orphan drug designations or exclusivity for our product candidates, which could limit the potential profitability of our product candidates. • Even if our product candidates receive marketing approval, they may fail to achieve market acceptance by physicians, patients, third-party payors or others in the medical community necessary for commercial success. • We face substantial competition, which may result in others developing or commercializing drugs before or more successfully than us. 21 Table of Contents • We are dependent upon our collaboration with Everest for the further development and commercialization of zetomipzomib in the greater China region, South Korea and certain Southeast Asian countries. • Our relationships with customers, physicians, and third-party payors may be subject, directly or indirectly, to federal and state healthcare fraud and abuse laws, transparency laws, false claims laws, health information privacy and security laws, and other healthcare laws and regulations.
If we encounter such difficulties, or fail to meet quality standards, our ability to meet clinical timelines and expand our development strategy could be impacted. • Our product candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval, limit the commercial potential or result in significant negative consequences following any potential marketing approval. • We may not be able to obtain or maintain orphan drug designations or exclusivity for our product candidates, which could limit the potential profitability of our product candidates. • Even if our product candidates receive marketing approval, they may fail to achieve market acceptance by physicians, patients, third-party payors or others in the medical community necessary for commercial success. • We face substantial competition, which may result in others developing or commercializing drugs before or more successfully than us. • We are dependent upon our collaboration with Everest for the further development and commercialization of zetomipzomib in the greater China region, South Korea and certain Southeast Asian countries. • Our relationships with customers, physicians, and third-party payors may be subject, directly or indirectly, to federal and state healthcare fraud and abuse laws, transparency laws, false claims laws, health information privacy and security laws, and other healthcare laws and regulations.
Even if we eventually complete clinical testing and receive approval of a new drug application, or NDA, or foreign marketing application for zetomipzomib or any future product candidates, the FDA or the comparable foreign regulatory authorities may grant approval or other marketing authorization contingent on the performance of costly additional clinical trials, including post-market clinical trials.
Even if we eventually complete clinical testing and receive approval of a new drug application, or NDA, or foreign marketing application for any future product candidates, the FDA or the comparable foreign regulatory authorities may grant approval or other marketing authorization contingent on the performance of costly additional clinical trials, including post-market clinical trials.
We expect our financial condition and operating results to continue to fluctuate from quarter to quarter and year to year due to a variety of factors, many of which are beyond our control. We may need to eventually transition from a company with a research and development focus to a company capable of undertaking commercial activities.
We expect our financial condition and operating results to continue to fluctuate from quarter to quarter and year to year due to a variety of factors, many of which are beyond our control. We may need to eventually transition from a company with a development focus to a company capable of undertaking commercial activities.
Furthermore, if we or others identify undesirable side effects caused by our product candidates 33 Table of Contents during development or after obtaining U.S. regulatory approval, several potentially significant negative consequences could result, including: • regulatory authorities may not permit us to initiate our studies or could put them on hold; • regulatory authorities may not approve, or may withdraw, their approval of the product; • regulatory authorities may require us to recall the product; • regulatory authorities may add new limitations for distribution and marketing of the product; • regulatory authorities may require the addition of warnings in the product label or narrowing of the indication in the product label; • we may be required to create a Medication Guide outlining the risks of such side effects for distribution to patients; • we may be required to change the way the product is administered or modify the product in some other way; • we may be required to implement a REMS program; • the FDA may require us to conduct additional clinical trials or costly post-marketing testing and surveillance to monitor the safety or efficacy of the product; • we could be sued and held liable for harm caused to patients; and • our reputation may suffer.
Furthermore, if we or others identify undesirable side effects caused by our product candidates during development or after obtaining U.S. regulatory approval, several potentially significant negative consequences could result, including: • regulatory authorities may not permit us to initiate our studies or could put them on hold; • regulatory authorities may not approve, or may withdraw, their approval of the product; • regulatory authorities may require us to recall the product; • regulatory authorities may add new limitations for distribution and marketing of the product; • regulatory authorities may require the addition of warnings in the product label or narrowing of the indication in the product label; • we may be required to create a Medication Guide outlining the risks of such side effects for distribution to patients; • we may be required to change the way the product is administered or modify the product in some other way; • we may be required to implement a REMS program; • the FDA may require us to conduct additional clinical trials or costly post-marketing testing and surveillance to monitor the safety or efficacy of the product; • we could be sued and held liable for harm caused to patients; and • our reputation may suffer.
If we fail to comply with applicable regulatory requirements following approval of any of our product candidates, a regulatory authority may: • issue an untitled letter or warning letter asserting that we are in violation of the law; • seek an injunction or impose administrative, civil or criminal penalties or monetary fines; • suspend or withdraw regulatory approval; 35 Table of Contents • suspend any ongoing clinical trials; • refuse to approve a pending NDA or comparable foreign marketing application or any supplements thereto submitted by us or our partners; • restrict the marketing or manufacturing of the drug; • seize or detain the drug or otherwise require the withdrawal of the drug from the market; • refuse to permit the import or export of product candidates; or • refuse to allow us to enter into supply contracts, including government contracts.
If we fail to comply with applicable regulatory requirements following approval of any of our product candidates, a regulatory authority may: • issue an untitled letter or warning letter asserting that we are in violation of the law; • seek an injunction or impose administrative, civil or criminal penalties or monetary fines; • suspend or withdraw regulatory approval; • suspend any ongoing clinical trials; • refuse to approve a pending NDA or comparable foreign marketing application or any supplements thereto submitted by us or our partners; • restrict the marketing or manufacturing of the drug; • seize or detain the drug or otherwise require the withdrawal of the drug from the market; • refuse to permit the import or export of product candidates; or • refuse to allow us to enter into supply contracts, including government contracts.
These estimates have been derived from a variety of sources, including scientific literature, patient foundations or market research, and may prove to be incorrect. Further, new studies may change the estimated incidence or prevalence of these disorders. The number of eligible patients for either product candidate may turn out to be lower than expected.
These estimates have been derived from a variety of sources, including scientific literature, patient foundations or market research, and may prove to be incorrect. Further, new studies may change the estimated incidence or prevalence of these disorders. The number of eligible patients for any product candidate may turn out to be lower than expected.
A person or entity does not need to have actual knowledge of this statute or specific intent to violate it to have committed a violation; • federal civil and criminal false claims laws, including, without limitation, the federal civil False Claims Act, and civil monetary penalty laws which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment or approval from Medicare, Medicaid or other government payors that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government.
A person or entity does not need to have actual knowledge of this statute or specific intent to violate it to have committed a violation; 40 Table of Contents • federal civil and criminal false claims laws, including, without limitation, the federal civil False Claims Act, and civil monetary penalty laws which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment or approval from Medicare, Medicaid or other government payors that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government.
In some cases, the price that we intend to charge for any product candidates, if approved, is also subject to approval. Obtaining approval for zetomipzomib in the European Union from the European Commission following the opinion of the European Medicines Agency, if we choose to submit a marketing authorization application there, would be a lengthy and expensive process.
In some cases, the price that we intend to charge for any product candidates, if approved, is also subject to approval. Obtaining approval for our product candidates in the European Union from the European Commission following the opinion of the European Medicines Agency, if we choose to submit a marketing authorization application there, would be a lengthy and expensive process.
Any changes to the manufacturing processes carry the risk that they will not achieve these intended objectives, or that the product candidates may not meet the rigorous quality standards necessary for use in our clinical trials. We are continuing to manufacture zetomipzomib and placebo in support of trials.
Any changes to the manufacturing processes carry the risk that they will not achieve these intended objectives, or that the product candidates may not meet the rigorous quality standards necessary for use in our clinical trials. We are continuing to manufacture zetomipzomib and placebo in support of potential future clinical trials.
We have experienced and may in the future experience numerous unforeseen events that may prevent the timely and successful completion of our clinical trials, or result in the termination of such clinical trials prior to their completion, including: • failure to recruit suitable patients to participate in a clinical trial, enrollment in these clinical trials may be slower than we anticipate, and participants may drop out during the course of these trials at a higher rate than we anticipate; • delays in manufacturing, testing, releasing, validating and shipping stable quantities of our product candidates and placebo for our clinical trial sites; • delays in reaching a consensus with the FDA and foreign regulatory authorities on the design of our clinical trials; • the number of patients required for clinical trials to produce statistically meaningful data may be larger than we anticipate; • the costs of clinical trials of our product candidates may be greater than we anticipate, which may be more likely as a result of increased price inflation worldwide; • occurrence of serious adverse events associated with the product candidate that are viewed to outweigh its potential benefits; • imposition of a clinical hold by regulatory authorities as a result of a serious adverse event, such as the clinical hold imposed by the FDA on our PALIZADE Phase 2b clinical trial of zetomipzomib in patients with LN following four patient deaths in the Philippines and Argentina, concerns with a class of product candidates or after an inspection of our clinical trial operations, trial sites or manufacturing facilities; • regulators or institutional review boards, or IRBs, may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site, or may otherwise suspend our clinical trials at any time if it appears we are or our collaborators are failing to conduct a trial in accordance with regulatory requirements; • delays in identifying and recruiting suitable clinical investigators or reaching agreement on acceptable terms with prospective clinical trial sites; • clinical trials of our product candidates may produce negative or inconclusive results, such as the topline data from our PRESIDIO Phase 2 clinical trial of zetomipzomib in patients with dermatomyositis and polymyositis, in which zetomipzomib did not demonstrate significant differentiation from placebo; • failure to perform our clinical trials in accordance with current Good Clinical Practice, or cGCP, or regulations required by the FDA or foreign regulatory authorities; • changes in regulatory requirements and guidance or other unforeseen regulatory developments that require amending or submitting new clinical protocols; • we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs; or • business interruptions resulting from geo-political actions, war, terrorism, natural disasters or public health crises.
We have experienced and may in the future experience numerous unforeseen events that may prevent the timely and successful completion of our clinical trials, or result in the termination of such clinical trials prior to their completion, including: • delays in reaching a consensus with the FDA and foreign regulatory authorities on the design of our clinical trials, such as our failure to reach alignment with the FDA on a registrational study design of zetomipzomib in patients with relapsed and refractory AIH; • failure to recruit suitable patients to participate in a clinical trial, enrollment in these clinical trials may be slower than we anticipate, and participants may drop out during the course of these trials at a higher rate than we anticipate; • delays in manufacturing, testing, releasing, validating and shipping stable quantities of our product candidates and placebo for our clinical trial sites; • the number of patients required for clinical trials to produce statistically meaningful data may be larger than we anticipate; • the costs of clinical trials of our product candidates may be greater than we anticipate, which may be more likely as a result of increased price inflation worldwide; • occurrence of serious adverse events associated with the product candidate that are viewed to outweigh its potential benefits; • imposition of a clinical hold by regulatory authorities as a result of a serious adverse event, such as the clinical hold imposed by the FDA on our PALIZADE Phase 2b clinical trial of zetomipzomib in patients with LN following four patient deaths in the Philippines and Argentina; • concerns with a class of product candidates or after an inspection of our clinical trial operations, trial sites or manufacturing facilities; • regulators or institutional review boards, or IRBs, may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site, or may otherwise suspend our clinical trials at any time if it appears we are or our collaborators are failing to conduct a trial in accordance with regulatory requirements; • delays in identifying and recruiting suitable clinical investigators or reaching agreement on acceptable terms with prospective clinical trial sites; 30 Table of Contents • clinical trials of our product candidates may produce negative or inconclusive results, such as the topline data from our PRESIDIO Phase 2 clinical trial of zetomipzomib in patients with dermatomyositis and polymyositis, in which zetomipzomib did not demonstrate significant differentiation from placebo; • failure to perform our clinical trials in accordance with current Good Clinical Practice, or cGCP, or regulations required by the FDA or foreign regulatory authorities; • changes in regulatory requirements and guidance or other unforeseen regulatory developments that require amending or submitting new clinical protocols; • we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs; or • business interruptions resulting from geo-political actions, war, terrorism, natural disasters or public health crises.
If the actual number of patients with these disorders is smaller than we anticipate, or if these patients are unwilling to participate in a clinical trial, we may encounter difficulties in enrolling patients in our clinical trials, thereby delaying or preventing development and approval of our product candidates.
If the actual number of patients with the disorders we are seeking to address is smaller than we anticipate, or if these patients are unwilling to participate in a clinical trial, we may encounter difficulties in enrolling patients in our clinical trials, thereby delaying or preventing development and approval of our product candidates.
Risks Related to Our Business Operations, Employee Matters and Managing Growth We are highly dependent on the services of our executive officers, and if we are not able to retain these members of our management team or recruit and retain additional management, clinical and scientific personnel, our business will be harmed.
Risks Related to Our Business Operations and Employee Matters We are highly dependent on the services of our executive officers, and if we are not able to retain these members of our management team or recruit and retain additional management, clinical and scientific personnel, our business will be harmed.
We also expect to rely on third-party manufacturers to supply us with sufficient quantities of our product candidates to be used, if approved, for commercialization. 43 Table of Contents Our reliance on third-party manufacturers entails risks to which we would not be subject if we manufactured product candidates ourselves, including: • inability to meet our product specifications and quality requirements consistently; • delay or inability to procure or expand sufficient manufacturing capacity; • issues related to scale-up of manufacturing; • costs and validation of new equipment and facilities required for scale-up; • our third-party manufacturers may not be able to execute our manufacturing procedures and other logistical support requirements appropriately; • our third-party manufacturers may fail to comply with cGMP and other inspections by the FDA or comparable foreign regulatory authorities; • our inability to negotiate manufacturing agreements with third parties under commercially reasonable terms, if at all; • breach, termination or nonrenewal of manufacturing agreements with third parties in a manner or at a time that is costly or damaging to us; • reliance on single sources for drug components; • lack of qualified backup suppliers for those components that are currently purchased from a sole or single source supplier; • our third-party manufacturers may not devote sufficient resources to our product candidates; • we may not own, or may have to share, the intellectual property rights to any improvements made by our third-party manufacturers in the manufacturing process for our product candidates; • operations of our third-party manufacturers or suppliers could be disrupted by conditions unrelated to our business or operations, including the bankruptcy of the manufacturer or supplier; and • carrier disruptions or increased costs that are beyond our control.
Our reliance on third-party manufacturers entails risks to which we would not be subject if we manufactured product candidates ourselves, including: • inability to meet our product specifications and quality requirements consistently; • delay or inability to procure or expand sufficient manufacturing capacity; • issues related to scale-up of manufacturing; • costs and validation of new equipment and facilities required for scale-up; • our third-party manufacturers may not be able to execute our manufacturing procedures and other logistical support requirements appropriately; • our third-party manufacturers may fail to comply with cGMP and other inspections by the FDA or comparable foreign regulatory authorities; • our inability to negotiate manufacturing agreements with third parties under commercially reasonable terms, if at all; 43 Table of Contents • breach, termination or nonrenewal of manufacturing agreements with third parties in a manner or at a time that is costly or damaging to us; • reliance on single sources for drug components; • lack of qualified backup suppliers for those components that are currently purchased from a sole or single source supplier; • our third-party manufacturers may not devote sufficient resources to our product candidates; • we may not own, or may have to share, the intellectual property rights to any improvements made by our third-party manufacturers in the manufacturing process for our product candidates; • operations of our third-party manufacturers or suppliers could be disrupted by conditions unrelated to our business or operations, including the bankruptcy of the manufacturer or supplier; and • carrier disruptions or increased costs that are beyond our control.
Federal Anti-Kickback Statute violations and certain marketing practices, including off-label promotion, implicate the federal civil False Claims Act; • HIPAA, which created additional federal civil and criminal statutes that prohibit, among other things, a person from knowingly and willfully executing, or attempting to execute, a scheme or artifice to defraud any healthcare benefit program, or making false or fraudulent statements to defraud any healthcare benefit program, regardless of the payor (e.g., public or private); 40 Table of Contents • HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act and their implementing regulations, which impose certain requirements relating to the privacy, security and transmission of individually identifiable health information on health plans, health care clearinghouses and certain healthcare providers, known as covered entities, and their respective business associates and their subcontractors that perform certain services involving the use or disclosure of individually identifiable health information; • federal transparency laws, including the federal Physician Payments Sunshine Act, that require 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 specific exceptions, to report annually to CMS, information related to: (i) payments or other “transfers of value” made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), other healthcare professionals (such as physician assistants and nurse practitioners), and teaching hospitals; and (ii) ownership and investment interests held by physicians and their immediate family members; and • state and foreign law equivalents of each of the above federal laws, state laws that require manufacturers to report information related to payments and other "transfers of value" to physicians and other healthcare providers, marketing expenditures, or drug pricing, state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government and state and local laws that require the registration of pharmaceutical sales representatives, or that otherwise restrict payments that may be made to healthcare providers; as well as state and foreign laws that 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 HIPAA, thus complicating compliance efforts.
Federal Anti-Kickback Statute violations and certain marketing practices, including off-label promotion, implicate the federal civil False Claims Act; • The federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created additional federal civil and criminal statutes that prohibit, among other things, a person from knowingly and willfully executing, or attempting to execute, a scheme or artifice to defraud any healthcare benefit program, or making false or fraudulent statements to defraud any healthcare benefit program, regardless of the payor (e.g., public or private); • HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act and their implementing regulations, which impose certain requirements relating to the privacy, security and transmission of individually identifiable health information on health plans, health care clearinghouses and certain healthcare providers, known as covered entities, and their respective business associates and their subcontractors that perform certain services involving the use or disclosure of individually identifiable health information; • federal transparency laws, including the federal Physician Payments Sunshine Act, that require 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 specific exceptions, to report annually to CMS, information related to: (i) payments or other “transfers of value” made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), other healthcare professionals (such as physician assistants and nurse practitioners), and teaching hospitals; and (ii) ownership and investment interests held by physicians and their immediate family members; and • state and foreign law equivalents of each of the above federal laws, state laws that require manufacturers to report information related to payments and other "transfers of value" to physicians and other healthcare providers, marketing expenditures, or drug pricing, state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government and state and local laws that require certain regulatory licenses to manufacture or distribute products commercially or the registration of pharmaceutical sales representatives, or that otherwise restrict payments that may be made to healthcare providers; as well as state and foreign laws that 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 HIPAA, thus complicating compliance efforts.
Delays in or failure to complete any preclinical studies or clinical trials of our product candidates will increase our costs, slow down our product candidate development and approval process and delay or potentially jeopardize our ability to commence product sales and generate product revenue.
Delays in or failure to complete any preclinical studies or clinical trials of our product candidates would increase our costs, slow down our product candidate development and approval process and delay or potentially jeopardize our ability to commence product sales and generate product revenue.
However, if planned or future manufacturing of zetomipzomib fails to meet the quality standards for use in our clinical trials, or the active drug substance does not meet our quality specifications, it could impact our timelines and limit our development strategy.
However, if manufacturing of zetomipzomib fails to meet the quality standards for use in clinical trials, or the active drug substance does not meet our quality specifications, it could impact our timelines and limit our development strategy.
The failure to obtain an orphan drug designation for any product candidates we may develop, the inability to 34 Table of Contents maintain that designation for the duration of the applicable period, or the inability to obtain or maintain orphan drug exclusivity could reduce our ability to make sufficient sales of the applicable product candidate to balance our expenses incurred to develop it, which would have a negative impact on our operational results and financial condition.
The failure to obtain an orphan drug designation for any product candidates we may develop, the inability to maintain that designation for the duration of the applicable period, or the inability to obtain or maintain orphan drug exclusivity could reduce our ability to make sufficient sales of the applicable product candidate to balance our expenses incurred to develop it, which would have a negative impact on our operational results and financial condition.
In the past few years, numerous U.S. states have enacted 53 Table of Contents comprehensive privacy laws that impose certain obligations on covered businesses, including providing specific disclosures in privacy notices and affording residents with certain rights concerning their personal data. The exercise of these rights may impact our business and ability to provide our products and services.
In the past few years, numerous U.S. states have enacted comprehensive privacy laws that impose certain obligations on covered businesses, including providing specific disclosures in privacy notices and affording residents with certain rights concerning their personal data. The exercise of these rights may impact our business and ability to provide our products and services.
If a court were to find either exclusive-forum provision in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could seriously harm our business. Item 1B. Unresolved Staff Comments. None. 62 Table of Contents
If a court were to find either exclusive-forum provision in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could seriously harm our business. Item 1B. Unresolved Staff Comments. None.
Even if favorable coverage and reimbursement status is attained for one or more products for which we receive regulatory approval, less favorable coverage policies and reimbursement rates may be implemented in the future. Product liability lawsuits against us could cause us to incur substantial liabilities and could limit commercialization of any product candidate that we may develop.
Even if favorable coverage and reimbursement status is attained for one or more products for which we receive regulatory approval, less favorable coverage policies and reimbursement rates may be implemented in the future. 39 Table of Contents Product liability lawsuits against us could cause us to incur substantial liabilities and could limit commercialization of any product candidate that we may develop.
The stock market in general and the market for biopharmaceutical and pharmaceutical companies in particular, has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies, which has resulted in decreased stock prices for many companies notwithstanding the lack of a fundamental change in their underlying business models or prospects.
The stock market in general and the market for biopharmaceutical and pharmaceutical companies in particular, has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies, which has resulted in decreased stock prices for many companies notwithstanding the lack of a 57 Table of Contents fundamental change in their underlying business models or prospects.
The shifting compliance environment and the need to build and maintain robust and expandable systems to comply with multiple jurisdictions with different compliance and/or reporting requirements increases the possibility that a healthcare company may run afoul of one or more of the requirements. Healthcare legislative reform measures may have a negative impact on our business and results of operations.
The shifting compliance environment and the need to build and maintain robust and expandable systems to comply with multiple jurisdictions with different compliance and/or reporting requirements increases the possibility that a healthcare company may run afoul of one or more of the requirements. 41 Table of Contents Healthcare legislative reform measures may have a negative impact on our business and results of operations.
For example, the loss of clinical trial data from completed or future clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. We may expend significant resources or modify our business activities (including our clinical trial activities) in an effort to protect against security incidents.
For example, the loss of clinical trial data from completed or future clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. 56 Table of Contents We may expend significant resources or modify our business activities (including our clinical trial activities) in an effort to protect against security incidents.
The Rights Plan may have the effect of discouraging or preventing a change of control by, among other things, making it uneconomical for a third party to acquire us without the consent of our 61 Table of Contents board of directors, although there can be no guarantee that the Rights Plan will fulfill its intended purpose.
The Rights Plan may have the effect of discouraging or preventing a change of control by, among other things, making it uneconomical for a third party to acquire us without the consent of our board of directors, although there can be no guarantee that the Rights Plan will fulfill its intended purpose.
During times of war and other major conflicts, we and the third parties with whom we work may be vulnerable to a heightened risk of these attacks, including cyber-attacks that could materially disrupt our systems and operations, supply chain, and ability to produce, sell and distribute our goods and services.
During times of war and other major conflicts, we and the third parties with whom we work may be vulnerable to a heightened risk of these attacks, including cyber-attacks 55 Table of Contents that could materially disrupt our systems and operations, supply chain, and ability to produce, sell and distribute our goods and services.
In addition, periodic 48 Table of Contents maintenance fees, renewal fees, annuity fees and various other government fees on patents and applications will have to be paid to the USPTO and various government patent agencies outside of the United States over the lifetime of our owned and licensed patents and applications and any patent rights we may own or license in the future.
In addition, periodic maintenance fees, renewal fees, annuity fees and various other government fees on patents and applications will have to be paid to the USPTO and various government patent agencies outside of the United States over the lifetime of our owned and licensed patents and applications and any patent rights we may own or license in the future.
The time required to obtain approval or other marketing authorizations by the FDA and comparable foreign regulatory authorities is unpredictable but typically takes many years following the commencement of clinical trials and depends upon numerous factors, including the substantial discretion of the regulatory authorities.
The time required to obtain approval or other marketing authorizations by the FDA and comparable foreign regulatory authorities is unpredictable but typically takes many years following the commencement of clinical trials and depends upon 25 Table of Contents numerous factors, including the substantial discretion of the regulatory authorities.
Sales of zetomipzomib outside of the United States will be subject to foreign regulatory requirements governing clinical trials and marketing approval. Even if the FDA grants marketing approval for a product candidate, comparable foreign regulatory authorities also must approve the manufacturing and marketing of the product candidate in those countries.
Sales of our product candidates outside of the United States will be subject to foreign regulatory requirements governing clinical trials and marketing approval. Even if the FDA grants marketing approval for a product candidate, comparable foreign regulatory authorities also must approve the manufacturing and marketing of the product candidate in those countries.
Coverage and adequate reimbursement may not be available for zetomipzomib or any future product candidates, which could make it difficult for us to sell profitably, if approved.
Coverage and adequate reimbursement may not be available for any future product candidates, which could make it difficult for us to sell profitably, if approved.
Moreover, we may be subject to a third-party pre-issuance submission of prior art to the USPTO or become involved in opposition, derivation, reexamination, inter partes review, post-grant review or interference proceedings challenging our patent rights or the patent rights of others.
Moreover, we may be subject to a third-party pre-issuance submission of prior art to the USPTO or become involved in opposition, derivation, reexamination, inter partes review, post-grant review or interference proceedings challenging our 47 Table of Contents patent rights or the patent rights of others.
As a result of our data processing activities, we are subject to numerous data privacy and security obligations, such as various laws, regulations, guidance, industry standards, external and internal privacy and security policies, contracts, and other obligations relating to data privacy and security and may become subject to additional such obligations in the future.
As a result of our data processing activities, we are subject to numerous data privacy and security obligations, such as various laws, regulations, guidance, industry standards, external and internal 53 Table of Contents privacy and security policies, contracts, and other obligations relating to data privacy and security and may become subject to additional such obligations in the future.
Likewise, the potentially addressable patient population for each of our product candidates may be limited or may not be amenable to treatment with our product candidates. If the market opportunities for our product candidates are smaller than we estimate, our business and results of operations could be adversely affected.
Likewise, the potentially addressable patient population for a product candidate may be limited or may not be amenable to treatment with our product candidates. If the market opportunities for our product candidates are smaller than we estimate, our business and results of operations could be adversely affected.
The use of this technology by our employees or personnel could result in additional compliance costs, regulatory investigations and 54 Table of Contents actions, and lawsuits. If our employees and personnel are unable to use generative AI, it could make our business less efficient and result in competitive disadvantages.
The use of this technology by our employees or personnel could result in additional compliance costs, regulatory investigations and actions, and lawsuits. If our employees and personnel are unable to use generative AI, it could make our business less efficient and result in competitive disadvantages.
Failure to obtain this necessary capital when needed may force us to delay, reduce or terminate certain of our product development programs or other operations. • Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish proprietary rights. • Our future success is substantially dependent on the successful clinical development, regulatory approval and commercialization of zetomipzomib, as well as any future product candidates. • We may explore strategic collaborations, which would require us to relinquish important rights to and control over the development and commercialization of our product candidates to any future collaborators. • Success in preclinical studies or earlier clinical trials may not be indicative of future clinical trial results, and we cannot assure you that any clinical trials will lead to results sufficient for the necessary regulatory approvals. • Clinical trials are very expensive, time consuming and difficult to design and implement. • Enrollment and retention of patients in clinical trials is an expensive and time-consuming process and could be delayed, made more difficult or rendered impossible by multiple factors outside our control. • We may encounter substantial delays or difficulties in enrolling and retaining patients in our clinical trials. • The manufacture of our product candidates is complex and uncertain, and until we develop a validated manufacturing process, we may encounter difficulties in supplying our planned and future clinical trials.
Failure to obtain this necessary capital when needed may force us to delay, reduce or terminate any future product development program or other operations. • Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish proprietary rights. • Our future success is substantially dependent on the successful clinical development, regulatory approval and commercialization of our product candidates. • We may explore strategic collaborations, which would require us to relinquish important rights to and control over the development and commercialization of our product candidates to any future collaborators. • Success in preclinical studies or earlier clinical trials may not be indicative of future clinical trial results, and we cannot assure you that any clinical trials will lead to results sufficient for the necessary regulatory approvals. • Clinical trials are very expensive, time consuming and difficult to design and implement. 19 Table of Contents • Enrollment and retention of patients in clinical trials is an expensive and time-consuming process and could be delayed, made more difficult or rendered impossible by multiple factors outside our control. • We may encounter substantial delays or difficulties in enrolling and retaining patients in our clinical trials. • The manufacture of our product candidates is complex and uncertain, and until we develop a validated manufacturing process, we may encounter difficulties in supplying future clinical trials.
In addition, if we enter into a strategic collaboration regarding any of our product candidates, our rights to receive milestone payments and royalties related to 36 Table of Contents such product candidates will depend on our collaborators’ abilities to achieve market acceptance of those product candidates.
In addition, if we enter into a strategic collaboration regarding any of our product candidates, our rights to receive milestone payments and royalties related to such product candidates will depend on our collaborators’ abilities to achieve market acceptance of those product candidates.
We face an inherent risk of product liability exposure related to the testing of our product candidates in clinical trials, both within and outside of the United States, and may face an even greater risk if we commercialize any product candidate that 39 Table of Contents we may develop.
We face an inherent risk of product liability exposure related to the testing of our product candidates in clinical trials, both within and outside of the United States, and may face an even greater risk if we commercialize any product candidate that we may develop.
We may also conduct collaborative research and development programs that may require us to share trade secrets and 51 Table of Contents proprietary know how. We seek to protect our proprietary information by entering into agreements containing confidentiality obligations and ownership provisions relating to intellectual property prior to disclosing proprietary information or beginning research projects with third-party collaborators.
We may also conduct collaborative research and development programs that may require us to share trade secrets and proprietary know how. We seek to protect our proprietary information by entering into agreements containing confidentiality obligations and ownership provisions relating to intellectual property prior to disclosing proprietary information or beginning research projects with third-party collaborators.
Further, if a designated orphan drug receives marketing approval for an indication broader than the rare disease or condition for which it received orphan drug designation, it may not be entitled to exclusivity. We intend to pursue orphan drug designation for zetomipzomib in the treatment of autoimmune hepatitis and any other rare immune-mediated disease indications we pursue for development.
Further, if a designated orphan drug receives marketing approval for an indication broader than the rare disease or condition for which it received orphan drug designation, it may not be entitled to exclusivity. We intended to pursue orphan drug designation for zetomipzomib in the treatment of autoimmune hepatitis and other rare immune-mediated disease indications we pursued for development.
For example, we have a field-specific exclusive license under the Onyx License Agreement to certain patents and patent applications relating to zetomipzomib. We or our licensors have not pursued or maintained, and may not pursue or maintain in the future, patent protection for our product candidates in every country or territory in which we may sell our products, if approved.
For example, we have a field-specific exclusive license under the Onyx License Agreement to certain patents and patent applications relating to zetomipzomib. 46 Table of Contents We or our licensors have not pursued or maintained, and may not pursue or maintain in the future, patent protection for our product candidates in every country or territory in which we may sell our products, if approved.
Obtaining foreign regulatory approvals and compliance with foreign regulatory requirements could result in significant delays, difficulties and costs for us and could delay or prevent the introduction of zetomipzomib and any future product candidates in certain countries. Further, clinical trials conducted in one country may not be accepted by regulatory authorities in other countries.
Obtaining foreign regulatory approvals and compliance with foreign regulatory requirements could result in significant delays, difficulties and costs for us and could delay or prevent the introduction of any future product candidates in certain countries. 34 Table of Contents Further, clinical trials conducted in one country may not be accepted by regulatory authorities in other countries.
In particular, these companies have greater experience and expertise in securing reimbursement, government contracts and relationships with key opinion leaders, conducting testing and clinical trials, obtaining and maintaining regulatory approvals and distribution relationships to market products and marketing approved drugs. These companies also have significantly greater research and marketing capabilities than we do.
In particular, these companies have greater experience and expertise in securing reimbursement, government 37 Table of Contents contracts and relationships with key opinion leaders, conducting testing and clinical trials, obtaining and maintaining regulatory approvals and distribution relationships to market products and marketing approved drugs. These companies also have significantly greater research and marketing capabilities than we do.
We may not be able to obtain or maintain orphan drug designations or exclusivity for our product candidates, which could limit the potential profitability of our product candidates. Regulatory authorities in some jurisdictions, including the United States, may designate drugs for relatively small patient populations as orphan drugs.
If we pursue further development of our product candidates, we may not be able to obtain or maintain orphan drug designations or exclusivity for our product candidates, which could limit the potential profitability of our product candidates. Regulatory authorities in some jurisdictions, including the United States, may designate drugs for relatively small patient populations as orphan drugs.
These include provisions that affect the way patent applications are prosecuted and may 47 Table of Contents affect the scope, strength and enforceability of our patent rights or the nature of proceedings that may be brought by or against us related to our patent rights.
These include provisions that affect the way patent applications are prosecuted and may affect the scope, strength and enforceability of our patent rights or the nature of proceedings that may be brought by or against us related to our patent rights.
We rely on our outside counsel or our licensing partners to pay these fees due to non-U.S. patent agencies. The USPTO and various non-U.S. government patent agencies require compliance with several procedural, documentary, fee payment and other similar provisions during the patent application process.
We rely on our outside counsel or our licensing partners to pay these fees due to non-U.S. patent agencies. The USPTO and various non-U.S. government 48 Table of Contents patent agencies require compliance with several procedural, documentary, fee payment and other similar provisions during the patent application process.
The exclusivity for our orphan drug designations, and for any other designations that we may obtain in the future, may not effectively protect the drug from the competition of different drugs for the same condition, which could have already been approved or could be approved before or during the exclusivity period.
The exclusivity for orphan drug designations, and for any other designations that we may seek to obtain in the future, may not effectively protect our product candidates from the competition of different drugs for the same condition, which could have already been approved or could be approved before or during the exclusivity period.
If the adverse global economic conditions, including higher inflation rates and changes in interest rates, persist or worsen, we could experience an inability to access additional capital or engage in strategic transactions on terms reasonable to us, or at all.
If the adverse global economic conditions, including higher inflation rates and changes in 23 Table of Contents interest rates, persist or worsen, we could experience an inability to access additional capital or engage in strategic transactions on terms reasonable to us, or at all.
For example, inflation rates, particularly in the United States, have increased recently to levels not seen in years, and increased inflation may result in increases in our operating costs (including our labor costs), reduced liquidity and limits on our ability to access credit or otherwise raise capital on acceptable terms, if at all. In addition, the U.S.
For example, inflation rates, particularly in the United States, increased from 2021 to 2023 to levels not seen in years, and increased inflation may result in increases in our operating costs (including our labor costs), reduced liquidity and limits on our ability to access credit or otherwise raise capital on acceptable terms, if at all. In addition, the U.S.
If we or our CROs fail to comply with GCP, the clinical data generated in our clinical trials may be deemed unreliable, and the FDA or comparable foreign regulatory authorities may require us to perform additional clinical trials before approving our 44 Table of Contents marketing applications.
If we or our CROs fail to comply with GCP, the clinical data generated in our clinical trials may be deemed unreliable, and the FDA or comparable foreign regulatory authorities may require us to perform additional clinical trials before approving our marketing applications.
In addition, such parties may: • have staffing difficulties; • fail to comply with contractual obligations; • not devote sufficient time and resources to our clinical trials; • experience regulatory compliance issues; or • undergo changes in priorities or become financially distressed.
In addition, such parties may: • have staffing difficulties; • fail to comply with contractual obligations; • not devote sufficient time and resources to our clinical trials; • experience regulatory compliance issues; or 44 Table of Contents • undergo changes in priorities or become financially distressed.
Even if we complete the development and regulatory processes necessary to obtain marketing approval, we anticipate incurring significant costs associated with launching and commercializing zetomipzomib and any future product candidates. Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis.
Even if we complete the development and regulatory processes necessary to obtain marketing approval, we would anticipate incurring significant costs associated with launching and commercializing our product candidates. Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis.
Zetomipzomib is being developed as a lyophilized formulation which could adversely affect market acceptance if patients are required to reconstitute zetomipzomib themselves prior to injection. We are developing zetomipzomib as a lyophilized product candidate, meaning that it will be freeze-dried and must be reconstituted with water prior to patient administration.
Zetomipzomib has been developed as a lyophilized formulation, which could adversely affect market acceptance if patients are required to reconstitute zetomipzomib themselves prior to injection. We have been developing zetomipzomib as a lyophilized product candidate, meaning that it will be freeze-dried and must be reconstituted with water prior to patient administration.
We have not obtained regulatory approval for any product candidate, and it is possible that neither our current product candidates, nor any product candidates we may seek to 26 Table of Contents develop in the future, will ever obtain regulatory approval.
We have not obtained regulatory approval for any product candidate, and it is possible that neither our current product candidates, nor any product candidates we may seek to develop in the future, will ever obtain regulatory approval.
The patent 46 Table of Contents prosecution process is expensive and time-consuming, and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner.
The patent prosecution process is expensive and time-consuming, and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner.
Based upon our shares of our common stock outstanding as of December 31, 2024, our executive officers, directors and stockholders who owned more than 5% of our outstanding common stock do, in the aggregate, beneficially own shares representing approximately 38% of our outstanding common stock.
Based upon our shares of our common stock outstanding as of December 31, 2025, our executive officers, directors and stockholders who owned more than 5% of our outstanding common stock do, in the aggregate, beneficially own shares representing approximately 39% of our outstanding common stock.
In addition, if we make manufacturing or formulation changes to our product candidates, we may need to conduct additional testing to bridge our modified product candidate to earlier versions. 31 Table of Contents Additionally, if the results of our clinical trials are inconclusive or if there are safety concerns or serious adverse events associated with our product candidates, we may: • be delayed in obtaining marketing approval, if at all; • obtain approval for indications or patient populations that are not as broad as intended or desired; • obtain approval with labeling that includes significant use or distribution restrictions or safety warnings; • be required to perform additional clinical trials to support approval or be subject to additional post-marketing testing requirements; • have regulatory authorities withdraw, or suspend, their approval of the drug or impose restrictions on its distribution in the form of a modified risk evaluation and mitigation strategy, or REMS; • be subject to the addition of labeling statements, such as warnings or contraindications; • be sued or held liable for harm causes to patients; or • experience damage to our reputation.
Additionally, if the results of our clinical trials are inconclusive or if there are safety concerns or serious adverse events associated with our product candidates, we may: • be delayed in obtaining marketing approval, if at all; • obtain approval for indications or patient populations that are not as broad as intended or desired; • obtain approval with labeling that includes significant use or distribution restrictions or safety warnings; • be required to perform additional clinical trials to support approval or be subject to additional post-marketing testing requirements; • have regulatory authorities withdraw, or suspend, their approval of the drug or impose restrictions on its distribution in the form of a modified risk evaluation and mitigation strategy, or REMS; • be subject to the addition of labeling statements, such as warnings or contraindications; • be sued or held liable for harm causes to patients; or • experience damage to our reputation.
In addition, we may be reliant on CROs and clinical trial sites to ensure proper and timely conduct of our clinical trials and, while we intend to enter into agreements governing their services, we will be limited in our ability to compel their actual performance. We may encounter substantial delays or difficulties in our clinical trials.
In addition, we may be reliant on CROs and clinical trial sites to ensure proper and timely conduct of our clinical trials and, while we intend to enter into agreements governing their services, we will be limited in our ability to compel their actual performance.
Any such delays could negatively impact our business, financial condition, results of operations and prospects. Enrollment and retention of patients in clinical trials is an expensive and time-consuming process and could be delayed, made more difficult or rendered impossible by multiple factors outside our control. Identifying and qualifying patients to participate in our clinical trials is critical to our success.
Any such delays could negatively impact our business, financial condition, results of operations and prospects. Enrollment and retention of patients in clinical trials is an expensive and time-consuming process and could be delayed, made more difficult or rendered impossible by multiple factors outside our control.
We are completely dependent on our CMOs for compliance with cGMP for manufacture of both active drug substances and finished drug products.
We are 42 Table of Contents completely dependent on our CMOs for compliance with cGMP for manufacture of both active drug substances and finished drug products.
If we breach the Onyx License Agreement, we could lose the ability to continue the development and commercialization of zetomipzomib. The licensing of intellectual property is of critical importance to our business and to our current and future product candidates, and we expect to enter into additional such agreements in the future.
If we breach the Onyx License Agreement, we could lose the ability to develop and commercialize zetomipzomib. The licensing of intellectual property is of critical importance to our business and to our current and future product candidates, and we expect to enter into additional such agreements in the future.
If we are unable to continue to attract and retain high-quality personnel, our ability to pursue our growth strategy will be limited. We will need to expand our organization, and we may experience difficulties in managing this growth, which could disrupt our operations.
If we are unable to continue to attract and retain high-quality personnel, our ability to pursue our growth strategy will be limited. If we pursue further development of our product candidates, we will need to expand our organization, and we may experience difficulties in managing this growth, which could disrupt our operations.
If we do not accurately evaluate the viability, development costs and commercial potential of our product candidates, we may fail to capitalize on profitable market opportunities, forego or delay opportunities to pursue other product candidates or other indications that may later prove to have greater commercial potential than those we choose to pursue, or relinquish valuable rights to product candidates through strategic transactions, including collaboration, licensing or other royalty arrangements, asset sales, and spin-offs, in cases in which it would have been more advantageous for us to retain ownership and sole development and commercialization rights to such product candidates. 28 Table of Contents We may explore strategic collaborations, which would require us to relinquish important rights to and control over the development and commercialization of our product candidates to any future collaborators.
If we do not accurately evaluate the viability, development costs and commercial potential of our product candidates, we may fail to capitalize on profitable market opportunities, forego or delay opportunities to pursue other product candidates or other indications that may later prove to have greater commercial potential than those we choose to 27 Table of Contents pursue, or relinquish valuable rights to product candidates through strategic transactions, including collaboration, licensing or other royalty arrangements, asset sales, and spin-offs, in cases in which it would have been more advantageous for us to retain ownership and sole development and commercialization rights to such product candidates.
These requirements have increased and will 60 Table of Contents continue to increase our legal, accounting, external audit and financial compliance costs and have made and will continue to make some activities more time consuming and costly.
These requirements have increased and will continue to increase our legal, accounting, external audit and financial compliance costs and have made and will continue to make some activities more time consuming and costly.
Any of these occurrences may harm our business, financial condition and prospects significantly. If the market opportunities for zetomipzomib or any future product candidates are smaller than we believe they are, our business may suffer. We currently focus our drug development of zetomipzomib on treatments of immune-mediated diseases, including AIH.
Any of these occurrences may harm our business, financial condition and prospects significantly. If the market opportunities for any product candidates are smaller than we believe they are, our business may suffer. We have focused our drug development of zetomipzomib on treatments of immune-mediated diseases, including AIH.
Our common stock price could, for example, decline significantly as a result of sales of a large number of shares of our common stock on the market without commensurate demand, as compared to a seasoned issuer that could better absorb those sales without adverse impact on its share price, or from the perception that these sales could occur. 59 Table of Contents We cannot predict the ultimate effect on our common stock share price of the Reverse Stock Split.
Our common stock price could, for example, decline significantly as a result of sales of a large number of shares of our common stock on the market without 59 Table of Contents commensurate demand, as compared to a seasoned issuer that could better absorb those sales without adverse impact on its share price, or from the perception that these sales could occur.
Our ability to generate revenue from product sales depends heavily on our, or any future collaborators’, success in: • timely and successfully completing preclinical and clinical development of zetomipzomib and any future product candidates; • obtaining regulatory approvals for zetomipzomib and any future product candidates for which we successfully complete clinical trials; • launching and commercializing any product candidates for which we obtain regulatory approval by establishing a sales force, marketing and distribution infrastructure or, alternatively, collaborating with a commercialization partner; • qualifying for and obtaining coverage and adequate reimbursement by government and third-party payors for any product candidates for which we obtain regulatory approval, both in the United States and internationally; • developing, validating and maintaining commercially viable, sustainable, scalable, reproducible and transferable manufacturing processes for zetomipzomib, a self-administered dual-chamber system for administering zetomipzomib and any future product candidates that are compliant with current good manufacturing practices, or cGMP; • establishing and maintaining supply and manufacturing relationships with third parties that can provide adequate amount and quality of starting materials, drug substance, drug product and drug delivery devices and services to support clinical development, as well as the market demand for zetomipzomib and any future product candidates, if approved; • obtaining market acceptance, if and when approved, of zetomipzomib or any future product candidate as a viable treatment option by physicians, patients, third-party payors and others in the medical community; 23 Table of Contents • effectively addressing any competing technological and market developments; • implementing additional internal systems and infrastructure, as needed; • negotiating favorable terms in any collaboration, licensing, spin-off or other arrangements into which we may enter and performing our obligations pursuant to such arrangements; • maintaining, protecting and expanding our portfolio of intellectual property rights, including patents, trade secrets and know-how; and • securing appropriate pricing in the United States and internationally.
Our ability to generate revenue from product sales depends heavily on our, or any future collaborators’, success in: • timely and successfully completing preclinical and clinical development of any future product candidates; 22 Table of Contents • obtaining regulatory approvals for any future product candidates for which we successfully complete clinical trials; • launching and commercializing any product candidates for which we obtain regulatory approval by establishing a sales force, marketing and distribution infrastructure or, alternatively, collaborating with a commercialization partner; • qualifying for and obtaining coverage and adequate reimbursement by government and third-party payors for any product candidates for which we obtain regulatory approval, both in the United States and internationally; • establishing and maintaining supply and manufacturing relationships with third parties that can provide adequate amount and quality of starting materials, drug substance, drug product and drug delivery devices and services to support clinical development, as well as the market demand for any future product candidates, if approved; • obtaining market acceptance, if and when approved, of any future product candidate as a viable treatment option by physicians, patients, third-party payors and others in the medical community; • effectively addressing any competing technological and market developments; • implementing additional internal systems and infrastructure, as needed; • negotiating favorable terms in any collaboration, licensing, spin-off or other arrangements into which we may enter and performing our obligations pursuant to such arrangements; • maintaining, protecting and expanding our portfolio of intellectual property rights, including patents, trade secrets and know-how; and • securing appropriate pricing in the United States and internationally.
We may encounter unforeseen expenses, difficulties, complications and delays and may not be successful in such a transition. We will require substantial additional capital to finance our operations, which may not be available on acceptable terms, if at all.
We may encounter unforeseen expenses, difficulties, complications and delays and may not be successful in such a transition. If we pursue further development of our product candidates, we will require substantial additional capital to finance our operations, which may not be available on acceptable terms, if at all.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeFor a description of the risks from cybersecurity threats that may materially affect the Company and how they may do so, see our risk factors under Part I. Item 1A titled “Risks Related to Our Business Operations, Employee Matters and Managing Growth.” Governance Our board of directors addresses the Company’s cybersecurity risk management as part of its general oversight function.
Biggest changeFor a description of the risks from cybersecurity threats that may materially affect the Company and how they may do so, see our risk factors under Part I. Item 1A titled “Risks Related to Our Business Operations and Employee Matters.” Governance Our board of directors addresses the Company’s cybersecurity risk management as part of its general oversight function.
They identify and assess risks from cybersecurity threats by monitoring and evaluating our threat environment and our and our industry’s risk profile using various methods, including, for example, automated tools, subscribing to reports and services that identify cybersecurity threats, analyzing reports of threats and actors, conducting scans of the threat environment, evaluating threats reported to us, conducting internal audits, and conducting internal and external threat and vulnerability assessments.
They identify and assess risks from cybersecurity threats by monitoring and evaluating our threat environment and our and our industry’s risk profile using various methods, including, for example, automated tools, subscribing to reports and services that identify cybersecurity threats, analyzing reports of threats and actors, conducting scans of the 62 Table of Contents threat environment, evaluating threats reported to us, conducting internal audits, and conducting internal and external threat and vulnerability assessments.
Our IT manager and our third-party information technology service provider are together responsible for helping prepare for cybersecurity incidents, approving cybersecurity processes, and reviewing security assessments and other security-related reports. 63 Table of Contents Our cybersecurity incident response plan is designed to escalate certain cybersecurity incidents to key members of management depending on the circumstances.
Our IT manager and our third-party information technology service provider are together responsible for helping prepare for cybersecurity incidents, approving cybersecurity processes, and reviewing security assessments and other security-related reports. Our cybersecurity incident response plan is designed to escalate certain cybersecurity incidents to key members of management depending on the circumstances.
The Audit Committee receives regular reports from our CFO concerning the Company’s significant cybersecurity threats and risks, and the processes the Company has implemented to address them. The board of directors also has access to reports, summaries and presentations related to the Company's cybersecurity threats, risk and mitigation.
The Audit Committee receives regular reports from our CFO concerning the Company’s significant cybersecurity threats and risks, and the processes the Company has implemented to address them. The board of directors also has access to reports, summaries and presentations related to the Company's cybersecurity threats, risk and mitigation. 63 Table of Contents

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock trades on the Nasdaq Capital Market under the symbol “KZR.” Holders As of February 28, 2025, there were approximately 9 stockholders of record.
Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock trades on the Nasdaq Capital Market under the symbol “KZR.” Holders As of March 23, 2026, there were approximately 6 stockholders of record.

Item 7. Management's Discussion & Analysis

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

35 edited+21 added−27 removed24 unchanged
Biggest changeOur future funding requirements will depend on many factors, including the following: • the progress, timing, scope, results and costs of our clinical trials and preclinical studies for our product candidates, including the ability to enroll patients in a timely manner for our clinical trials; • the costs of obtaining clinical and commercial supplies for zetomipzomib and any other product candidates we may identify and develop; • the cost, timing and outcomes of regulatory approvals; • the extent to which we may acquire or in-license other product candidates and technologies; • the cost of attracting, hiring and retaining qualified personnel; • our ability to successfully commercialize any product candidates for which we obtain regulatory approval; and • the cost of preparing, filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights.
Biggest changeOur future funding requirements will depend on many factors, including the following: • the extent of funding required to finance our streamlined operations and to operate as a public company; • the extent to which we enter into a strategic transaction; and • the cost of preparing, filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights.
Research and Development Expenses Research and development expenses consist primarily of costs incurred for the development of our product candidates, which include: • employee-related expenses, which include salaries, benefits and stock-based compensation; • fees paid to consultants for services directly related to our product development and regulatory effort; • expenses incurred under agreements with third-party contract organizations, investigative clinical trial sites and consultants that conduct research and development activities on our behalf; • costs associated with preclinical studies and clinical trials; 67 Table of Contents • costs associated with technology and intellectual property licenses; • the costs related to production of clinical supplies; and • facilities and other allocated expenses, which include expenses for rent and other facility related costs and other supplies.
Research and Development Expenses Research and development expenses consist primarily of costs incurred for the development of our product candidates, which include: • employee-related expenses, which include salaries, benefits and stock-based compensation; • fees paid to consultants for services directly related to our product development and regulatory effort; 67 Table of Contents • expenses incurred under agreements with third-party contract organizations, investigative clinical trial sites and consultants that conduct research and development activities on our behalf; • costs associated with preclinical studies and clinical trials; • costs associated with technology and intellectual property licenses; • the costs related to production of clinical supplies; and • facilities and other allocated expenses, which include expenses for rent and other facility related costs and other supplies.
We recognize an impairment loss when the total estimated future cash flows expected to result from the use of the asset and its eventual disposition are less than the carrying amount. See Note 17 to our consolidated financial statements located elsewhere in this Annual Report on Form 10-K for additional information on the restructuring and impairment charges.
We recognize an impairment loss when the total estimated future cash flows expected to result from the use of the asset and its eventual disposition are less than the carrying amount. See Note 16 to our consolidated financial statements located elsewhere in this Annual Report on Form 10-K for additional information on the restructuring and impairment charges.
Restructuring and Impairment Charges In October 2023, we announced a strategic restructuring and workforce reduction, or Workforce Reduction, to prioritize our clinical-stage assets and extend our cash runway, reducing our workforce by approximately 40%. All employees affected by the Workforce Reduction separated from the Company by December 31, 2023.
In October 2023, we announced a strategic restructuring and workforce reduction, or Workforce Reduction, to prioritize our clinical-stage assets and extend our cash runway, reducing our workforce by approximately 40%. All employees affected by the Workforce Reduction separated from the Company by December 31, 2023.
Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report on Form 10-K, particularly in “Special Note Regarding Forward-Looking Statements” and “Risk Factors.” A discussion regarding our financial condition and results of operations for the year ended December 31, 2023 compared to the year ended December 31, 2022 is included in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 14, 2024.
Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report on Form 10-K, particularly in “Special Note Regarding Forward-Looking Statements” and “Risk Factors.” A discussion regarding our financial condition and results of operations for the year ended December 31, 2024 compared to the year ended December 31, 2023 is included in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 25, 2025.
Our product candidate, zetomipzomib, is a first-in-class selective immunoproteasome inhibitor that we are evaluating for the treatment of severe autoimmune diseases of high unmet medical need. We believe that the immunoproteasome is a validated target for the treatment of a wide variety of immune-mediated diseases given its ability to regulate multiple drivers of the inflammatory disease process.
Our product candidate, zetomipzomib, is a first-in-class selective immunoproteasome inhibitor in development for the treatment of severe autoimmune diseases of high unmet medical need. We believe that the immunoproteasome is a validated target for the treatment of a wide variety of immune-mediated diseases given its ability to regulate multiple drivers of the inflammatory disease process.
Cash Flows from Investing Activities During the year ended December 31, 2024, net cash provided by investing activities was $80.4 million primarily relating to the maturities of marketable securities exceeding purchases of such marketable securities.
During the year ended December 31, 2024, net cash provided by investing activities was $80.4 million primarily relating to the maturities of marketable securities exceeding purchases of such marketable securities.
In connection with the Workforce Reduction, we committed to a plan to sublease Suite 400 of our corporate headquarters, which resulted in an impairment to the right-of-use asset and certain property and equipment no longer utilized under then-current or expected future operations.
In connection with the Workforce Reduction, we committed to a plan to sublease Suite 400 of our corporate headquarters, which resulted in an 68 Table of Contents impairment to the right-of-use asset and certain property and equipment no longer utilized under then-current or expected future operations.
Debt Facility In November 2021, we entered into the Loan Agreement with Oxford Finance, which provided for up to $50.0 million in borrowing capacity across five potential tranches. The initial tranche of $10.0 million was funded at the closing of the Loan Agreement. The remaining tranches were dependent on achieving certain clinical trial milestones.
Debt Facility In November 2021, we entered into the Loan Agreement with Oxford Finance, which provided for up to $50.0 million in borrowing capacity across five potential tranches. The initial tranche of $10.0 million was funded at the closing of the Loan Agreement. The remaining tranches were dependent on achieving certain clinical trial milestones. We had previously declined these tranches.
Cash Flows Discussion of our cash flow activities for the year ended December 31, 2022 is included in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 14, 2024.
Cash Flows Discussion of our cash flow activities for the year ended December 31, 2023 is included in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 25, 2025.
The following table summarizes our research and development expenses for the years ended: Year Ended December 31, 2024 2023 2022 (dollars in millions) (unaudited) Research and development expenses by program: Zetomipzomib $ 54.2 $ 56.1 $ 29.6 KZR-261 11.2 15.6 11.5 Other protein secretion discovery programs 0.3 14.0 9.9 Total research and development expenses $ 65.7 $ 85.7 $ 51.0 In August 2024, we made the strategic decision to halt enrollment in our Phase 1 clinical trial of KZR-261 and discontinue development of this product candidate.
The following table summarizes our research and development expenses for the years ended: Year Ended December 31, 2025 2024 2023 (dollars in millions) (unaudited) Research and development expenses by program: Zetomipzomib $ 31.9 $ 54.2 $ 56.1 KZR-261 1.9 11.2 15.6 Other protein secretion discovery programs — 0.3 14.0 Total research and development expenses $ 33.8 $ 65.7 $ 85.7 In August 2024, we made the strategic decision to halt enrollment in our Phase 1 clinical trial of KZR-261 and discontinue development of this product candidate.
The following summarizes our cash flows for the periods indicated: Year Ended December 31, (dollars in millions) 2024 2023 Net cash used in operating activities $ (74.2) $ (81.6) Net cash provided by investing activities 80.4 76.0 Net cash provided by financing activities 0.1 0.6 Net increase (decrease) in cash and cash equivalents $ 6.3 $ (5.0) Cash Flows from Operating Activities During the year ended December 31, 2024, cash used in operating activities was $74.2 million, which consisted of a net loss of $83.7 million and a net change of $1.3 million in our net operating assets and liabilities, adjusted by non-cash charges of $10.8 million.
The following summarizes our cash flows for the periods indicated: Year Ended December 31, (dollars in millions) 2025 2024 Net cash used in operating activities $ (51.8) $ (74.2) Net cash provided by investing activities 92.5 80.4 Net cash provided by (used in) financing activities (10.6) 0.1 Net increase in cash and cash equivalents $ 30.1 $ 6.3 Cash Flows from Operating Activities During the year ended December 31, 2025, cash used in operating activities was $51.8 million, which consisted of a net loss of $56.0 million and a net change of $5.4 million in our net operating assets and liabilities, adjusted by non-cash charges of $9.7 million.
Our net losses were $83.7 million, $101.9 million and $68.2 million for the years ended December 31, 2024, 2023 and 2022, respectively, and we expect to continue to incur significant losses for the foreseeable future. As of December 31, 2024, we had an accumulated deficit of $434.5 million.
Our net losses were $56.0 million, $83.7 million and $101.9 million for the years ended December 31, 2025, 2024 and 2023, respectively, and we expect to continue to incur significant losses for the foreseeable future. As of December 31, 2025, we had an accumulated deficit of $490.5 million.
General and Administrative Expenses Our general and administrative expenses consist primarily of personnel expenses, allocated facilities costs and fees for outside consulting and professional services, including legal, human resource, information technology and audit services. Personnel expenses consist of salaries, benefits and stock-based compensation. We may incur additional expenses to support the growth of our business.
General and Administrative Expenses Our general and administrative expenses consist primarily of personnel expenses, allocated facilities costs and fees for outside consulting and professional services, including legal, human resource, information technology and audit services. Personnel expenses consist of salaries, benefits and stock-based compensation.
During the year ended December 31, 2023, net cash provided by investing activities was $76.0 million primarily relating to the maturities of marketable securities exceeding purchases of such marketable securities.
Cash Flows from Investing Activities During the year ended December 31, 2025, net cash provided by investing activities was $92.5 million primarily relating to the maturities of marketable securities exceeding purchases of such marketable securities.
In October 2024, we made the strategic decision to terminate the PALIZADE Phase 2b clinical trial in patients with active LN and focus our clinical development efforts on zetomipzomib for the treatment of AIH.
In October 2024, we made the strategic decision to terminate the PALIZADE Phase 2b clinical trial in patients with active LN and focus our clinical development efforts on zetomipzomib for the treatment of AIH. In October 2025, we initiated a process to explore a full range of strategic alternatives focused on maximizing stockholder value.
The non-cash charges consisted of $18.1 million for stock-based compensation expense, $2.9 million for impairment loss of long-lived assets, $1.1 million for depreciation, and $0.2 million of non-cash interest expense, offset by $6.8 million of amortization of premium and discounts on marketable securities.
The non-cash charges consisted of $9.0 million for stock-based compensation expense, $0.9 million for impairment loss of long-lived assets, $0.9 million for depreciation, $0.3 million of cumulative currency translation loss, $0.2 million of non-cash interest expense, $0.1 million of loss on debt extinguishment, and $0.3 million of loss on disposition of property and equipment, offset by $2.0 million of amortization of premium and discounts on 71 Table of Contents marketable securities.
Results of Operations Comparison of the Years Ended December 31, 2024 and 2023 Year Ended December 31, Increase (decrease) (dollars in millions) 2024 2023 Collaboration revenue $ — $ 7.0 $ (7.0) Operating expenses: Research and development 65.7 85.7 (20.0) General and administrative 23.4 26.5 (3.1) Restructuring and impairment charges 1.5 6.2 (4.7) Total operating expenses 90.6 118.4 (27.8) Loss from operations (90.6) (111.4) 20.8 Interest income 8.5 11.1 (2.6) Interest expense (1.6) (1.6) — Net loss $ (83.7) $ (101.9) $ 18.2 Collaboration Revenue Collaboration revenue decreased by $7.0 million in 2024 compared to 2023 due to the upfront payment under the Everest License Agreement realized in September 2023.
Results of Operations Comparison of the Years Ended December 31, 2025 and 2024 Year Ended December 31, Increase (decrease) (dollars in millions) 2025 2024 Operating expenses: Research and development $ 33.8 $ 65.7 (31.9) General and administrative 18.5 23.4 (4.9) Restructuring and impairment charges 6.8 1.5 5.3 Total operating expenses 59.1 90.6 (31.5) Loss from operations (59.1) (90.6) 31.5 Interest income 4.5 8.5 (4.0) Other expenses (1.4) (1.6) 0.2 Net loss $ (56.0) $ (83.7) $ 27.7 Research and Development Expenses Research and development expenses decreased by $31.9 million in 2025 compared to 2024.
General and Administrative Expenses General and administrative expenses decreased by $3.1 million in 2024 compared to 2023.
General and Administrative Expenses General and administrative expenses decreased by $4.9 million in 2025 compared to 2024.
We believe that our existing cash, cash equivalents and marketable securities as of December 31, 2024 will be sufficient to meet our projected operating requirements through at least the next 12 months from the date the financial statements were issued.
Based on our current operating plans, including our previously announced reduction in force and suspension of various development efforts, we estimate that our existing cash and cash equivalents as of December 31, 2025 will be sufficient to meet our projected operating requirements through at least the next 12 months from the date the financial statements were issued.
Interest Income Our interest income consists of interest income earned on our cash, cash equivalents and marketable securities. 68 Table of Contents Interest Expense Our interest expense consists of interest expense related to our debt facility.
Interest Income Our interest income consists of interest income earned on our cash, cash equivalents and marketable securities. Other Expenses Other expenses consist of interest expense and realized cumulative currency translation loss. Our interest expense is related to our debt facility.
The decrease was primarily due to a decrease of $2.0 million in legal and professional services in connection with the negotiation and implementation of the Everest License Agreement in 2023, a decrease of $0.5 million in stock-based compensation and personnel-related expenses, a decrease of $0.3 million in consulting expenses and a decrease of $0.3 million in D&O insurance premiums.
The decrease was primarily due to a decrease of $4.4 million in stock-based compensation and personnel-related expenses driven by lower headcount from 69 Table of Contents a corporate restructuring, a decrease of $0.3 million in D&O insurance premiums and a decrease of $0.2 million in legal and professional services.
Payments for the purchases of property and equipment was $1.8 million during the year ended December 31, 2023. 72 Table of Contents Cash Flows from Financing Activities During the year ended December 31, 2024, cash provided by financing activities was $0.1 million from the issuance of common stock pursuant to our employee equity plans.
During the year ended December 31, 2024, cash provided by financing activities was $0.1 million from the issuance of common stock pursuant to our employee equity plans. Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Not required for smaller reporting companies. Item 8. Financial Statements and Supplementary Data.
As of December 31, 2024, our cash equivalents and marketable securities had a weighted-average maturity of approximately five months and the longest maturity was 12 months. We have incurred operating losses and experienced negative operating cash flows since our inception and anticipate that we will continue to incur losses for at least the foreseeable future.
Liquidity and Capital Resources Overview As of December 31, 2025, we had $71.9 million in cash and cash equivalents invested in a U.S. Treasury money market fund. We have incurred operating losses and experienced negative operating cash flows since our inception and anticipate that we will continue to incur losses for at least the foreseeable future.
Critical Accounting Estimates Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles. 66 Table of Contents The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported expenses incurred during the reporting periods.
The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported expenses incurred during the reporting periods.
We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect.
We have based our estimates on assumptions that may prove to be incorrect, and we could use our capital resources sooner than we currently expect. We expect that our operating expenses will decrease as we suspended various development efforts and commenced our reductions in force.
The decrease was primarily related to one-time severance-related costs of $3.3 million recognized in 2023 and higher impairment costs recognized in 69 Table of Contents 2023 than 2024 on the right-of-use asset for the vacated floor in the leased office facility and certain equipment no longer utilized. Interest Income Interest income decreased by $2.6 million in 2024 compared to 2023.
Restructuring and impairment charges Restructuring and impairment charges increased by $5.3 million in 2025 compared to 2024. The increase was primarily related to one-time severance-related costs and higher impairment costs on certain equipment no longer utilized following a corporate restructuring. Interest Income Interest income decreased by $4.0 million in 2025 compared to 2024.
During the year ended December 31, 2023, cash used in operating activities was $81.6 million, which consisted of a net loss of $101.9 million and a net change of $4.7 million in our net operating assets and liabilities, and adjusted by non-cash charges of $15.5 million.
The change in our net operating assets and liabilities was primarily due to a decrease of $2.4 million in other assets and a decrease of $1.9 million in prepaid expenses and other current assets, offset by a decrease of $7.3 million in accounts payable and accrued expenses driven by the reduced operating activities following the corporate restructuring in October 2025, and a decrease of $2.4 million in operating lease asset and liabilities During the year ended December 31, 2024, cash used in operating activities was $74.2 million, which consisted of a net loss of $83.7 million and a net change of $1.3 million in our net operating assets and liabilities, adjusted by non-cash charges of $10.8 million.
Overview We are a clinical-stage biotechnology company developing novel small molecule therapeutics to treat unmet needs in immune-mediated diseases. We believe therapies that inhibit multiple drivers of disease by targeting fundamental upstream control processes within the cell have the potential for profound therapeutic benefit in a number of difficult-to-treat diseases.
Overview We are a clinical-stage biotechnology company developing novel small molecule therapeutics to treat unmet needs in immune-mediated diseases.
Our net loss was $83.7 million for the year ended December 31, 2024, and we had an accumulated deficit of $434.5 million as of December 31, 2024.
Our net loss was $56.0 million for the year ended December 31, 2025, and we had an accumulated deficit of $490.5 million as of December 31, 2025. In October 2025, we announced plans to explore a full range of strategic alternatives focused on maximizing stockholder value.
The interest expense was composed of the contractual coupon interest expense, the amortization of the debt discount and issuance costs and the accretion of the final payment fee associated with the Oxford Loan Agreement.
A portion of the interest expense is non-cash expense relating to the accretion of the final payment fees and amortization of debt discount and debt issuance costs associated with our loan agreement, or the Loan Agreement, that we entered into in November 2021 with Oxford Finance, LLC, or Oxford Finance.
For additional information relating to our leases or debt, see Notes 6 and 7 to our audited consolidated financial statements found elsewhere in this Annual Report. We have no material non-cancelable purchase commitments with service providers, as we have generally contracted on a cancelable, purchase order basis.
We have no material non-cancelable purchase commitments with service providers, as we have generally contracted on a cancelable, purchase order basis.
Our primary uses of capital are, and we expect will continue to be, compensation and related expenses, third-party clinical research and development services, clinical costs, legal and other regulatory expenses and general overhead costs. We have based our estimates on assumptions that may prove to be incorrect, and we could use our capital resources sooner than we currently expect.
Funding Requirements We believe that our available cash and cash equivalents are sufficient to fund existing and planned cash requirements for the next 12 months. Our primary uses of capital are, and we expect will continue to be, compensation and related expenses, third-party development services, legal, lease and general overhead costs.
The change in our net operating assets and liabilities was primarily due to an increase of $4.9 million of other assets driven by the clinical activities related to PALIZADE clinical trial, a decrease of $0.3 million in operating lease asset and liabilities, offset by an increase of $6.3 million in accounts payable and accrued expenses due to timing of payments and increased clinical and manufacturing expenditures, and a decrease of $3.6 million in prepaid expenses and other current assets.
The decrease was primarily due to a decrease of $26.3 million in clinical expenses resulting from our strategic decision to terminate the PALIZADE trial in October 2024 and the completion of the PORTOLA trial, a decrease of $4.8 million in personnel-related expenses driven by lower headcount resulting from a corporate restructuring, a decrease of $0.8 million in facility-related expenses and a decrease of $0.7 million in consulting expenses, offset by an increase of $0.7 million in manufacturing expenses related to the timing of drug manufacturing runs.
The decrease was primarily attributable to the decrease in our cash equivalent and marketable securities balances. Interest Expense Interest expense stayed at $1.6 million in 2024 compared to $1.6 million in 2023.
The decrease was primarily attributable to the decrease in our cash equivalent and marketable securities balances and lower interest rates. Other Expenses Other expenses consist of interest expense and realized cumulative currency translation loss. Our interest expense is related to our prior debt facility.
Removed
To that end, we are advancing a drug development program that harnesses a key regulator of cellular function by targeting the immunoproteasome, which is responsible for protein degradation in cells of the immune system and drives many key aspects of immune cell function. We believe targeting this fundamental regulator of cellular function offers an attractive approach to treating autoimmune diseases.
Added
In October 2025, we announced plans to explore strategic alternatives focused on maximizing stockholder value after being unable to align with the Food and Drug Administration, or FDA, on a potential registrational clinical trial of zetomipzomib, a novel, selective inhibitor of the immunoproteasome in patients with relapsed and refractory autoimmune hepatitis, or AIH.
Removed
We anticipate that a substantial portion of our capital resources and efforts in the foreseeable future will be focused on completing the necessary development, obtaining regulatory approval and preparing for potential commercialization of our product candidates. We expect to continue to incur significant expenses and increasing operating losses for at least the next several years.
Added
We retained TD Cowen to support the Company through the strategic review process. Following this announcement, we have been implementing a restructuring plan and wind-down of our business operations to focus on strategic alternatives for zetomipzomib development.
Removed
Our net losses may fluctuate significantly from period to period, depending on the timing of our planned clinical trials and expenditures on other research and development activities.
Added
We expect operating expenses to continue to decrease over the prior year due to the implementation of reductions in our workforce and suspension of various development efforts.
Removed
Given our strategic focus, we expect our research and development expenses to remain stable for the foreseeable future even as zetomipzomib advances into later stages of development. The process of conducting the necessary clinical research to obtain regulatory approval is costly and time-consuming, and the successful development of our product candidates is highly uncertain.
Added
Recent Developments On March 6, 2026, we entered into an asset purchase agreement, or the Enodia Agreement, with Enodia Therapeutics SAS, or Enodia, under which Enodia has acquired the assets from our Sec61-based discovery and development program, or the Assets.
Removed
As a result, we are unable to determine the duration and completion costs of our research and development projects or when and to what extent we will generate revenue from the commercialization and sale of any of our product candidates.
Added
In connection with the transaction, Enodia assumed liabilities related to certain transferred contracts and from the ownership, use, operation or maintenance of the Assets.
Removed
Research and Development Expenses Research and development expenses decreased by $20.0 million in 2024 compared to 2023. The decrease was primarily due to our October 2023 strategic restructuring to prioritize clinical-stage programs, reduce our headcount and pause early-stage research and discovery activities.
Added
The Enodia Agreement does not cover any other of our assets, including any assets related to the zetomizomib program, employee contracts, cash, accounts receivable, real property or equipment. 66 Table of Contents Critical Accounting Estimates Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles.
Removed
As the result of the restructuring, there was a decrease of $10.4 million in stock-based compensation and personnel-related expenses, a decrease of $5.9 million in research and pre-clinical expenses, a $5.0 million milestone payment made in 2023 under the Onyx License Agreement, a decrease of $1.7 million in facility-related expenses and a decrease of $1.1 million in consulting expense offset by an increase of $4.1 million in clinical expenses primarily related to increased activities for the PALIZADE and PORTOLA trials and an increase of $0.2 million in manufacturing.
Added
Due to the suspension of various development efforts related to our programs and the recent reduction in our workforce, we expect our research and development expenses to decrease in 2026.
Removed
Restructuring and impairment charges Restructuring and impairment charges decreased by $4.7 million in 2024 compared to 2023.
Added
As a result of the ongoing strategic review and workforce reduction, we expect that our general and administrative expenses will decrease in 2026, and will include costs associated with operating as a public company, including expenses related to legal, audit, accounting, regulatory and tax-related services associated with maintaining compliance with exchange listing and SEC requirements, director and officer insurance costs, investor and public relations costs, and other administrative and professional services.
Removed
Liquidity and Capital Resources Overview As of December 31, 2024, we had $41.7 million in cash and cash equivalents and $90.5 million of marketable securities invested in a U.S. Treasury money market fund, U.S. Treasury securities, U.S. agency bonds, commercial paper and corporate debt securities.
Added
Restructuring and Impairment Charges In October 2025, we announced the initiation of a process to explore a full range of strategic alternatives focused on maximizing stockholder value.
Removed
At-the-Market Offering Program In December 2021, we entered into a Sales Agreement, or December 2021 ATM Agreement, with Cowen and Company, LLC, or Cowen, pursuant to which we can offer and sell, from time to time at our sole discretion through Cowen, as our sales agent, shares of common stock having an aggregate offering price of up to $200.0 million.
Added
In connection with the evaluation of strategic alternatives, we are in the process of implementing a restructuring plan including workforce reduction and other cost-containment and cash conservation measures, pursuant to which we reduced our workforce by approximately 70%.
Removed
Any shares of common stock sold will be issued pursuant to our shelf registration statement on Form S-3. We will pay Cowen a commission equal to 3.0% of the gross sales proceeds of any shares of common stock sold through Cowen under the December 2021 ATM Agreement and also have provided Cowen with indemnification and contribution rights.
Added
On October 20, 2025, we made a repayment of $6.3 million in full satisfaction of the aggregate outstanding amount, including accrued interest and final payment fee as of such date, under the Loan Agreement.
Removed
As of December 31, 2024, we have sold an aggregate of 1,198,601 shares of our common stock for gross proceeds of approximately $131.7 million at a weighted average purchase price of $109.84 per share pursuant to the ATM Agreement. As of December 31, 2024, approximately $68.3 million remains available under the ATM Agreement.
Added
Upon making the repayment, the Loan Agreement was terminated in accordance with its terms and all liens and security interests granted thereunder to secure the obligations were released. As a result, we expect interest expense to decrease in 2026.
Removed
As of December 31, 2024, we declined these tranches in borrowing capacity available to us under the Loan Agreement.
Added
On October 20, 2025, we made a repayment of $6.3 million in full satisfaction of the aggregate outstanding amount, including accrued interest and final payment fee as of such date, under the Loan Agreement.
Removed
Until June 30, 2023, the Loan Agreement bore interest at a floating per annum rate (based on the actual number of days elapsed divided by a year of 360 days) equal to the sum of (a) the greater of (i) the 30-day U.S.
Added
Upon making the repayment, the Loan Agreement was terminated in accordance with its terms and all liens and security interests granted thereunder to secure the obligations were released. The cumulative currency translation loss of $0.3 million was offset by a decrease of $0.5 million of interest expense due to payoff Oxford loan balance in October 2025.
Removed
LIBOR rate reported in The Wall Street Journal on the last business day of the month that immediately precedes the month in which the interest will accrue and (ii) 0.08%, plus (b) 7.87%. We are required to make monthly interest-only payments prior to the amortization 70 Table of Contents date of January 1, 2025.
Added
If the process for evaluating strategic alternatives does not result in the Company consummating a transaction or any other strategic outcome, the Board of Directors may decide to pursue a dissolution and liquidation of the Company. As part of the cost reductions associated with the evaluation of strategic alternatives, we had reduced our workforce by approximately 70%.
Removed
The loan facility is secured by all assets except intellectual property, which is subject to a negative pledge, and will mature on November 1, 2026. There are no warrants or financial covenants associated with the Loan Agreement.
Added
We expect to continue to incur additional losses in the future to fund our operations as we evaluate strategic alternatives. Failure to manage discretionary spending during this time may adversely impact our ability to achieve our intended business objectives.
Removed
A LIBOR transition event occurred effective July 1, 2023 and Oxford Finance revised the Loan Agreement to replace the LIBOR rate with the 1-month CME term SOFR plus 0.1%. The rate change did not require contract remeasurement at the effective date of the change or a reassessment of any previous accounting determinations pertaining to the facility.
Added
In October 2025, we made a repayment of $6.3 million in full satisfaction of the aggregate 70 Table of Contents outstanding amount, including accrued interest and final payment fee as of such date, under the Loan Agreement, pursuant to a payoff letter from Oxford Finance. Refer to Note 7 to our condensed consolidated financial statements for additional information.
Removed
The rate change did not have a material impact on our financial statements. Funding Requirements We believe that our available cash, cash equivalents and short-term investments are sufficient to fund existing and planned cash requirements for the next 12 months.
Added
Our expected material cash requirements comprise of contractually obligated expenditures. Our material cash requirements through fiscal year 2026 are expected to total approximately $2.4 million, which represents amounts due under our operating leases. For additional information relating to our leases, see Notes 6 to our audited consolidated financial statements found elsewhere in this Annual Report.
Removed
Further, our operating plan may change, and we may need additional funds to meet operational needs and capital requirements for clinical trials and other research and development expenditures.
Added
See the section titled “Business—License Agreement with Onyx” for additional information.
Removed
Because of the numerous risks and uncertainties associated with the development and commercialization of our product candidates, we are unable to estimate the amounts of increased capital outlays and operating expenditures associated with our current and anticipated clinical studies. Our expected material cash requirements comprise of contractually obligated expenditures.
Added
Cash Flows from Financing Activities During the year ended December 31, 2025, cash used in financing activities was $10.6 million primarily relating to the repayments and payoff of loan principal and final fee associated with the Loan Agreement with Oxford Finance.
Removed
Our material cash requirements through fiscal year 2027 are expected to total approximately $17.8 million, which includes debt payments, including principal, future interest payments and the final payment fee due on maturity, and amounts due under our operating leases.
Added
The financial statements required by this item are set forth beginning on page F-1 of this Annual Report on Form 10-K. Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. None.
Removed
See the section titled “Business—License Agreement with Onyx” for additional information. We will require additional financing to fund working capital and pay our obligations. We may pursue financing opportunities through a combination of equity offerings, debt financings and additional funding from license and collaboration agreements.
Removed
Except for any obligations of Everest to reimburse us for research and development expenses or to make milestone or royalty payments under the Everest License Agreement, we have no committed external sources of funding.
Removed
There can be no assurance that we will be successful in acquiring additional funding at levels sufficient to fund our operations or on terms favorable to us or at all. Funding may not be available to us on acceptable terms, or at all.

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