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What changed in SPRUCE BIOSCIENCES, INC.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of SPRUCE BIOSCIENCES, 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.

+456 added−480 removedSource: 10-K (2026-03-09) vs 10-K (2025-04-15)

Top changes in SPRUCE BIOSCIENCES, INC.'s 2025 10-K

456 paragraphs added · 480 removed · 333 edited across 6 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

286 edited+88 added−108 removed482 unchanged
Biggest changeThese factors include: ▪ the commencement, enrollment or results of our ongoing and planned clinical trials of tralesinidase alfa, tildacerfont or any future clinical trials we may conduct of tralesinidase alfa, tildacerfont and any future product candidates, or changes in the development status of tildacerfont, tralesinidase alfa and any future product candidates; ▪ acceptance by the FDA and EMA of the clinical trial design of our planned and ongoing clinical trials of tralesinidase alfa and tildacerfont; ▪ any delay in our regulatory filings for tralesinidase alfa, tildacerfont and any future product candidates and any adverse development or perceived adverse development with respect to the applicable regulatory authority’s review of such filings, including without limitation the FDA’s issuance of a “refusal to file” letter or a request for additional information; ▪ adverse results or delays in clinical trials as a result of outbreaks of contagious diseases, patient engagement, protocol amendments or otherwise; ▪ our decision to initiate a clinical trial, not to initiate a clinical trial, or to terminate an existing clinical trial; ▪ adverse regulatory decisions, including failure to receive regulatory approval for tralesinidase alfa, tildacerfont and any future product candidates; ▪ changes in laws or regulations applicable to tralesinidase alfa, tildacerfont and any future product candidates, including but not limited to clinical trial requirements for approvals; ▪ the failure to obtain coverage and adequate reimbursement of tralesinidase alfa, tildacerfont and any future product candidates, if approved; ▪ changes in the structure of healthcare payment systems; 79 Table of Contents ▪ adverse developments concerning our manufacturers; ▪ our inability to obtain adequate product supply for any approved drug product or inability to do so at acceptable prices; ▪ our inability to establish collaborations if needed; ▪ our failure to commercialize tralesinidase alfa, tildacerfont and any future product candidates; ▪ unanticipated serious safety concerns related to the use of tralesinidase alfa, tildacerfont and any future product candidates; ▪ introduction of new products or services offered by us or our competitors, or the release or publication of clinical trial results from competing product candidates; ▪ announcements of significant acquisitions, strategic partnerships, joint ventures, or capital commitments by us or our competitors; ▪ our ability to effectively manage our growth; ▪ the size and growth, if any, of the markets for MPS-IIIB (Sanfilippo Syndrome Type B), major depressive disorder, and other disorders that we may target; ▪ actual or anticipated variations in quarterly or annual operating results; ▪ our cash position; ▪ our failure to meet the estimates and projections of the investment community or that we may otherwise provide to the public; ▪ publication of research reports about us or our industry or positive or negative recommendations or withdrawal of research coverage by securities analysts; ▪ fluctuations in the market valuation of companies perceived by investors to be comparable to us; ▪ overall performance of the equity markets; ▪ issuances of debt or equity securities; ▪ sales of our common stock by us, our insiders or our other stockholders in the future; ▪ share price and volume fluctuations attributable to inconsistent trading volume levels of our shares; ▪ trading volume of our common stock; ▪ changes in accounting practices; ▪ ineffectiveness of our internal controls; ▪ disputes or other developments relating to proprietary rights, including patents, litigation matters, and our ability to obtain patent protection for our technologies; ▪ significant lawsuits, including patent or stockholder litigation; ▪ geopolitical and macroeconomic conditions, including relating to contagious disease outbreaks, the ongoing wars in Ukraine and Israel, and recent and potential future disruptions in access to bank deposits or lending commitments due to bank failures; and ▪ other events or factors discussed in this “Risk Factors” section and elsewhere in this Annual Report, many of which are beyond our control.
Biggest changeThese factors include: • the commencement, enrollment or results of our ongoing and planned clinical trials of TA-ERT, tildacerfont or any future clinical trials we may conduct of TA-ERT and any other current or future product candidates, or changes in the development status of TA-ERT and any other current or future product candidates; • acceptance by the FDA and EMA of the clinical trial design of our planned and ongoing clinical trials of TA-ERT and tildacerfont; • any delay in our regulatory filings for TA-ERT and any other current or future product candidates and any adverse development or perceived adverse development with respect to the applicable regulatory authority’s review of such filings, including without limitation the FDA’s issuance of a “refusal to file” letter or a request for additional information; 60 Table of Contents • adverse results or delays in clinical trials as a result of outbreaks of contagious diseases, patient engagement, protocol amendments or otherwise; • our decision to initiate a clinical trial, not to initiate a clinical trial, or to terminate an existing clinical trial; • adverse regulatory decisions, including failure to receive regulatory approval for TA-ERT and any other current or future product candidates; • changes in laws or regulations applicable to TA-ERT and any other current or future product candidates, including but not limited to clinical trial requirements for approvals; • the failure to obtain coverage and adequate reimbursement of TA-ERT and any other current or future product candidates, if approved; • changes in the structure of healthcare payment systems; • adverse developments concerning our manufacturers; • our inability to obtain adequate product supply for any approved drug product or inability to do so at acceptable prices; • our inability to establish collaborations if needed; • our failure to commercialize TA-ERT and any other current or future product candidates; • unanticipated serious safety concerns related to the use of TA-ERT and any other current or future product candidates; • introduction of new products or services offered by us or our competitors, or the release or publication of clinical trial results from competing product candidates; • announcements of significant acquisitions, strategic partnerships, joint ventures, or capital commitments by us or our competitors; • our ability to effectively manage our growth; • the size and growth, if any, of the markets for MPS IIIB, major depressive disorder, and other disorders that we may target; • actual or anticipated variations in quarterly or annual operating results; • our cash position, including doubt about our ability to continue as a going concern; • our failure to meet the estimates and projections of the investment community or that we may otherwise provide to the public; • publication of research reports about us or our industry or positive or negative recommendations or withdrawal of research coverage by securities analysts; • fluctuations in the market valuation of companies perceived by investors to be comparable to us; • overall performance of the equity markets; • issuances of debt or equity securities; • sales of our common stock by us, our insiders or our other stockholders in the future; • share price and volume fluctuations attributable to inconsistent trading volume levels of our shares; • trading volume of our common stock; • changes in accounting practices; • ineffectiveness of our internal controls; 61 Table of Contents • disputes or other developments relating to proprietary rights, including patents, litigation matters, and our ability to obtain patent protection for our technologies; • significant lawsuits, including patent or stockholder litigation; • geopolitical and macroeconomic conditions, including global trade disputes and the wars in Ukraine and the Middle East and related sanctions; and • other events or factors discussed in this “Risk Factors” section and elsewhere in this Annual Report, many of which are beyond our control.
Any delays in entering into new strategic partnership agreements related to our product candidates could delay the development and commercialization of our product candidates in certain geographies for certain indications, which would harm our business prospects, financial condition, and results of operations.
Any delays in entering into new strategic partnership agreements related to our product candidates could delay the development and commercialization of our product candidates in certain geographies for certain indications, which would harm our business, financial condition, results of operations and prospects.
Our business may not be able to generate sufficient cash flow from operations, and future borrowings or other financings may not be available to us in an amount sufficient to enable us to service our indebtedness and fund our other liquidity needs.
Our business may not be able to generate sufficient cash flow from operations, and future borrowings or other financings may not be available to us in an amount sufficient to enable us to service our indebtedness and to fund our other liquidity needs.
For example, under the GDPR, companies may face temporary or definitive bans on processing of personal data and other corrective actions; fines of up to 20 million Euros under the EU GDPR. 17.5 million pounds sterling under the UK GDPR or, in each case, 4% of annual 56 Table of Contents global revenue, whichever is greater; or private litigation related to processing of personal data brought by classes of data subjects or consumer protection organizations authorized at law to represent their interests.
For example, under the GDPR, companies 56 Table of Contents may face temporary or definitive bans on processing of personal data and other corrective actions; fines of up to 20 million Euros under the EU GDPR. 17.5 million pounds sterling under the UK GDPR or, in each case, 4% of annual global revenue, whichever is greater; or private litigation related to processing of personal data brought by classes of data subjects or consumer protection organizations authorized at law to represent their interests.
Although we carefully manage our relationships with our CROs, we may encounter challenges or delays in the future and these delays or challenges may have a material adverse impact on our business, prospects, financial condition, and results of operations.
Although we carefully manage our relationships with our CROs, we may encounter challenges or delays in the future and these delays or challenges may have a material adverse impact on our business, financial condition, results of operations and prospects.
In addition, quarantines, shelter-in-place, and similar government orders, or the perception that such orders, shutdowns or other restrictions on the conduct of business operations could occur, related to infectious diseases could impact personnel at our CROs, which could disrupt our clinical timelines, which could have a material adverse impact on our business, prospects, financial condition, and results of operations.
In addition, quarantines, shelter-in-place, and similar government orders, or the perception that such orders, shutdowns or other restrictions on the conduct of business operations could occur, related to infectious diseases could impact personnel at our CROs, which could disrupt our clinical timelines, which could have a material adverse impact on our business, financial condition, results of operations and prospects.
In addition, there could be public announcements of the results of hearings, motions, or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock.
In addition, there could be public announcements of the results of hearings, motions, or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock.
These risks and uncertainties include the following: ▪ the United States Patent and Trademark Office (“USPTO”) and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other provisions during the patent process, the noncompliance with which can result in abandonment or lapse of a patent or patent application, and partial or complete loss of patent rights in the relevant jurisdiction; ▪ patent applications may not result in any patents being issued; ▪ patents that may be issued or in-licensed may be challenged, invalidated, modified, revoked, circumvented, found to be unenforceable, or may otherwise not provide any competitive advantage; ▪ our competitors, many of whom have substantially greater resources than we do and many of whom have made significant investments in competing technologies, may seek or may have already obtained patents that will limit, interfere with, or eliminate our ability to make, use and sell our potential product candidates and may limit, interfere with, or eliminate our ability to obtain patents related to our product candidates; ▪ other parties may have or may seek to design around our claims or develop technologies that may be related or competitive to our platform, may have filed or may file patent applications and may have received or may receive patents that overlap or conflict with our patent applications and patents, either by claiming the same composition of matter, methods or formulations or by claiming subject matter that could dominate our patent position; ▪ any successful opposition to any patents owned by or licensed to us could deprive us of rights necessary for the practice of our technologies or the successful commercialization of any products or product candidates that we may develop; 63 Table of Contents ▪ because patent applications in the United States and most other countries are confidential for a period of time after filing, we cannot be certain that we or our licensors were the first to file any patent application related to our product candidates, any future product candidates, and other proprietary technologies and their uses; ▪ an interference proceeding can be provoked by a third party or instituted by the USPTO to determine who was the first to invent any of the subject matter covered by the patent claims of our applications for any application with an effective filing date before March 16, 2013; as such, subject matter covered in patents or patent applications that we or our licensors have filed before March 16, 2013 may be challenged and invalidated under an interference proceeding; ▪ there may be significant pressure on the U.S. government and international governmental bodies to limit the scope of patent protection both inside and outside the United States for disease treatments that prove successful, as a matter of public policy regarding worldwide health concerns; and ▪ countries other than the United States may have patent laws less favorable to patentees than those upheld by U.S. courts, allowing foreign competitors a better opportunity to create, develop, and market competing product candidates in those countries.
These risks and uncertainties include the following: • the United States Patent and Trademark Office (“USPTO”) and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other provisions during the patent process, the noncompliance with which can result in abandonment or lapse of a patent or patent application, and partial or complete loss of patent rights in the relevant jurisdiction; • patent applications may not result in any patents being issued; • patents that may be issued or in-licensed may be challenged, invalidated, modified, revoked, circumvented, found to be unenforceable, or may otherwise not provide any competitive advantage; • our competitors, many of whom have substantially greater resources than we do and many of whom have made significant investments in competing technologies, may seek or may have already obtained patents that will limit, interfere with, or eliminate our ability to make, use and sell our potential product candidates and may limit, interfere with, or eliminate our ability to obtain patents related to our product candidates; • other parties may have or may seek to design around our claims or develop technologies that may be related or competitive to our platform, may have filed or may file patent applications and may have received or may receive patents that overlap or conflict with our patent applications and patents, either by claiming the same composition of matter, methods or formulations or by claiming subject matter that could dominate our patent position; • any successful opposition to any patents owned by or licensed to us could deprive us of rights necessary for the practice of our technologies or the successful commercialization of any products or product candidates that we may develop; • because patent applications in the United States and most other countries are confidential for a period of time after filing, we cannot be certain that we or our licensors were the first to file any patent application related to our product candidates, any future product candidates, and other proprietary technologies and their uses; • an interference proceeding can be provoked by a third party or instituted by the USPTO to determine who was the first to invent any of the subject matter covered by the patent claims of our applications for any application with an effective filing date before March 16, 2013; as such, subject matter covered in patents or patent applications that we or our licensors have filed before March 16, 2013 may be challenged and invalidated under an interference proceeding; • there may be significant pressure on the U.S. government and international governmental bodies to limit the scope of patent protection both inside and outside the United States for disease treatments that prove successful, as a matter of public policy regarding worldwide health concerns; and • countries other than the United States may have patent laws less favorable to patentees than those upheld by U.S. courts, allowing foreign competitors a better opportunity to create, develop, and market competing product candidates in those countries.
The commencement and completion of clinical trials can be delayed for a number of reasons, including delays related to: ▪ the FDA or comparable foreign regulatory authorities’ failure to accept our proposed manufacturing processes and suppliers and/or requirement to provide additional information regarding our manufacturing processes before providing marketing authorization; ▪ obtaining regulatory authorizations to commence a clinical trial or reaching a consensus with regulatory authorities on clinical trial design or implementation; ▪ any failure or delay in reaching an agreement with CROs and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and clinical trial sites; ▪ obtaining approval from one or more institutional review boards (“IRBs”) or positive opinions from Ethics Committees (“ECs”); ▪ IRBs or ECs refusing to approve or issuing a negative opinion, suspending, varying or terminating the clinical trial at an investigational site, precluding enrollment of additional subjects, or withdrawing their approval or positive opinion of the clinical trial; ▪ changes to clinical trial protocols and related operationalization of such changes at clinical trial sites; ▪ selection of clinical endpoints that require prolonged periods of clinical observation or analysis of the resulting data; ▪ acceptance by the FDA and EMA of the clinical trial design of our planned and ongoing clinical trials of tralesinidase alfa and tildacerfont; ▪ sites not timely activating, delaying screening activities, or deviating from clinical trial protocols; ▪ manufacturing sufficient quantities of tralesinidase alfa, tildacerfont or our other current and future product candidates or obtaining sufficient quantities of combination therapies for use in clinical trials; ▪ subjects failing to enroll or remain in our trials at the rate we expect, or failing to return for post-treatment follow-up; 34 Table of Contents ▪ subjects choosing an alternative treatment for the indications for which we are developing tralesinidase alfa, tildacerfont and our other current and future product candidates, or participating in competing clinical trials; ▪ lack of subject engagement in the clinical trials or subjects dropping out of a clinical trial; ▪ lack of adequate funding to continue the clinical trial, such as that experienced by Allievex in relation to the continued development of tralesinidase alfa; ▪ subjects experiencing severe or unexpected drug-related adverse effects; ▪ occurrence of SAEs in clinical trials of the same class of agents conducted by other companies; ▪ a facility manufacturing our product candidates or any of its components being ordered by the FDA or comparable foreign regulatory authorities to temporarily or permanently shut down due to violations of current good manufacturing practice (“cGMP”), regulations or other applicable requirements, or infections or cross-contaminations of our product candidates in the manufacturing process; ▪ any changes to our manufacturing process, suppliers or formulation that may be necessary or desired; ▪ third-party vendors not performing manufacturing and distribution services in a timely manner or to sufficient quality standards; ▪ third-party clinical investigators losing the licenses or permits necessary to perform our clinical trials, not performing our clinical trials on our anticipated schedule or consistent with the clinical trial protocol, good clinical practice (“GCP”), or other regulatory requirements; ▪ third-party contractors not performing data collection or analysis in a timely or accurate manner; ▪ third-party contractors becoming debarred or suspended or otherwise penalized by the FDA or other government or regulatory authorities for violations of regulatory requirements, in which case we may need to find a substitute contractor, and we may not be able to use some or all of the data produced by such contractors in support of our marketing applications; or ▪ the impacts of contagious disease outbreaks on our ongoing and planned clinical trials.
The commencement and completion of clinical trials can be delayed for a number of reasons, including delays related to: • the FDA or comparable foreign regulatory authorities’ failure to accept our proposed manufacturing processes and suppliers and/or requirement to provide additional information regarding our manufacturing processes before providing marketing authorization; • obtaining regulatory authorizations to commence a clinical trial or reaching a consensus with regulatory authorities on clinical trial design or implementation; • any failure or delay in reaching an agreement with CROs and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and clinical trial sites; • obtaining approval from one or more institutional review boards (“IRBs”) or positive opinions from Ethics Committees (“ECs”); • IRBs or ECs refusing to approve or issuing a negative opinion, suspending, varying or terminating the clinical trial at an investigational site, precluding enrollment of additional subjects, or withdrawing their approval or positive opinion of the clinical trial; • changes to clinical trial protocols and related operationalization of such changes at clinical trial sites; • selection of clinical endpoints that require prolonged periods of clinical observation or analysis of the resulting data; • acceptance by the FDA and EMA of the clinical trial design of our planned and ongoing clinical trials of TA-ERT and our other current product candidates; • sites not timely activating, delaying screening activities, or deviating from clinical trial protocols; • manufacturing sufficient quantities of TA-ERT or our other current and future product candidates or obtaining sufficient quantities of combination therapies for use in clinical trials; • subjects failing to enroll or remain in our trials at the rate we expect, or failing to return for post-treatment follow-up; • subjects choosing an alternative treatment for the indications for which we are developing TA-ERT and our other current and future product candidates, or participating in competing clinical trials; • lack of subject engagement in the clinical trials or subjects dropping out of a clinical trial; • lack of adequate funding to continue the clinical trial, such as that experienced by Allievex in relation to the continued development of TA-ERT; • subjects experiencing severe or unexpected drug-related adverse effects; 34 Table of Contents • occurrence of SAEs in clinical trials of the same class of agents conducted by other companies; • a facility manufacturing our product candidates or any of its components being ordered by the FDA or comparable foreign regulatory authorities to temporarily or permanently shut down due to violations of current good manufacturing practice (“cGMP”), regulations or other applicable requirements, or infections or cross-contaminations of our product candidates in the manufacturing process; • any changes to our manufacturing process, suppliers or formulation that may be necessary or desired; • third-party vendors not performing manufacturing and distribution services in a timely manner or to sufficient quality standards; • third-party clinical investigators losing the licenses or permits necessary to perform our clinical trials, not performing our clinical trials on our anticipated schedule or consistent with the clinical trial protocol, good clinical practice (“GCP”), or other regulatory requirements; • third-party contractors not performing data collection or analysis in a timely or accurate manner; • third-party contractors becoming debarred or suspended or otherwise penalized by the FDA or other government or regulatory authorities for violations of regulatory requirements, in which case we may need to find a substitute contractor, and we may not be able to use some or all of the data produced by such contractors in support of our marketing applications; or • the impacts of contagious disease outbreaks on our ongoing and planned clinical trials.
Pursuant to the HBM License Agreement, we obtained an exclusive license to a specified product candidate developed by HBM in all countries outside of mainland China, Taiwan, Hong Kong, and Macau (“License”), for upfront consideration of $5.0 million and the issuance to HBM of a pre-funded warrant equal to 4.99% of our outstanding common stock as of the date of issuance of such warrant.
Pursuant to the HBM License Agreement, we obtained an exclusive license to a specified product candidate developed by HBM in all countries outside of mainland China, Taiwan, Hong Kong, and Macau, for upfront consideration of $5.0 million and the issuance to HBM of a pre-funded warrant equal to 4.99% of our outstanding common stock as of the date of issuance of such warrant.
Although there are currently various mechanisms that may be used to transfer personal data from the EEA and UK to the United States and other ‘inadequate’ countries in compliance with law, as applicable, such as the European Commission’s standard contractual clauses, the UK’s International Data Transfer Agreement / Addendum, and the EU-U.S.
Although there are currently various mechanisms that may be used to transfer personal data from the EEA and UK to the United States and other countries in compliance with law, as applicable, such as the European Commission’s standard contractual clauses, the UK’s International Data Transfer Agreement / Addendum, and the EU-U.S.
Later discovery of previously unknown problems with a product candidate, including adverse events of unanticipated severity or frequency, or with our third-party manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may result in, among other things: ▪ issue warning letters or untitled letters; ▪ mandate modifications to promotional materials or require us to provide corrective information to healthcare practitioners, or require other restrictions on the labeling or marketing of such products; ▪ require us to enter into a consent decree, which can include imposition of various fines, reimbursements for inspection costs, required due dates for specific actions and penalties for noncompliance; ▪ seek an injunction or impose civil or criminal penalties or monetary fines; ▪ suspend, withdraw or modify regulatory approval; ▪ suspend, terminate or modify any ongoing clinical trials; ▪ require that we conduct post-market studies; ▪ refuse to approve pending applications or supplements to applications filed by us; ▪ grant approval for narrower indications than we requested; ▪ suspend or impose restrictions on operations, including costly new manufacturing requirements; or ▪ seize or detain products, refuse to permit the import or export of products, or require us to initiate a product recall.
Later discovery of previously unknown problems with a product candidate, including adverse events of unanticipated severity or frequency, or with our third-party manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may result in, among other things: • issue warning letters or untitled letters; 42 Table of Contents • mandate modifications to promotional materials or require us to provide corrective information to healthcare practitioners, or require other restrictions on the labeling or marketing of such products; • require us to enter into a consent decree, which can include imposition of various fines, reimbursements for inspection costs, required due dates for specific actions and penalties for noncompliance; • seek an injunction or impose civil or criminal penalties or monetary fines; • suspend, withdraw or modify regulatory approval; • suspend, terminate or modify any ongoing clinical trials; • require that we conduct post-market studies; • refuse to approve pending applications or supplements to applications filed by us; • grant approval for narrower indications than we requested; • suspend or impose restrictions on operations, including costly new manufacturing requirements; or • seize or detain products, refuse to permit the import or export of products, or require us to initiate a product recall.
Even if we obtain such approvals, we will nevertheless be subject to additional risks related to operating in foreign countries, including: ▪ differing regulatory requirements in foreign countries, including differing reimbursement, pricing and insurance regimes; 48 Table of Contents ▪ the potential for so-called parallel importing, which is what happens when a local seller, faced with high or higher local prices, opts to import goods from a foreign market (with low or lower prices) rather than buying them locally; ▪ unexpected changes in tariffs, trade barriers, price and exchange controls, and other 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 internationally; ▪ foreign taxes, including withholding of payroll taxes; ▪ foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, and other obligations incident to doing business in another country; ▪ difficulties staffing and managing foreign operations; ▪ workforce uncertainty in countries where labor unrest is more common than in the United States; ▪ potential liability under the U.S.
Even if we obtain such approvals, we will nevertheless be subject to additional risks related to operating in foreign countries, including: • differing regulatory requirements in foreign countries, including differing reimbursement, pricing and insurance regimes; • the potential for so-called parallel importing, which is what happens when a local seller, faced with high or higher local prices, opts to import goods from a foreign market (with low or lower prices) rather than buying them locally; • unexpected changes in tariffs, trade barriers, price and exchange controls, and other 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 internationally; • foreign taxes, including withholding of payroll taxes; • foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, and other obligations incident to doing business in another country; • difficulties staffing and managing foreign operations; • workforce uncertainty in countries where labor unrest is more common than in the United States; • potential liability under the U.S.
We have faced significant setbacks as we conducted our two Phase 2b clinical trials for tildacerfont in adult patients with classic CAH, and we may continue to face such setbacks in our other development programs, which may delay or prevent regulatory approval of tildacerfont.
For example, we have faced significant setbacks as we conducted our two Phase 2b clinical trials for tildacerfont in adult patients with classic CAH, and we may continue to face such setbacks in our other development programs, which may delay or prevent regulatory approval of tildacerfont.
We cannot be certain that any of our or our licensors’ patent searches or analyses, including but not limited to the identification of relevant patents, analysis of the scope of relevant patent claims or determination of the expiration of relevant patents, are complete or thorough, nor can we be certain that we have identified each and every third-party patent and pending application in the United States, Europe and elsewhere that is relevant to or necessary for the commercialization of our product candidates in any jurisdiction, because: ▪ some patent applications in the United States may be maintained in secrecy until the patents are issued; ▪ patent applications in the United States and elsewhere can be pending for many years before issuance, or unintentionally abandoned patents or applications can be revived; ▪ pending patent applications that have been published can, subject to certain limitations, be later amended in a manner that could cover our technologies, our product candidates, and any future product candidates or the use of our technologies, our product candidates, and any future product candidates; ▪ identification of third-party patent rights that may be relevant to our technology is difficult because patent searching is imperfect due to differences in terminology among patents, incomplete databases, and the difficulty in assessing the meaning of patent claims; ▪ patent applications in the United States are typically not published until 18 months after the priority date; and ▪ publications in the scientific literature often lag behind actual discoveries.
We cannot be certain that any of our or our licensors’ patent searches or analyses, including but not limited to the identification of relevant patents, analysis of the scope of relevant patent claims or determination of the expiration of relevant patents, are complete or thorough, nor can we be certain that we have identified each and every third-party patent and pending application in the United States, Europe and elsewhere that is relevant to or necessary for the commercialization of our product candidates in any jurisdiction, because: • some patent applications in the United States may be maintained in secrecy until the patents are issued; • patent applications in the United States and elsewhere can be pending for many years before issuance, or unintentionally abandoned patents or applications can be revived; 78 Table of Contents • pending patent applications that have been published can, subject to certain limitations, be later amended in a manner that could cover our technologies, our product candidates, and any future product candidates or the use of our technologies, our product candidates, and any future product candidates; • identification of third-party patent rights that may be relevant to our technology is difficult because patent searching is imperfect due to differences in terminology among patents, incomplete databases, and the difficulty in assessing the meaning of patent claims; • patent applications in the United States are typically not published until 18 months after the priority date; and • publications in the scientific literature often lag behind actual discoveries.
Collaborations are subject to numerous risks, which may include that: 77 Table of Contents ▪ collaborators have significant discretion in determining the efforts and resources that they will apply to collaborations; ▪ collaborators may not pursue development and commercialization of our products or may elect not to continue or renew development or commercialization programs based on trial or test results, changes in their strategic focus due to the acquisition of competitive products, availability of funding, or other external factors, such as a business combination that diverts resources or creates competing priorities; ▪ collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our product candidates and any future product candidates; ▪ a collaborator with marketing, manufacturing, and distribution rights to one or more products may not commit sufficient resources to or otherwise not perform satisfactorily in carrying out these activities; ▪ we could grant exclusive rights to our collaborators that would prevent us from collaborating with others; ▪ collaborators may not properly maintain or defend our intellectual property rights or may use our intellectual property or proprietary information in a way that gives rise to actual or threatened litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential liability; ▪ disputes may arise between us and a collaborator that causes the delay or termination of the research, development, or commercialization of our current or future products or that results in costly litigation or arbitration that diverts management attention and resources; ▪ collaborations may be terminated, and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable current or future products; ▪ collaborators may own or co-own intellectual property covering our products that results from our collaborating with them, and in such cases, we would not have the exclusive right to develop or commercialize such intellectual property; ▪ we may not be able to obtain intellectual property rights in technologies or products resulting from the collaboration; under certain situations, the collaborators may provide us with an option to negotiate a license to such developed technologies or products, however, we may not be able to negotiate such license; and ▪ a collaborator’s sales and marketing activities or other operations may not be in compliance with applicable laws resulting in civil or criminal proceedings.
Collaborations are subject to numerous risks, which may include that: • collaborators have significant discretion in determining the efforts and resources that they will apply to collaborations; • collaborators may not pursue development and commercialization of our products or may elect not to continue or renew development or commercialization programs based on trial or test results, changes in their strategic focus due to the acquisition of competitive products, availability of funding, or other external factors, such as a business combination that diverts resources or creates competing priorities; • collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our product candidates and any future product candidates; • a collaborator with marketing, manufacturing, and distribution rights to one or more products may not commit sufficient resources to or otherwise not perform satisfactorily in carrying out these activities; • we could grant exclusive rights to our collaborators that would prevent us from collaborating with others; • collaborators may not properly maintain or defend our intellectual property rights or may use our intellectual property or proprietary information in a way that gives rise to actual or threatened litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential liability; • disputes may arise between us and a collaborator that causes the delay or termination of the research, development, or commercialization of our current or future products or that results in costly litigation or arbitration that diverts management attention and resources; 84 Table of Contents • collaborations may be terminated, and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable current or future products; • collaborators may own or co-own intellectual property covering our products that results from our collaborating with them, and in such cases, we would not have the exclusive right to develop or commercialize such intellectual property; • we may not be able to obtain intellectual property rights in technologies or products resulting from the collaboration; under certain situations, the collaborators may provide us with an option to negotiate a license to such developed technologies or products, however, we may not be able to negotiate such license; and • a collaborator’s sales and marketing activities or other operations may not be in compliance with applicable laws resulting in civil or criminal proceedings. 85 Table of Contents Item 1B.
For example, in March 2024, in a type C meeting with the FDA, the FDA confirmed that HS-NRE is deemed to be a biomarker reasonably likely to predict clinical benefit and could serve as a basis for accelerated approval.
For example, in March 2024, in a type C meeting with the FDA, the FDA confirmed that CSF HS-NRE is deemed to be a biomarker reasonably likely to predict clinical benefit and could serve as a basis for accelerated approval.
For example, we may be subject to the following: state and foreign anti-kickback and false claims laws that may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third party payors, including private insurers, or that apply regardless of payor; state and foreign laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government; state and foreign 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; state and local laws requiring the registration of pharmaceutical sales and medical representatives; and state and foreign laws, such as the EU GDPR governing the privacy and security of health information in some 53 Table of Contents circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.
For example, we may be subject to the following: state and foreign anti-kickback and false claims laws that may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third party payors, including private insurers, or that apply regardless of payor; state and foreign laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government; state and foreign 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; state and local laws requiring the registration of pharmaceutical sales and medical representatives; and state and foreign laws, such as the EU GDPR governing 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.
Any delay or prevention of a change of control transaction or changes in our board of directors could cause the market price of our common stock to decline. 84 Table of Contents Our amended and restated certificate of incorporation and amended and restated bylaws provide that the Court of Chancery of the State of Delaware will be the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Any delay or prevention of a change of control transaction or changes in our board of directors could cause the market price of our common stock to decline. 65 Table of Contents Our amended and restated certificate of incorporation and amended and restated bylaws provide that the Court of Chancery of the State of Delaware will be the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Tralesinidase alfa, tildacerfont and our other current and future product candidates could fail to receive regulatory approval for many reasons, including the following: ▪ serious and unexpected drug-related side effects may be experienced by participants in our clinical trials or by people using drugs similar to tralesinidase alfa, tildacerfont and our other current and future product candidates; ▪ the population studied in the clinical trial may not be sufficiently broad or representative to assure safety in the full population for which we seek approval; ▪ the FDA or comparable foreign regulatory authorities may not accept clinical data from trials which are conducted at clinical facilities or in countries where the standard of care is potentially different from that of the United States; 36 Table of Contents ▪ we may be unable to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that a product candidate is safe and effective for any of its proposed indications; ▪ the results of clinical trials may not meet the level of statistical significance required by the FDA or comparable foreign regulatory authorities for approval; ▪ we may be unable to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks; ▪ the FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical trials; ▪ the data collected from clinical trials may not be sufficient to satisfy the FDA or comparable foreign regulatory authorities to support the submission of an NDA, BLA or other comparable submissions in foreign jurisdictions or to obtain regulatory approval in the United States or elsewhere, requiring, in the case of adult patients with classic CAH, additional clinical trials beyond our ongoing Phase 2b clinical trial prior to any such approval; ▪ the FDA or comparable foreign regulatory authorities may fail to approve the manufacturing processes or facilities of third-party manufacturers with which we contract for clinical and commercial supplies; and ▪ the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval.
TA-ERT and our other current and future product candidates could fail to receive regulatory approval for many reasons, including the following: • serious and unexpected drug-related side effects may be experienced by participants in our clinical trials or by people using drugs similar to TA-ERT and our other current and future product candidates; • the population studied in the clinical trial may not be sufficiently broad or representative to assure safety in the full population for which we seek approval; • the FDA or comparable foreign regulatory authorities may not accept clinical data from trials which are conducted at clinical facilities or in countries where the standard of care is potentially different from that of the United States; • we may be unable to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that a product candidate is safe and effective for any of its proposed indications; • the results of clinical trials may not meet the level of statistical significance required by the FDA or comparable foreign regulatory authorities for approval; • we may be unable to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks; • the FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical trials; 36 Table of Contents • the data collected from clinical trials may not be sufficient to satisfy the FDA or comparable foreign regulatory authorities to support the submission of an NDA, BLA or other comparable submissions in foreign jurisdictions or to obtain regulatory approval in the United States or elsewhere, requiring, in the case of adult patients with classic CAH, additional clinical trials beyond our ongoing Phase 2b clinical trial prior to any such approval; • the FDA or comparable foreign regulatory authorities may fail to approve the manufacturing processes or facilities of third-party manufacturers with which we contract for clinical and commercial supplies; and • the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval.
If we or our employees, independent contractors, consultants, commercial partners and vendors violate these laws, we may be subject to investigations, enforcement actions and/or significant penalties, including the imposition of significant civil, criminal and administrative penalties, damages, disgorgement, monetary fines, imprisonment, possible exclusion from participation in Medicare, Medicaid and other federal or comparable foreign healthcare programs, contractual damages, public reprimands, reputational harm, diminished profits and future earnings, additional reporting requirements and/or oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, and curtailment of our operations, any of which could adversely affect our ability to operate our business and our results of operations.
If we or our employees, independent contractors, consultants, commercial partners and vendors violate these laws, we may be subject to investigations, enforcement actions and/or significant penalties, including the imposition of significant civil, criminal and administrative 53 Table of Contents penalties, damages, disgorgement, monetary fines, imprisonment, possible exclusion from participation in Medicare, Medicaid and other federal or comparable foreign healthcare programs, contractual damages, public reprimands, reputational harm, diminished profits and future earnings, additional reporting requirements and/or oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, and curtailment of our operations, any of which could adversely affect our ability to operate our business and our results of operations.
In addition, it is uncertain if and to what extent various states will conform to the Tax Act, the CARES Act, the Inflation Reduction Act, or any other newly enacted federal tax legislation.
In addition, it is uncertain if and to what extent various states will conform to the Tax Act, the CARES Act, the Inflation Reduction Act, OBBBA or any other newly enacted federal tax legislation.
Disputes may arise between us and our licensors regarding intellectual property rights subject to a license agreement, including: ▪ the scope of rights granted under the license agreement and other interpretation-related issues; ▪ whether and the extent to which our technology and processes infringe on intellectual property rights of the licensor that are not subject to the license agreement; ▪ our right to sublicense intellectual property rights to third parties under collaborative development relationships; ▪ our diligence obligations with respect to the use of the licensed technology in relation to our development and commercialization of our product candidates, and what activities satisfy those diligence obligations; and ▪ the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our partners.
Disputes may arise between us and our licensors regarding intellectual property rights subject to a license agreement, including: • the scope of rights granted under the license agreement and other interpretation-related issues; • whether and the extent to which our technology and processes infringe on intellectual property rights of the licensor that are not subject to the license agreement; • our right to sublicense intellectual property rights to third parties under collaborative development relationships; 73 Table of Contents • our diligence obligations with respect to the use of the licensed technology in relation to our development and commercialization of our product candidates, and what activities satisfy those diligence obligations; and • the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our partners.
In addition, a person or entity does not need to have actual knowledge of this statute or specific intent to violate it in order to have committed a violation. ▪ federal civil and criminal false claims laws, including 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 federal government programs that are false or fraudulent or knowingly making a false statement to improperly avoid, decrease or conceal an obligation to pay money to the federal government, including federal healthcare programs.
In addition, a person or entity does not need to have actual knowledge of this statute or specific intent to violate it in order to have committed a violation. • federal civil and criminal false claims laws, including 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 52 Table of Contents other federal government programs that are false or fraudulent or knowingly making a false statement to improperly avoid, decrease or conceal an obligation to pay money to the federal government, including federal healthcare programs.
The U.S. healthcare laws and regulations that may affect our ability to operate include, but are not limited to: 52 Table of Contents ▪ the federal Anti-Kickback Statute, which prohibits, among other things, any person or entity from knowingly and willfully, offering, paying, soliciting or receiving any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce, or in return for, the purchasing, leasing, ordering or arranging for the purchase, lease, or order of any item or service reimbursable under Medicare, Medicaid or other federal healthcare programs.
The U.S. healthcare laws and regulations that may affect our ability to operate include, but are not limited to: • the federal Anti-Kickback Statute, which prohibits, among other things, any person or entity from knowingly and willfully, offering, paying, soliciting or receiving any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce, or in return for, the purchasing, leasing, ordering or arranging for the purchase, lease, or order of any item or service reimbursable under Medicare, Medicaid or other federal healthcare programs.
If we sell additional shares of common stock, convertible securities or other equity securities, investors may be materially diluted by subsequent 83 Table of Contents sales. Such sales may also result in material dilution to our existing stockholders, and new investors could gain rights, preferences and privileges senior to the holders of our common stock.
If we sell additional shares of common stock, convertible securities or other equity securities, investors may be materially diluted by subsequent 64 Table of Contents sales. Such sales may also result in material dilution to our existing stockholders, and new investors could gain rights, preferences and privileges senior to the holders of our common stock.
The degree of market acceptance of tralesinidase alfa, tildacerfont or our other current and future products, if approved, will depend on a number of factors, including: ▪ the clinical indications for which such product candidate is approved; ▪ physicians and patients considering the product as a safe and effective treatment; ▪ the potential and perceived advantages of the product over alternative treatments; ▪ the prevalence and severity of any side effects; ▪ product labeling or product insert requirements of the FDA or other regulatory authorities; ▪ limitations or warnings contained in the labeling approved by the FDA or other regulatory authorities; ▪ the timing of market introduction of the product as well as competitive products; ▪ the cost of treatment in relation to alternative treatments; ▪ the availability of coverage and adequate reimbursement by third-party payors and government authorities; ▪ the willingness of patients to pay out-of-pocket in the absence of coverage and adequate reimbursement by third-party payors and government authorities; ▪ relative convenience and ease of administration, including as compared to alternative treatments and competitive therapies; and ▪ the effectiveness of our sales and marketing efforts and those of any collaboration or distribution partner on whom we rely for sales in foreign jurisdictions.
The degree of market acceptance of TA-ERT or our other current and future products, if approved, will depend on a number of factors, including: • the clinical indications for which such product candidate is approved; • physicians and patients considering the product as a safe and effective treatment; • the potential and perceived advantages of the product over alternative treatments; • the prevalence and severity of any side effects; • product labeling or product insert requirements of the FDA or other regulatory authorities; • limitations or warnings contained in the labeling approved by the FDA or other regulatory authorities; • the timing of market introduction of the product as well as competitive products; • the cost of treatment in relation to alternative treatments; • the availability of coverage and adequate reimbursement by third-party payors and government authorities; • the willingness of patients to pay out-of-pocket in the absence of coverage and adequate reimbursement by third-party payors and government authorities; • relative convenience and ease of administration, including as compared to alternative treatments and competitive therapies; and • the effectiveness of our sales and marketing efforts and those of any collaboration or distribution partner on whom we rely for sales in foreign jurisdictions.
If we fail to comply with our obligations in the agreements under which we license intellectual property rights from third parties, such as our license agreement with Lilly, Antibody License Agreement with Twist and HBM License Agreement, or otherwise experience disruptions to our business relationships with our licensors, we could lose license rights that are important to our business.
If we fail to comply with our obligations in the agreements under which we license intellectual property rights from third parties, such as our license agreement with Lilly and HBM License Agreement, or otherwise experience disruptions to our business relationships with our licensors, we could lose license rights that are important to our business.
Our ability to use our remaining NOL carryforwards may be further limited if we experience a Section 382 ownership change as a result of future changes in our stock ownership. As of December 31, 2024, we recorded a full valuation allowance on our net deferred tax assets.
Our ability to use our remaining NOL carryforwards may be further limited if we experience a Section 382 ownership change as a result of future changes in our stock ownership. As of December 31, 2025 we recorded a full valuation allowance on our net deferred tax assets.
On April 26, 2024, we received a letter from Nasdaq Listing Qualifications, notifying us that, for the previous 30 consecutive business day period prior to the date of the letter, the closing bid price for our common stock was below $1.00.
On April 26, 2024, we received a letter from Nasdaq Listing Qualifications, notifying us that, for the previous 30 consecutive business day period prior to the date of the letter, the closing bid price for our common stock was below $1.00 (the “Minimum Bid Price Requirement”).
In the event that we breach one or more covenants, SVB may choose to declare an event of default and require that we immediately repay all amounts outstanding under the Loan Agreement, terminate any commitment to extend further credit and foreclose on the collateral.
In the event that we breach one or more covenants, the Agent may choose to declare an event of default and require that we immediately repay all amounts outstanding under the Loan Agreement, terminate any commitment to extend further credit and foreclose on the collateral.
For example, California recently enacted legislation that, with certain exceptions, suspends the ability to use California net operating losses to offset California income and limits the ability to use California business tax credits to offset California taxes, for taxable years beginning on or after January 1, 2024 and before January 1, 2027.
For example, California has enacted legislation that, with certain exceptions, suspends the ability to use California net operating losses to offset California income and limits the ability to use California business tax credits to offset California taxes, for taxable years beginning on or after January 1, 2024 and before January 1, 2027.
Misconduct by these parties could include intentional, reckless and/or negligent conduct or disclosure of unauthorized activities to us that violates: (i) the rules of the FDA and other similar foreign regulatory bodies, including those rules that require the reporting of true, complete, and accurate information to the FDA and other similar foreign regulatory bodies; (ii) manufacturing standards; (iii) healthcare fraud and abuse laws in the United States and similar foreign fraudulent misconduct laws or (iv) laws that require the true, complete, and accurate reporting of our financial information or data.
Misconduct by these parties could 51 Table of Contents include intentional, reckless and/or negligent conduct or disclosure of unauthorized activities to us that violates: (i) the rules of the FDA and other similar foreign regulatory bodies, including those rules that require the reporting of true, complete, and accurate information to the FDA and other similar foreign regulatory bodies; (ii) manufacturing standards; (iii) healthcare fraud and abuse laws in the United States and similar foreign fraudulent misconduct laws or (iv) laws that require the true, complete, and accurate reporting of our financial information or data.
Drug-related side effects could affect patient recruitment or the ability of enrolled patients to complete the trial or result in potential product liability claims. Any of these occurrences may harm our business, financial condition, and prospects significantly.
Drug-related side effects could affect patient recruitment or the ability of enrolled patients to complete the trial or result in potential product liability claims. Any of these occurrences may significantly harm our business, financial condition, results of operations and prospects.
Before we can initiate clinical trials for our current product candidates or any future product candidates, we must submit the results of preclinical studies to the FDA, or comparable foreign regulatory authorities, along with other information, including information about chemistry, manufacturing and controls, and our proposed clinical trial protocol, as part of an IND or similar regulatory filing under which we must receive authorization to proceed with clinical development.
Before we can initiate clinical trials for our current product candidates or any future product candidates, we must submit the results of preclinical studies to the FDA, or comparable foreign regulatory authorities, along with other information, including information about chemistry, manufacturing and controls, and our proposed clinical 33 Table of Contents trial protocol, as part of an IND or similar regulatory filing under which we must receive authorization to proceed with clinical development.
In addition, intellectual property litigation, regardless of its outcome, may cause negative publicity and could prohibit us from marketing or otherwise commercializing our product candidates and technology. 73 Table of Contents Parties making claims against us may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources.
In addition, intellectual property litigation, regardless of its outcome, may cause negative publicity and could prohibit us from marketing or otherwise commercializing our product candidates and technology. Parties making claims against us may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources.
We will be able to take advantage of these scaled disclosures for so long as our voting and non-voting common stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.
We will be able to take advantage of these scaled disclosures for so long as our voting and 62 Table of Contents non-voting common stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.
For example: ▪ others may be able to make compounds that are similar to TA-ERT, SPR202, tildacerfont and any future product candidates but that are not covered by the claims of our patents; ▪ others may be able to make and use TA-ERT, SPR202, tildacerfont and any future product candidates in countries where valid enforceable patents are not obtained; ▪ we might not have been the first to make the inventions covered by our pending patent applications; ▪ we might not have been the first to file patent applications for these inventions; 64 Table of Contents ▪ others may independently develop similar or alternative technologies or duplicate any of our technologies; ▪ any patents that we obtain may not provide us with any competitive advantages; ▪ we may not develop additional proprietary technologies that are patentable; ▪ our competitors might conduct research and development activities in countries where we do not have patent rights or where patent protection is weak and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; ▪ we cannot ensure that any of our patents, or any of our pending patent applications, if issued, or those of our licensors, will include claims having a scope sufficient to protect our products; ▪ we cannot ensure that we will be able to successfully commercialize our products on a substantial scale, if approved, before the relevant patents that we own or license expire; ▪ others may obtain patents that cover the use or manufacture of TA-ERT, SPR202, or tildacerfont; or ▪ the patents of others may have an adverse effect on our business.
For example: • others may be able to make compounds that are similar to TA-ERT and our other current and future product candidates but that are not covered by the claims of our patents; • others may be able to make and use TA-ERT and our other current and future product candidates in countries where valid enforceable patents are not obtained; • we might not have been the first to make the inventions covered by our pending patent applications; • we might not have been the first to file patent applications for these inventions; • others may independently develop similar or alternative technologies or duplicate any of our technologies; • any patents that we obtain may not provide us with any competitive advantages; • we may not develop additional proprietary technologies that are patentable; • our competitors might conduct research and development activities in countries where we do not have patent rights or where patent protection is weak and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; • we cannot ensure that any of our patents, or any of our pending patent applications, if issued, or those of our licensors, will include claims having a scope sufficient to protect our products; • we cannot ensure that we will be able to successfully commercialize our products on a substantial scale, if approved, before the relevant patents that we own or license expire; • others may obtain patents that cover the use or manufacture of TA-ERT or our other current product candidates; or • the patents of others may have an adverse effect on our business.
The IRA also eliminates the “donut hole” under the Medicare Part D program beginning in 2025 by significantly lowering the beneficiary maximum out-of-pocket cost and creating a new manufacturer discount program. It is possible that the Affordable Care Act will be subject to judicial or Congressional challenges and amendments in the future.
The IRA also eliminates the “donut hole” 46 Table of Contents under the Medicare Part D program beginning in 2025 by significantly lowering the beneficiary maximum out-of-pocket cost and creating a new manufacturer discount program. It is possible that the Affordable Care Act will be subject to judicial or Congressional challenges and amendments in the future.
Although no third party has asserted a claim of patent infringement against us as of the date of this prospectus, others may hold proprietary rights that could prevent our product candidates from being marketed. For example, we are aware of issued patents that claim a method of treatment based upon a general mode of action.
Although no third party has asserted a claim of patent infringement against us as of the date of this prospectus, others may hold proprietary rights that could prevent our product candidates from being marketed. For example, we 79 Table of Contents are aware of issued patents that claim a method of treatment based upon a general mode of action.
If the interim, topline, or preliminary data that we report differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to obtain regulatory approval for, and commercialize, our product candidates and any future product candidates may be harmed, which could harm our business, operating results, prospects, or financial condition.
If the interim, topline, or preliminary data that we report differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to obtain regulatory approval for, and commercialize, our product candidates and any future product candidates may be harmed, which could harm our business, financial condition, results of operations and prospects.
The patent application process is subject to numerous risks and uncertainties, and there can be no assurance that we or any of our actual or potential future collaborators will be successful in protecting TA-ERT, SPR202, tildacerfont, any future product candidates and other proprietary technologies and their uses by obtaining, defending and enforcing patents.
The patent application process is subject to numerous risks and uncertainties, and there can be no assurance that we or any of our actual or potential future collaborators will be successful in protecting TA-ERT and our other current and future product candidates and other proprietary technologies and their uses by obtaining, defending and enforcing patents.
If we do not adequately protect our intellectual property and proprietary technology, competitors may be able to use TA-ERT, SPR202, tildacerfont, any future product candidates, and other proprietary technologies and erode or negate any competitive advantage we may have, which could have a material adverse effect on our financial condition and results of operations.
If we do not adequately protect our intellectual property and proprietary technology, competitors may be able to use TA-ERT and our other current and future product candidates, and other proprietary technologies and erode or negate any competitive advantage we may have, which could have a material adverse effect on our financial condition and results of operations.
The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets, and other intellectual property protection, particularly those relating to biotechnology or pharmaceutical products, which could make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our proprietary rights generally.
The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets, and other intellectual property protection, particularly those relating to biotechnology or pharmaceutical products, which could make it difficult for us to stop the infringement of 75 Table of Contents our patents or marketing of competing products in violation of our proprietary rights generally.
In addition, pursuant to our 2020 Employee Stock Purchase Plan, the number of shares of our common stock reserved for issuance will automatically increase on January 1 of each calendar year continuing through January 1, 2030, by the lesser of (i) 1% of the total number of shares of our common stock outstanding on the last day of the calendar month before the date of the automatic increase, and (ii) 441,280 shares; provided that before the date of any such increase, our board of directors may determine that such increase will be less than the amount set forth in clauses (i) and (ii).
In addition, pursuant to our 2020 Employee Stock Purchase Plan, the number of shares of our common stock reserved for issuance will automatically increase on January 1 of each calendar year continuing through January 1, 2030, by the lesser of (i) 1% of the total number of shares of our common stock outstanding on the last day of the calendar month before the date of the automatic increase, and (ii) 5,883 shares; provided that before the date of any such increase, our board of directors may determine that such increase will be less than the amount set forth in clauses (i) and (ii).
In addition to seeking patents for some of our technology and products, we also rely on trade secrets, including unpatented know-how, technology and other proprietary information, to maintain our competitive position, especially where we do not believe patent protection is appropriate or obtainable. However, trade secrets are difficult to protect.
In addition to seeking patents for some of our technology and products, we also rely on trade secrets, including unpatented know-how, technology and other proprietary information, to maintain our competitive 82 Table of Contents position, especially where we do not believe patent protection is appropriate or obtainable. However, trade secrets are difficult to protect.
Our operations, and those of our CROs and other contractors and consultants, could be subject to earthquakes, power shortages, telecommunications failures, water shortages, floods, hurricanes, typhoons, fires, extreme weather 51 Table of Contents conditions, medical epidemics and other natural or man-made disasters or business interruptions, for which we are predominantly self-insured.
Our operations, and those of our CROs and other contractors and consultants, could be subject to earthquakes, power shortages, telecommunications failures, water shortages, floods, hurricanes, typhoons, fires, extreme weather conditions, medical epidemics and other natural or man-made disasters or business interruptions, for which we are predominantly self-insured.
Anti-corruption laws are interpreted broadly and prohibit companies and 58 Table of Contents their employees, agents, clinical research organizations, contractors and other collaborators and partners from authorizing, promising, offering, providing, soliciting or receiving, directly or indirectly, improper payments or anything else of value to recipients in the public or private sector.
Anti-corruption laws are interpreted broadly and prohibit companies and their employees, agents, clinical research organizations, contractors and other collaborators and partners from authorizing, promising, offering, providing, soliciting or receiving, directly or indirectly, improper payments or anything else of value to recipients in the public or private sector.
In addition, pursuant to the Loan Agreement, we are prohibited from paying cash dividends without the prior written consent of SVB, and future debt instruments may materially restrict our ability to pay dividends on our common stock. Any return to stockholders would therefore be limited to the appreciation, if any, of their stock.
In addition, pursuant to the Loan Agreement, we are prohibited from paying cash dividends without the prior written consent of Avenue Capital, and future debt instruments may materially restrict our ability to pay dividends on our common stock. Any return to stockholders would therefore be limited to the appreciation, if any, of their stock.
Prior to our IPO, we have never been required to test our internal controls within a specified period, and, as a result, we may experience difficulty in meeting these reporting requirements in a timely manner.
Prior to our IPO, we had never been required to test our internal controls within a specified period, and, as a result, we may experience difficulty in meeting these reporting requirements in a timely manner.
Additionally, certain data privacy and security obligations may require us to implement and maintain specific security measures or industry-standard or reasonable security measures to protect our information technology systems and sensitive data. While we have implemented security measures designed to protect against and recover from security incidents, there can be no assurance that these measures will be effective.
Additionally, certain data privacy and security obligations have required us to implement and maintain specific security measures or industry-standard or reasonable security measures to protect our information technology systems and sensitive data. While we have implemented security measures designed to protect against and recover from security incidents, there can be no assurance that these measures will be effective.
We may be subject to new or additional third-party pre-issuance submission of prior art to the USPTO or become involved in other post-grant review procedures, derivations, reexaminations, or inter partes review proceedings, in the United States or oppositions or similar proceedings in foreign jurisdictions, challenging our patent rights.
We may be subject to new or additional third-party pre-issuance submission of prior art to the USPTO or become involved in other post-grant review 81 Table of Contents procedures, derivations, reexaminations, or inter partes review proceedings, in the United States or oppositions or similar proceedings in foreign jurisdictions, challenging our patent rights.
Emerging growth companies and smaller reporting companies are exempted from certain of these requirements, but we may be required to implement these requirements sooner than budgeted or planned and thereby incur unexpected expenses.
Smaller reporting companies are exempted from certain of these requirements, but we may be required to implement these requirements sooner than budgeted or planned and thereby incur unexpected expenses.
For example, due to the lack of available treatment options, newborn screening programs have not been widely adopted for the detection of MPSIIIB. As a result, patients may become increasingly difficult to identify or gain access to, which would adversely affect our results of operations and our business.
For example, due to the lack of available treatment options, newborn screening programs have not been widely adopted for the detection of MPS IIIB. As a result, patients may become increasingly difficult to identify or gain access to, which would adversely affect our results of operations and our business.
While an inadvertent lapse may sometimes be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or 67 Table of Contents complete loss of patent rights in the relevant jurisdiction.
While an inadvertent lapse may sometimes be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction.
This type of litigation, if instituted, could result in substantial costs and a diversion of management’s attention and resources, which could harm our business, operating results or financial condition. If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.
This type of litigation, if instituted, could result in substantial costs and a diversion of management’s attention and resources, which could harm our business, financial condition, results of operations and prospects. If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.
In many jurisdictions outside the United States, including a number of countries in 38 Table of Contents the EU, a product candidate must be approved for reimbursement before it can be approved for sale in that jurisdiction. In some cases, the price that we intend to charge for our product candidates is also subject to approval.
In many jurisdictions outside the United States, including a number of countries in the EU, a product candidate must be approved for reimbursement before it can be approved for sale in that jurisdiction. In some cases, the price that we intend to charge for our product candidates is also subject to approval.
In addition, our relationship with the third parties with whom we work could introduce new cybersecurity risks and vulnerabilities, including supply-chain attacks, and other threats to our business operations.
In addition, our relationship with the third parties with whom we work could introduce additional cybersecurity risks and vulnerabilities, including supply-chain attacks, and other threats to our business operations.
For example, we entered into a license agreement with Lilly in May 2016 pursuant to which we were granted an exclusive, worldwide, royalty bearing, sublicensable license under certain technology, patent rights, know-how, and proprietary materials relating to certain CRF1 receptor antagonist compounds.
For example, we entered into a license agreement with Eli Lilly and Company (“Lilly”) in May 2016 pursuant to which we were granted an exclusive, worldwide, royalty bearing, sublicensable license under certain technology, patent rights, know-how, and proprietary materials relating to certain CRF1 receptor antagonist compounds.
The realization of any of the above risks or any of a broad range of other risks, including those described in this “Risk Factors” section, could have a dramatic and negative impact on the market price of our common stock. 80 Table of Contents We could be subject to securities class action litigation.
The realization of any of the above risks or any of a broad range of other risks, including those described in this “Risk Factors” section, could have a dramatic and negative impact on the market price of our common stock. We could be subject to securities class action litigation.
Furthermore, if tralesinidase alfa, tildacerfont and our other current and future product candidates receive marketing approval, and we or others later identify undesirable side effects caused by such product candidate, a number of potentially significant negative consequences could result, including: ▪ we may be forced to suspend marketing of that product, or decide to remove the product form the marketplace; ▪ regulatory authorities may withdraw approvals or suspend or change their approvals of such product or place restrictions on the way it is prescribed; ▪ regulatory authorities may require additional warnings on the label or limit access of that product to selective specialized centers with additional safety reporting and with requirements that patients be geographically close to these centers for all or part of their treatment; ▪ 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; ▪ we could be subject to fines, injunctions, or the imposition of criminal or civil penalties; 41 Table of Contents ▪ we could be sued and held liable for harm caused to patients; and ▪ the product may become less competitive, and our reputation may suffer.
Furthermore, if TA-ERT and our other current and future product candidates receive marketing approval, and we or others later identify undesirable side effects caused by such product candidate, a number of potentially significant negative consequences could result, including: • we may be forced to suspend marketing of that product, or decide to remove the product form the marketplace; • regulatory authorities may withdraw approvals or suspend or change their approvals of such product or place restrictions on the way it is prescribed; • regulatory authorities may require additional warnings on the label or limit access of that product to selective specialized centers with additional safety reporting and with requirements that patients be geographically close to these centers for all or part of their treatment; • 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; • we could be subject to fines, injunctions, or the imposition of criminal or civil penalties; • we could be sued and held liable for harm caused to patients; and • the product may become less competitive, and our reputation may suffer.
Further, others, including regulatory authorities, may not accept or agree with our assumptions, estimates, calculations, conclusions, or analyses or may interpret or weigh the importance of data differently, which could impact the value of the particular program, the approvability, or commercialization of the particular product candidate or product and our company in general.
Further, others, including regulatory authorities, may not accept or agree with our assumptions, estimates, calculations, conclusions, or analyses or may interpret or weigh the importance of data differently, which could 37 Table of Contents impact the value of the particular program, the approvability, or commercialization of the particular product candidate or product and our company in general.
An ownership change analysis covering periods through December 31, 2023 concluded that an ownership change occurred in May 2016 and in August 2020. As a result of the ownership changes, we derecognized NOL-related deferred tax assets down to the amount expected to be realized.
An ownership change analysis covering periods through December 31, 2025 concluded that an ownership change occurred in May 2016, August 2020, and October 2025. As a result of the ownership changes, we derecognized NOL-related deferred tax assets down to the amount expected to be realized.
The lengthy approval process as well as the unpredictability of future clinical trial results may result in our failing to obtain regulatory approval to market tildacerfont and our other current and future product candidates, which would significantly harm our business, financial condition, results of operations, and prospects.
The lengthy approval process as well as the unpredictability of future clinical trial results may result in our failing to obtain regulatory approval to market TA-ERT and our other current and future product candidates, which would significantly harm our business, financial condition, results of operations, and prospects.
Average review times at the authorities have fluctuated in recent years as a result. In addition, government funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.
Average review times 43 Table of Contents at the authorities have fluctuated in recent years as a result. In addition, government funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.
Even if we eventually complete clinical trials and receive approval of an NDA, BLA or foreign marketing application for tralesinidase alfa, tildacerfont and our other current and future product candidates, the FDA or comparable foreign regulatory authority may grant approval contingent on the performance of costly additional clinical trials, including Phase 4 clinical trials, and/or the implementation of a risk evaluation and mitigation strategy (“REMS”) or comparable foreign strategies which may be required to ensure safe use of the drug after approval.
Even if we eventually complete clinical trials and receive approval of an NDA, BLA or foreign marketing application for TA-ERT and our other current and future product candidates, the FDA or comparable foreign regulatory authority may grant approval contingent on the performance of costly additional clinical trials, including Phase 4 clinical trials, and/or the implementation of a risk evaluation and mitigation strategy (“REMS”) or comparable foreign strategies which may be required to ensure safe use of the drug after approval.
In addition, the manufacture of pharmaceutical products is complex and requires significant expertise and capital investment, including the development of advanced manufacturing techniques and process controls. Manufacturers of pharmaceutical products often encounter difficulties in production, particularly in scaling up and 61 Table of Contents validating initial production and absence of contamination.
In addition, the manufacture of pharmaceutical products is complex and requires significant expertise and capital investment, including the development of advanced manufacturing techniques and process controls. Manufacturers of pharmaceutical products often encounter difficulties in production, particularly in scaling up and validating initial production and absence of contamination.
Although we believe that our manufacturers’ procedures for using, handling, storing and disposing of these materials comply with legally prescribed standards, we cannot completely eliminate the risk of contamination or injury resulting from medical, radioactive or hazardous materials.
Although we believe that our manufacturers’ 68 Table of Contents procedures for using, handling, storing and disposing of these materials comply with legally prescribed standards, we cannot completely eliminate the risk of contamination or injury resulting from medical, radioactive or hazardous materials.
As we build our capabilities and expand our organization, we have not yet demonstrated an ability to overcome many of the risks and uncertainties frequently encountered by companies in new and rapidly evolving fields, particularly in the biopharmaceutical area.
As we build our capabilities and expand our organization, we have not yet demonstrated an ability to overcome many of the risks and uncertainties frequently encountered by companies in new and rapidly evolving fields, particularly in the 29 Table of Contents biopharmaceutical area.
Risks of a prolonged global 39 Table of Contents economic downturn are particularly true in Europe, which is undergoing a continued severe economic crisis. A weak or declining economy could also strain our suppliers and manufacturers, possibly resulting in supply disruption.
Risks of a prolonged global economic downturn are particularly true in Europe, which is undergoing a continued severe economic crisis. A weak or declining economy could also strain our suppliers and manufacturers, possibly resulting in supply disruption.
If we are unable to do so, the institution may offer, on an exclusive basis, their proprietary rights to other parties, potentially blocking our ability to pursue our program. In addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us, either on reasonable terms, or at all.
If we are unable to do so, the institution may offer, on an exclusive basis, their proprietary rights to other parties, potentially blocking our ability to pursue our program. 77 Table of Contents In addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us, either on reasonable terms, or at all.
If another party has filed a U.S. patent application 72 Table of Contents on inventions similar to ours, we may have to participate in an interference proceeding declared by the USPTO to determine priority of invention in the United States.
If another party has filed a U.S. patent application on inventions similar to ours, we may have to participate in an interference proceeding declared by the USPTO to determine priority of invention in the United States.
Though our agreements with third parties 76 Table of Contents typically restrict the ability of our advisors, employees, collaborators, licensors, suppliers, third-party contractors, and consultants to publish data potentially relating to our trade secrets, our agreements may contain certain limited publication rights.
Though our agreements with third parties typically restrict the ability of our advisors, employees, collaborators, licensors, suppliers, third-party contractors, and consultants to publish data potentially relating to our trade secrets, our agreements may contain certain limited publication rights.
If we are deemed by the FDA, DOJ, or other governmental authorities, or comparable foreign regulatory authorities, to have engaged in the promotion of tralesinidase alfa, tildacerfont or any other current or future product candidate for off-label use, we could be subject to certain prohibitions or other restrictions on the sale or marketing and other operations or significant fines and penalties, and the imposition of these sanctions could also affect our reputation and position within the industry.
If we are deemed by the FDA, DOJ, or other governmental authorities, or comparable foreign regulatory authorities, to have engaged in the promotion of TA-ERT or any other current or future product candidate for off-label use, we could be subject to certain prohibitions or other restrictions on the sale or marketing and other operations or significant fines and penalties, and the imposition of these sanctions could also affect our reputation and position within the industry.
In the United States, numerous federal, state, and local laws and regulations, including, as applicable, state data breach notification laws, state health information privacy laws, and federal and state consumer protection laws (e.g., Section 5 of the Federal Trade Commission Act) and regulations, and other laws (e.g., wiretapping laws), that govern the processing of personal data apply to our operations and the operations of the third parties with whom we work.
In the United States, numerous federal, state, and local laws and regulations, including, as applicable, state data breach notification laws, personal data privacy laws, consumer protection laws (e.g., Section 5 of the Federal Trade Commission Act) and other similar laws (e.g., wiretapping laws), govern the processing of personal data and apply to our operations and the operations of the third parties with whom we work.
Furthermore, we may discover security issues that were not found during due diligence of such acquired or integrated entities, and it may be difficult to integrate companies into our information technology environment and security program.
Furthermore, we may discover security issues that were not found during due diligence of such acquired or 54 Table of Contents integrated entities, and it may be difficult to integrate companies into our information technology environment and security program.
If the FDA or any other applicable regulatory authority does not approve these facilities for the manufacture of tralesinidase alfa, tildacerfont or any future product candidates or if it withdraws any such approval in the future, or if our suppliers or contract manufacturers decide they no longer want to supply or manufacture for us, we may need to find alternative manufacturing facilities, in which case we might not be able to identify manufacturers for clinical or commercial supply on acceptable terms, or at all, which would significantly impact our ability to develop, obtain regulatory approval for, or market tralesinidase alfa, tildacerfont and any future product candidates.
If the FDA or any other applicable regulatory authority does not approve these facilities for the manufacture of TA-ERT and our other current and future product candidates or if it withdraws any such approval in the future, or if our suppliers or contract manufacturers decide they no longer want to supply or manufacture for us, we may need to find alternative manufacturing facilities, in which case we might not be able to identify manufacturers for clinical or commercial supply on acceptable terms, or at all, which would significantly impact our ability to develop, obtain regulatory approval for, or market TA-ERT and our other current and future product candidates.
Any of these events could have a material adverse effect on our reputation, business, or financial condition, including but not limited to: loss of customers; interruptions or stoppages in our business operations (including, as relevant, clinical trials); inability to process personal data or to operate in certain jurisdictions; limited 57 Table of Contents ability to develop or commercialize our products; expenditure of time and resources to defend any claim or inquiry; adverse publicity; or substantial changes to our business model or operations.
Any of these events could have a material adverse effect on our reputation, business, or financial condition, including but not limited to: interruptions or stoppages in our business operations (including, as relevant, clinical trials); inability to process personal data or to operate in certain jurisdictions; limited ability to develop or commercialize our products; expenditure of time and resources to defend any claim or inquiry; adverse publicity; or substantial changes to our business model or operations.
If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back, or discontinue the development or commercialization of tildacerfont or other research and development initiatives.
If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back, or discontinue the development or commercialization of TA-ERT or other research and development initiatives.
Moreover, in order to obtain reimbursement for our products in some European countries, including some EU Member States, we may be required to compile additional data comparing the cost-effectiveness of our products to other available therapies.
Moreover, in order to obtain reimbursement for our products in some European countries, including some EU Member States, we may be required to compile additional data comparing the cost-effectiveness of our products to 47 Table of Contents other available therapies.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeRisk Factors in this Annual Report, including the sections titled “Risk Factors— If our information technology systems or data, or those of third parties with whom we work, are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; and other adverse consequences” and “Risk Factors— We and the third parties with whom we work are subject to stringent and evolving obligations related to data privacy and security.
Biggest changeRisk Factors in this Annual Report, including the sections titled “Risk Factors—If our information technology systems or data, or those of third parties with whom we work, are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; and other adverse consequences” and “Risk Factors—We and the third parties with whom we work are subject to stringent and evolving U.S. and foreign laws, regulations, and rules; contractual obligations; industry standards; policies; and other obligations, in each case related to data privacy or security.
Our (including the third parties with whom we work) actual or perceived failure to comply 86 Table of Contents with such obligations could lead to regulatory investigations and actions (which could include civil or criminal penalties); private litigation (including class-action claims) and mass arbitration demands; disruptions to our business operations; adverse publicity; and other adverse consequences that could negatively affect our operating results and business.” Governance Our board of directors addresses the Company’s cybersecurity risk management as part of its general oversight function.
Our (or the third parties with whom we work) actual or perceived failure to comply with such 86 Table of Contents obligations could lead to regulatory investigations and actions (which could include civil or criminal penalties); private litigation (including class-action claims) and mass arbitration demands; disruptions to our business operations; adverse publicity; and other adverse business consequences.” Governance Our board of directors addresses the Company’s cybersecurity risk management as part of its general oversight function.
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These obligations include U.S. and foreign laws, regulations, and rules; contractual obligations; industry standards; and policies.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings. In January 2025, Neurocrine Biosciences, Inc. (“Neurocrine”) filed suit in the United States District Court for the District of Delaware against us, seeking to invalidate one of our patents. In addition, Neurocrine has initiated administrative proceedings against other Spruce patents in the U.S.
Biggest changeItem 3. Legal Proceedings. In January 2025, Neurocrine Biosciences, Inc. (“Neurocrine”) initiated proceedings seeking to invalidate European Patent 3,784,233 (the “Patent”) in the United Kingdom Patents Court (“UKPC”), and in August 2025, initiated similar proceeds before the Unified Patent Court (collectively, the “Patent Proceedings”).
Removed
Patent Office, and both judicial and administrative proceedings against Spruce patents in other jurisdictions. We currently believe that none of the claims or actions pending against us is likely to have, individually or in the aggregate, a material adverse effect on our business, financial condition or results of operations.
Added
In February 2026, the UKPC issued a judgment ordering us to pay Neurocrine an interim payment of approximately $1.2 million for its legal costs. As of the year ended December 31, 2025, we accrued $1.9 million for loss contingencies associated with the Patent Proceedings. Item 4. Mine S afety Disclosures. Not applicable. 87 Table of Contents PART II
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Given the unpredictability inherent in litigation, however, we cannot predict the outcome of these matters. Item 4. Mine S afety Disclosures. Not applicable. 87 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePrior to October 9, 2020, there was no public market for our common stock. Holders of Common Stock As of April 11, 2025, we had 42,231,285 shares of common stock outstanding held by 33 holders of record, one of which was Cede & Co., a nominee for Depository Trust Company (“DTC”).
Biggest changeOur common stock resumed trading on the Nasdaq Capital Market on September 15, 2025. Holders of Common Stock As of March 3, 2026, we had 1,372,043 shares of common stock outstanding held by 43 holders of record, one of which was Cede & Co., a nominee for Depository Trust Company (“DTC”).
Any future determination related to dividend policy will be made at the discretion of our board of directors and will depend on then-existing conditions, including our financial condition, operating results, contractual restrictions, capital requirements, business prospects and other factors our board of directors may deem relevant. Purchases of Equity Securities by the Issuer and Affiliated Parties None.
Any future determination related to dividend policy will be made at the discretion of our board of directors and will depend on then-existing conditions, including our financial condition, operating results, contractual restrictions, capital requirements, business prospects and other factors our board of directors may deem relevant.
In addition, pursuant to the Loan Agreement with Silicon Valley Bank, as amended, we are prohibited from paying cash dividends without the prior written consent of Silicon Valley Bank and future debt instruments may materially restrict our ability to pay dividends on our common stock.
In addition, pursuant to the Loan Agreement with Avenue Capital, we are prohibited from paying cash dividends without the prior written consent of Avenue Capital and future debt instruments may materially restrict our ability to pay dividends on our common stock.
Added
Prior to October 9, 2020, there was no public market for our common stock. Our common stock trading on the Nasdaq Capital Market was suspended at the open of trading on April 29, 2025 and began trading on the OTCQB on a split-adjusted basis on August 7, 2025 under the ticker symbol “SPRBD”.
Added
Recent Sales of Unregistered Securities In December 2025, 18 warrant holders affiliated with HBM Alpha Therapeutics, Inc. (“HBM”) exercised warrants to purchase 53,955 shares of common stock, each at a price per share of $0.75006. 3,978 shares of common stock were exercised on a cashless basis and 49,977 shares of common stock were exercised for cash.
Added
For each of the securities issued and sold, we relied on the exemption from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof. The warrants were initially issued to HBM pursuant to the collaboration and license agreement by and between us and HBM.
Added
HBM subsequently assigned such warrants pursuant to the terms and conditions of the warrants. Purchases of Equity Securities by the Issuer and Affiliated Parties None.

Item 7. Management's Discussion & Analysis

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

37 edited+30 added−36 removed22 unchanged
Biggest changeWe expect our expenses will increase significantly in connection with our ongoing activities, as we: • pursue regulatory approval of TA-ERT in patients with MPSIIIB; • build a highly specialized commercial organization to support the commercialization of TA-ERT, if approved, in the United States; • seek strategic collaborations to benefit from the resources of biopharmaceutical companies specialized in either relevant disease areas or geographies in markets outside the United States; • advance TA-ERT through a planned confirmatory study in patients with MPSIIB and expanded access programs; • expand manufacturing capacity to accommodate anticipated global demand of TA-ERT, if approved, for the treatment of MPSIIIB; • advance clinical development of tildacerfont in MDD; • advance pre-clinical and clinical development of SPR202 in CAH; • advance pre-clinical and clinical development of SPR204 in PBH; • implement operational, financial, and management information systems; • hire additional personnel; and • obtain, maintain, expand, and protect our intellectual property portfolio.
Biggest changeWithout alternative financing or proceeds from other strategic alternatives, we believe, based on our current operating plan, that our cash and cash equivalents as of December 31, 2025 and gross proceeds received in January 2026 under the Loan Agreement with Avenue Capital (each as defined below) will be insufficient to fund our operations and debt obligations for at least 12 months following the issuance date of our financial statements included elsewhere in this Annual Report. 89 Table of Contents We expect our expenses will increase significantly in connection with our ongoing activities, as we: • pursue regulatory approval of TA-ERT in patients with MPS IIIB; • build a highly specialized commercial organization to support the commercialization of TA-ERT, if approved, in the United States; • seek strategic collaborations to benefit from the resources of biopharmaceutical companies specialized in either relevant disease areas or geographies in markets outside the United States; • advance TA-ERT through a planned confirmatory study in patients with MPS IIIB and expanded access programs; • expand manufacturing capacity to accommodate anticipated global demand of TA-ERT, if approved, for the treatment of MPS IIIB; • advance pre-clinical and clinical development of SPR202 in congenital adrenal hyperplasia (“CAH”); • implement operational, financial, and management information systems; • hire additional personnel; and • obtain, maintain, expand, and protect our intellectual property portfolio.
To date, these expenses have been incurred primarily to advance tildacerfont and acquire TA-ERT. These expenses will primarily consist of personnel costs, expenses for the conduct of clinical trials, manufacturing costs for clinical drug supply, and in-process research and development.
To date, these expenses have been incurred primarily to advance tildacerfont and acquire and develop TA-ERT. These expenses will primarily consist of personnel costs, expenses for the conduct of clinical trials, manufacturing costs for clinical drug supply, and in-process research and development.
These expenses include: ▪ external expenses, consisting of: o clinical development—expenses associated with clinical research organizations (“CROs”) engaged to manage and conduct clinical trials, in-process research and development and other outside services; o preclinical studies—expenses associated with preclinical studies and clinical pharmacology; o manufacturing—expenses associated with contract manufacturing; labeling, packaging, and distribution of clinical trial supplies, and other outside services; o other research and development—expenses associated with business operations, quality and regulatory compliance; and ▪ internal expenses, consisting of personnel, including expenses for salaries, bonuses, benefits, stock-based compensation, as well as allocation of certain expenses.
These expenses include: ▪ external expenses, consisting of: o clinical development—expenses associated with clinical research organizations (“CROs”) engaged to manage and conduct clinical trials, in-process research and development and other outside services; 91 Table of Contents o preclinical studies—expenses associated with preclinical studies and clinical pharmacology; o manufacturing—expenses associated with contract manufacturing; labeling, packaging, and distribution of clinical trial supplies, and other outside services; o other research and development—expenses associated with business operations, quality and regulatory compliance; and ▪ internal expenses, consisting of personnel, including expenses for salaries, bonuses, benefits, stock-based compensation, as well as allocation of certain expenses.
If we raise additional capital through debt financing, we may be subject to covenants that restrict our operations including 94 Table of Contents limitations on our ability to incur liens or additional debt, pay dividends, repurchase our common stock, make certain investments, and engage in certain merger, consolidation, or asset sale transactions.
If we raise additional capital through debt financing, we may be subject to covenants that restrict our operations including limitations on our ability to incur liens or additional debt, pay dividends, repurchase our common stock, make certain investments, and engage in certain merger, consolidation, or asset sale transactions.
We expect our research and development expenses to increase significantly in the foreseeable future as we continue to invest in activities related to the clinical development and commercialization of TA-ERT, as we pursue regulatory approval of TA-ERT for the treatment of MPSIIIB.
We expect our research and development expenses to increase significantly in the foreseeable future as we continue to invest in activities related to the clinical development and commercialization of TA-ERT and as we pursue regulatory approval of TA-ERT for the treatment of MPS IIIB.
Since inception through December 31, 2024, we have raised aggregate gross proceeds of $293.1 million, including $103.5 million from our IPO in October 2020, $116.0 million from the sale of our redeemable convertible preferred stock, $5.0 million from the issuance of debt, $53.6 million from a private placement financing in February 2023, and $15.0 million from the Kaken upfront payment received in April 2023.
Since inception through December 31, 2025, we have raised aggregate gross proceeds of $343.1 million, including $103.5 million from our IPO in October 2020, $116.0 million from the sale of our redeemable convertible preferred stock, $5.0 million from the issuance of debt, $53.6 million from a private placement financing in February 2023, $15.0 million from the Kaken upfront payment received in April 2023, and $50.0 million from a private placement financing in October 2025.
If the equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult, more costly and more dilutive.
If the equity and credit markets continue to deteriorate, it may make any necessary debt or equity financing more difficult, more costly and more dilutive.
The process of conducting the necessary clinical research to obtain regulatory approval is costly and time-consuming, and we may never succeed in achieving regulatory approval for TA-ERT in patients with MPSIIIB.
The process of conducting the necessary clinical research to obtain regulatory approval is costly and time-consuming, and we may never succeed in achieving regulatory approval for TA-ERT in patients with MPS IIIB.
We enter into contracts in the normal course of business with third-party contract manufacturing organizations and CROs for clinical trials, non-clinical studies, drug substance and product manufacturing and other services for operating purposes. These contracts are generally cancelable by us upon prior written notice after a certain period.
We enter into contracts in the normal course of business with third-party contract manufacturing organizations and CROs for clinical trials, non-clinical studies, drug substance and product manufacturing and other services for operating purposes. These contracts are generally cancelable by us upon prior written notice after a certain period, except for certain contracts with contract manufacturing organizations containing minimum purchase obligations.
Liquidity and Capital Resources Liquidity Since our inception, we have not generated any revenue from product sales and have incurred significant operating losses and negative cash flows from operations. We anticipate that we will continue to incur net losses for the foreseeable future. As of December 31, 2024, we had an accumulated deficit of $250.3 million.
Liquidity and Capital Resources Liquidity Since our inception, we have not generated any revenue from product sales and have incurred significant operating losses and negative cash flows from operations. We anticipate that we will continue to incur net losses for the foreseeable future. As of December 31, 2025, we had an accumulated deficit of $289.2 million.
We expect that our general and administrative expenses will continue to increase in the foreseeable future as additional administrative personnel and services are required to manage these functions of a public company, and as we advance tildacerfont through clinical development and potential regulatory approval.
We expect that our general and administrative expenses will continue to increase in the foreseeable future as additional administrative personnel and services are required to manage these functions of a public company, and as we advance TA-ERT through potential regulatory approval.
At this time, we cannot reasonably estimate or know the nature, timing, and estimated costs of the efforts that will be necessary to complete the development of, and obtain regulatory approval for, tildacerfont or any of our future product candidates.
At this time, we cannot reasonably estimate or know the nature, timing, and estimated costs of the efforts that will be necessary to complete the development of, and obtain regulatory approval for, TA-ERT or any of our other current or future product candidates.
As of December 31, 2024, we were unable to estimate the timing or likelihood of achieving these milestones or generating future product sales. For a description of the terms of our license and collaboration agreements, see “Item 1. Business — License and Collaboration Agreements” above.
As of December 31, 2025, we were unable to estimate the timing or likelihood of achieving these milestones or generating future product sales. For a description of the terms of our license and collaboration agreements, see “Item 1.
Since inception through December 31, 2024, we have raised aggregate gross proceeds of $293.1 million, including $103.5 million from our initial public offering (“IPO”) in October 2020, $116.0 million from the sale of our redeemable convertible preferred stock, $5.0 million from the issuance of debt, $53.6 million from a private placement financing in February 2023, and the $15.0 million upfront payment from Kaken received in April 2023.
Since inception through December 31, 2025, we have raised aggregate gross proceeds of $343.1 million, including $103.5 million from our initial public offering (“IPO”) in October 2020, $116.0 million from the sale of our redeemable convertible preferred stock, $5.0 million from the issuance of debt, $53.6 million from a private placement financing in February 2023, $15.0 million upfront payment from Kaken Pharmaceutical Co.
During the years ended December 31, 2024 and 2023, we incurred net losses of $53.0 million and $47.9 million, respectively, and used $56.0 million and $33.3 million of cash in operations, respectively. As of December 31, 2024, we had an accumulated deficit of $250.3 million, and we do not expect positive cash flows from operations for the foreseeable future.
During the years ended December 31, 2025 and 2024, we incurred net losses of $39.0 million and $53.0 million, respectively, and used $33.3 million and $56.0 million of cash in operations, respectively. As of December 31, 2025, we had an accumulated deficit of $289.2 million, and we do not expect positive cash flows from operations for the foreseeable future.
We anticipate that we will need to raise substantial additional capital, the requirements of which will depend on many factors, including: ▪ the progress, costs, trial design, results of, and timing of our ongoing and planned clinical trials of our product candidates; ▪ the outcome, costs and timing of seeking and obtaining FDA and any other regulatory approvals; ▪ the number and characteristics of product candidates that we may pursue; ▪ our ability to manufacture sufficient quantities of our product candidates; ▪ our plan to expand our research and development activities; ▪ the costs associated with manufacturing our product candidates and establishing clinical and commercial supplies, and sales, marketing, and distribution capabilities; ▪ our ability to enter into favorable out-licensing agreements for the development and commercialization of our product candidates; ▪ the costs associated with commercialization; ▪ the costs of acquiring, licensing, or investing in product candidates; ▪ our ability to maintain, expand, and defend the scope of our intellectual property portfolio, including the amount and timing of any payments we may be required to make, or that we may receive, in connection with the licensing, filing, prosecution, defense, and enforcement of any patents or other intellectual property rights; ▪ our need and ability to retain key management and hire scientific, technical, business, and medical personnel; ▪ the effect of competing products and product candidates and other market developments; ▪ the timing, receipt, and amount of sales from our product candidates and any future product candidates, if approved; ▪ our need to implement additional internal systems and infrastructure, including financial and reporting systems; ▪ the economic and other terms, timing of, and success of any collaboration, licensing, or other arrangements which we may enter in the future; and ▪ the effects of the disruptions to and volatility in the credit and financial markets in the United States and worldwide from geopolitical and macroeconomic events, including the wars in Ukraine and Israel and related sanctions, and recent and potential future disruptions in access to bank deposits or lending commitments due to bank failures.
We anticipate that we will need to raise substantial additional capital, the requirements of which will depend on many factors, including: • the progress, costs, trial design, results of, and timing of our ongoing and planned clinical trials of our product candidates; • the outcome, costs and timing of seeking and obtaining FDA and any other regulatory approvals; • the number and characteristics of product candidates that we may pursue; • our ability to manufacture sufficient quantities of our product candidates; • our plan to expand our research and development activities; • the costs associated with manufacturing our product candidates and establishing clinical and commercial supplies, and sales, marketing, and distribution capabilities; • our ability to enter into favorable out-licensing agreements for the development and commercialization of our product candidates; • the costs associated with commercialization; • the costs of acquiring, licensing, or investing in product candidates; • our ability to maintain, expand, and defend the scope of our intellectual property portfolio, including the amount and timing of any payments we may be required to make, or that we may receive, in connection with the licensing, filing, prosecution, defense, and enforcement of any patents or other intellectual property rights; • our need and ability to retain key management and hire scientific, technical, business, and medical personnel; • the effect of competing products and product candidates and other market developments; • the timing, receipt, and amount of sales from our product candidates and any future product candidates, if approved; • our need to implement additional internal systems and infrastructure, including financial and reporting systems; • the economic and other terms, timing of, and success of any collaboration, licensing, or other arrangements which we may enter in the future; and • the effects of the disruptions to and volatility in the credit and financial markets in the United States and worldwide from geopolitical and macroeconomic events, including global trade disputes, labor shortages, declines in consumer confidence, inflation and monetary supply shifts, recession risks, 95 Table of Contents tariffs and related legal challenges, and the ongoing wars in Ukraine and the Middle East and related sanctions.
Components of Results of Operations Collaboration Revenue To date, all of our revenue has been derived from the Kaken License Agreement, pursuant to which we granted Kaken the exclusive right to develop and commercialize tildacerfont for CAH in Japan.
Components of Results of Operations Collaboration Revenue To date, all of our revenue has been derived from a collaboration and license agreement (the “Kaken License Agreement”) with Kaken Pharmaceutical Co. Ltd. (“Kaken”), pursuant to which we granted Kaken the exclusive right to develop and commercialize tildacerfont for CAH in Japan.
Without alternative financing or proceeds from other strategic alternatives, we believe, based on our current operating plan, that our cash and cash equivalents as of December 31, 2024 will be insufficient to fund our operations and debt obligations for at least 12 months following the issuance date of our financial statements included elsewhere in this Annual Report.
Without alternative financing or proceeds from other strategic alternatives, we believe, based on our current operating plan, that our cash and cash equivalents as of December 31, 2025 and gross proceeds received in January 2026 under the Loan Agreement with Avenue Capital will be insufficient to fund our operations for at least 12 months following the issuance date of our financial statements included elsewhere in this Annual Report.
As of December 31, 2024, the total undiscounted lease payments for our non-cancelable operating lease for office space, which terminates in February 2028 unless renewed, was $1.2 million.
Material Cash Requirements As of December 31, 2025, the total undiscounted lease payments for our non-cancelable operating lease for office space, which terminates in February 2028 unless renewed, was $0.8 million.
We do not expect to generate any meaningful revenue unless and until we obtain regulatory approval and commercialize TA-ERT or any future product candidates, and we do not know when, or if at all, that will occur. We will continue to require additional capital to develop tildacerfont and fund operations for the foreseeable future.
We do not expect to generate any meaningful revenue unless and until we obtain regulatory approval and commercialize TA-ERT or any other current or future product candidates, and we do not know when, or if at all, that will occur.
Cash Provided by Financing Activities For the year ended December 31, 2024, net cash used in financing activities was $1.6 million, consisting primarily of principal payments on the Term Loan of $1.6 million.
For the year ended December 31, 2024, net cash used in financing activities was $1.6 million, consisting primarily of principal payments on the debt previously outstanding with Silicon Valley Bank of $1.6 million.
Interest Expense Interest expense decreased by $0.2 million during the year ended December 31, 2024 compared to the year ended December 31, 2023 due to the decrease in the interest rate and the decrease in the principal balance on the Term Loan year over year.
Interest Expense Interest expense decreased by $0.2 million during the year ended December 31, 2025 compared to the year ended December 31, 2024 due to the decrease in the principal balance on the debt previously outstanding with Silicon Valley Bank year over year.
Our primary uses of cash are to fund our operations, which consist 93 Table of Contents primarily of research and development expenses related to our clinical development programs, and to a lesser extent, general and administrative expenses.
We will continue to require additional capital to 94 Table of Contents develop TA-ERT and fund operations for the foreseeable future. Our primary uses of cash are to fund our operations, which consist primarily of research and development expenses related to our clinical development programs, and to a lesser extent, general and administrative expenses.
As of December 31, 2024, we had cash and cash equivalents of $38.8 million.
As of December 31, 2025, we had cash and cash equivalents of $48.9 million.
Segments We operate and manage our business as one operating segment, which is the business of developing and commercializing novel therapies for serious neurological disorders with significant unmet medical need. Critical Accounting Estimates Our accounting policies are more fully described in Note 2 of the financial statements to this Annual Report.
Segments We operate and manage our business as one operating segment, which is the business of developing and commercializing novel therapies for serious neurological disorders with significant unmet medical need.
General and Administrative Expenses General and administrative expenses increased by $2.0 million during the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily due to an increase of $2.5 million in legal professional services, partially offset by a decrease of $0.3 million in insurance costs for directors and officers.
General and Administrative Expenses General and administrative expenses increased by $2.3 million during the year ended December 31, 2025 compared to the year ended December 31, 2024, primarily due to an increase in professional fees of $3.1 million, driven by patent litigation and other legal costs, offset by a decrease in stock-based compensation expense of $0.7 million.
If deposits are required by external vendors, a portion of the deposit is included as a prepaid expense until the activity has been performed or when the goods have been received to amortize the deposit to expense in the statements of operations and comprehensive loss. 91 Table of Contents General and Administrative Expenses General and administrative expenses consist primarily of personnel-related costs, including salaries, bonuses, benefits, and stock-based compensation expense, for executive, finance, and other administrative functions.
If deposits are required by external vendors, a portion of the deposit is included as a prepaid expense until the activity has been performed or when the goods have been received to amortize the deposit to expense in the statements of operations and comprehensive loss.
Global economic and business activities continue to face widespread macroeconomic uncertainties, including recent and potential future disruptions in access to bank deposits or lending commitments due to bank failures, labor shortages, inflation and monetary supply shifts, recession risks and potential disruptions from the ongoing wars in Ukraine and the Middle East and related sanctions.
Global economic and business activities continue to face widespread macroeconomic uncertainties, including global trade disputes, labor shortages, declines in consumer confidence, inflation and monetary supply shifts, recession risks, potential disruptions from the ongoing wars in Ukraine and the Middle East and related sanctions, declines in economic growth, tariffs and related legal challenges, and uncertainty about economic stability.
As disclosed in Note 2, the preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ significantly from those estimates.
Critical Accounting Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Future events and their effects cannot be determined with certainty; therefore, the determination of estimates requires the exercise of judgment.
Our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and the disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from macroeconomic events, the wars in Ukraine and Israel and related sanctions, and recent and potential future disruptions in access to bank deposits or lending commitments due to bank failures, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates, and uncertainty about economic stability.
Our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and the disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from macroeconomic events, global trade disputes, labor shortages, declines in consumer confidence, inflation and monetary supply shifts, recession risks, potential disruptions from the wars in Ukraine and the Middle East and related sanctions, declines in economic growth, tariffs and related legal challenges, and uncertainty about economic stability.
Research and Development Expenses The following table sets forth research and development expenses for the periods presented (in thousands): Year Ended December 31, 2024 2023 Change External expenses: Clinical development $ 27,824 $ 32,354 $ (4,530 ) Manufacturing 7,748 3,855 3,893 Preclinical studies 31 490 (459 ) Other research and development 860 1,272 (412 ) Internal expenses: Personnel 9,637 11,130 (1,493 ) Facilities and other 318 331 (13 ) Total research and development expenses $ 46,418 $ 49,432 $ (3,014 ) 92 Table of Contents Research and development expenses decreased by $3.0 million during the year ended December 31, 2024 compared to the year ended December 31, 2023.
Research and Development Expenses The following table sets forth research and development expenses for the periods presented (in thousands): Year Ended December 31, 2025 2024 Change External expenses: Clinical development $ 11,913 $ 27,824 $ (15,911 ) Manufacturing 2,605 7,748 (5,143 ) Preclinical studies (46 ) 31 (77 ) Other research and development 640 860 (220 ) Internal expenses: Personnel 4,144 9,637 (5,493 ) Facilities and other 266 318 (52 ) Total research and development expenses $ 19,522 $ 46,418 $ (26,896 ) Research and development expenses decreased by $26.9 million during the year ended December 31, 2025 compared to the year ended December 31, 2024.
Summary Statements of Cash Flows The following table sets forth the primary sources and uses of cash, cash equivalents, and restricted cash for the periods presented below (in thousands): Year Ended December 31, 2024 2023 Change Net cash used in operating activities $ (55,964 ) $ (33,275 ) $ (22,689 ) Net cash provided by investing activities — 55,777 (55,777 ) Net cash provided by (used in) financing activities (1,622 ) 49,140 (50,762 ) Net increase (decrease) in cash, cash equivalents, and restricted cash $ (57,586 ) $ 71,642 $ (129,228 ) 95 Table of Contents Cash Used in Operating Activities Net cash used in operating activities increased by $22.7 million during the year ended December 31, 2024 compared to the year ended December 31, 2023.
Business — License and Collaboration Agreements” above. 96 Table of Contents Summary Statements of Cash Flows The following table sets forth the primary sources and uses of cash, cash equivalents, and restricted cash for the periods presented below (in thousands): Year Ended December 31, 2025 2024 Change Net cash used in operating activities $ (33,327 ) $ (55,964 ) $ 22,637 Net cash provided by (used in) financing activities 43,481 (1,622 ) 45,103 Net increase (decrease) in cash, cash equivalents, and restricted cash $ 10,154 $ (57,586 ) $ 67,740 Cash Used in Operating Activities Net cash used in operating activities decreased by $22.6 million during the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily due to lower payments driven by decreased clinical development activities offset by payments made for asset acquisitions of $7.4 million.
Interest and Other Income, Net Interest and other income, net decreased by $1.1 million during the year ended December 31, 2024 compared to the year ended December 31, 2023 due to a decrease in cash and cash equivalents year over year.
Interest and Other Income, Net Interest and other income, net decreased by $2.3 million during the year ended December 31, 2025 compared to the year ended December 31, 2024, primarily due to a decrease in interest income of $2.3 million primarily due to lower average daily balances earning yield in money market accounts.
For the year ended December 31, 2023, net cash provided by financing activities was $49.1 million, consisting primarily of net proceeds received from the February 2023 private placement of $50.9 million, offset by principal payments on the Term Loan of $1.6 million.
Cash Provided by Financing Activities For the year ended December 31, 2025, net cash provided by financing activities was $43.5 million, consisting primarily of net proceeds from a private placement financing in October 2025 of $46.6 million offset by payments on the debt previously outstanding with Silicon Valley Bank of $2.1 million.
Results of Operations Comparisons of the Year Ended December 31, 2024 and 2023 The following table summarizes our results of operations for the periods presented (in thousands): Year Ended December 31, 2024 2023 Change Collaboration revenue $ 4,911 $ 10,089 $ (5,178 ) Operating expenses: Research and development 46,418 49,432 (3,014 ) General and administrative 14,644 12,650 1,994 Total operating expenses 61,062 62,082 (1,020 ) Loss from operations (56,151 ) (51,993 ) (4,158 ) Interest expense (307 ) (483 ) 176 Interest and other income, net 3,422 4,557 (1,135 ) Net loss $ (53,036 ) $ (47,919 ) $ (5,117 ) Collaboration Revenue During the years ended December 31, 2024 and 2023, we recognized $4.9 million and $10.1 million, respectively, as collaboration revenue under the Kaken License Agreement.
Interest and Other Income, Net Interest and other income, net primarily consists of interest income earned on our cash and cash equivalents. 92 Table of Contents Results of Operations Comparisons of the Year Ended December 31, 2025 and 2024 The following table summarizes our results of operations for the periods presented (in thousands): Year Ended December 31, 2025 2024 Change Collaboration revenue $ — $ 4,911 $ (4,911 ) Operating expenses: Research and development 19,522 46,418 (26,896 ) General and administrative 16,991 14,644 2,347 Total operating expenses 36,513 61,062 (24,549 ) Loss from operations (36,513 ) (56,151 ) 19,638 Interest expense (90 ) (307 ) 217 Change in fair value of warrant liability (3,500 ) — (3,500 ) Interest and other income, net 1,137 3,422 (2,285 ) Net loss $ (38,966 ) $ (53,036 ) $ 14,070 Collaboration Revenue During the year ended December 31, 2024 we recognized $4.9 million as collaboration revenue under the Kaken License Agreement.
We have no products approved for commercial sale and have not generated any product revenue to date, and we continue to incur significant research and development and other expenses related to our ongoing operations. Our ability to generate product revenue sufficient to achieve profitability, if ever, will depend on the successful development of tildacerfont and any future product candidates.
Currently, there is no FDA-approved therapy for the treatment of MPS IIIB, and disease management consists of limited palliative care. We have no products approved for commercial sale and have not generated any product revenue to date, and we continue to incur significant research and development and other expenses related to our ongoing operations.
Interest Expense Interest expense consists of interest incurred and non-cash amortization of debt discount and issuance costs in connection with the Term Loan. Interest and Other Income, Net Interest and other income, net primarily consists of interest income earned on our cash, cash equivalents and investments.
Interest Expense Interest expense consists of interest incurred and non-cash amortization of debt discount and issuance costs in connection with the debt previously outstanding with Silicon Valley Bank, which we voluntarily prepaid in full on November 3, 2025.
Removed
Given that a relatively small number of clinicians and specialists treat a large proportion of the patients with MPS IIIB, we believe this market can be effectively addressed with a modest-sized and targeted patient-centric field team, alongside various high-touch patient initiatives.
Added
Since November 2024 we have shifted our focus to the development of tralesinidase alfa enzyme replacement therapy (“TA-ERT”), an investigational treatment for mucopolysaccharidoses type IIIB (“MPS IIIB”), or Sanfilippo Syndrome Type B. In October 2025, TA-ERT received breakthrough therapy designation from the U.S. Food and Drug Administration (“FDA”) for the treatment of Sanfilippo Syndrome Type B.
Removed
We plan to seek strategic collaborations to benefit from the resources of biopharmaceutical companies specialized in either relevant disease areas or geographies in markets outside the United States.
Added
TA-ERT has received Rare Pediatric Disease Designation, Fast Track Designation, Breakthrough Therapy Designation, and Orphan Drug Designation in the United States and European Union (“EU”). We anticipate submitting a biologics license application of TA-ERT for the treatment of Sanfilippo Syndrome Type B in the fourth quarter of 2026.
Removed
We rely, and expect to continue to rely, on third parties for the manufacture of our investigational products for preclinical studies and clinical trials, as well as for commercial manufacture if our investigational products, including TA-ERT, obtain marketing approval.
Added
Our ability to generate product revenue sufficient to achieve profitability, if ever, will depend on the successful development of TA-ERT and our other current and future product candidates. Since inception, we have incurred significant losses and negative cash flows from operations.
Removed
We also rely, and expect to continue to rely, on third parties to package, label, store, and distribute tildacerfont, if marketing approval is obtained.
Added
Ltd. received in April 2023, and $50.0 million from a private placement financing in October 2025. As of December 31, 2025, we had cash and cash equivalents of $48.9 million.
Removed
We believe that this strategy allows us to maintain a more efficient infrastructure by eliminating the need for us to invest in our own manufacturing facilities, equipment, and personnel while also enabling us to focus our expertise and resources on the development of tildacerfont. Since inception, we have incurred significant losses and negative cash flows from operations.
Added
Reverse Stock Split We effected a one-for-seventy-five (1:75) reverse stock split of our outstanding common stock (the “Reverse Stock Split”) on August 4, 2025.
Removed
Without alternative financing or proceeds from other strategic alternatives, we believe, based on our current operating plan, that our cash and cash equivalents as of December 31, 2024 will be insufficient to fund our operations and debt obligations for at least 12 months following the issuance date of our financial statements 89 Table of Contents included elsewhere in this Annual Report.
Added
All of the outstanding common stock share numbers (including shares of common stock subject to our options), share prices, exercise prices and per share amounts contained in the financial statements have been retroactively adjusted in the financial statements to reflect this Reverse Stock Split for all periods presented.
Removed
Material Agreements Loan Agreement with Silicon Valley Bank In September 2019, we entered into a Loan and Security Agreement, as subsequently amended (the “Loan Agreement”), with SVB providing for a term loan (the “Term Loan”) for an aggregate principal amount of $4.5 million.
Added
Material Agreements Loan Agreement with Avenue Capital On January 7, 2026 (the “Closing Date”), the Company entered into a Loan and Security Agreement (the “Loan and Security Agreement”) and a Supplement to the Loan and Security Agreement (together with the Loan and Security Agreement, the “Loan Agreement”), with Avenue Capital Management II, L.P., as administrative agent and collateral agent (the “Agent”) and Avenue Venture Opportunities Fund II, L.P., as lender (the “Lender”, together with Agent, “Avenue Capital”).
Removed
In March 2021, we entered into a First Amendment to Loan and Security Agreement (the “First Amendment”) which increased the aggregate principal amount of the Term Loan to $30.0 million, of which $20.0 million was immediately available under the first tranche (the “First Tranche”) and $10.0 million was available under the second tranche through December 31, 2022 (the “Second Tranche”) subject to the completion of certain clinical or financial milestones.
Added
The Loan Agreement makes available to the company term loans in an aggregate principal amount of up to $50.0 million with (i) $15.0 million funded within 5 business days after the Closing Date (“Tranche 1”), (ii) up to $10.0 million to be made available to the company between March 1, 2026 and September 30, 2026, subject to, among other things, the company’s achievement of a key regulatory milestone related to our development of TA-ERT for the treatment of MPS IIIB (“Tranche 2”) and (iii) up to $15.0 million to be made available to the company between September 1, 2026 and March 31, 2027, subject to, among other things, the company’s achievement of an additional key regulatory milestone with respect to our development of TA-ERT for the treatment of MPS IIIB (“Tranche 3”).
Removed
Pursuant to the First Amendment, the Term Loan will mature on January 1, 2026 (the “Maturity Date”). In May 2022, we entered into a Second Amendment to Loan and Security Agreement (the “Second Amendment”) which amended the milestones for the Second Tranche, added a liquidity covenant for the Second Tranche and amended the interest and prepayment terms.
Added
The Lender may make additional term loans of up to an additional $10.0 million (the “Discretionary Tranche 4” and collectively with Tranche 1, Tranche 2 and Tranche 3, the “Loans”), to be funded between October 1, 2027 and June 30, 2028, subject to, among other things, (i) the company’s achievement of a certain commercial 90 Table of Contents milestone and (ii) the mutual written agreement of the company and the Lender (upon the Lender’s investment committee approval).
Removed
As of December 31, 2024 and 2023, the outstanding principal was comprised of $1.8 million and $3.4 million, respectively, under the First Tranche. Repayment of principal under the First Tranche commenced in January 2023. Commitments available under the Second Tranche of $10.0 million expired on December 31, 2022.
Added
The Loans bear interest at an annual rate equal to the greater of (x) the sum of 5.25% plus the prime rate as reported in The Wall Street Journal and (y) 12.25%. The Loans are secured by a lien on and security interest in all of our assets, including intellectual property, subject to agreed exceptions.
Removed
The Loan Agreement provided for monthly cash interest-only payments following the funding date of each respective tranche and continuing thereafter through December 31, 2022. The Term Loan is subject to a floating per annum interest rate equal to the greater of (a) 0.50% above the Prime Rate (as defined in the Loan Agreement) or (b) 90 Table of Contents 3.75%.
Added
The maturity date of the Loans is July 1, 2029 (the “Maturity Date”). The Loan Agreement does not contain any minimum cash requirement or other financial covenants. As of the date hereof, $15.0 million has been funded under the Loan Agreement.
Removed
Following the interest-only period, the outstanding Term Loan balance is payable in (i) 37 consecutive monthly payments after the end of the interest-only period and continuing on the same day of each month thereafter, in amounts that would fully amortize such Term Loan balance, as of the first business day of the first month following the amended interest-only period, over the repayment period, plus (ii) monthly payments of accrued but unpaid interest.
Added
We will make interest only payments on the Loans until the 12-month anniversary of the Closing Date, subject to (i) a 6-month extension, so long as at least $5.0 million from Tranche 2 has been funded and (ii) an additional 12-month extension if the company achieves the Tranche 3 milestone.
Removed
The final payment is due on the Maturity Date and includes all outstanding principal plus accrued unpaid interest and an end of term payment totaling $0.3 million, which is 6.0% of the original funded principal amount of the First Tranche (the “Supplemental Final Payment”).
Added
The Loan principal is repayable in equal monthly installments from the end of interest only period to the Maturity Date.
Removed
We may prepay amounts outstanding under the Term Loan at any time provided certain notification conditions are met, in which case, all outstanding principal plus accrued and unpaid interest, the Supplemental Final Payment, a prepayment fee of 1% or 2% of the principal amount of the First Tranche, and any bank expenses become due and payable.
Added
We may, at our option at any time, prepay the Loans in their entirety by paying the then-outstanding principal balance and all accrued and unpaid interest on the Loans, subject to a prepayment fee equal to (i) 3.0% of the principal amount outstanding if the prepayment occurs on or prior to the first anniversary following the Closing Date, (ii) 2.0% of the principal amount outstanding if the prepayment occurs after the first anniversary following the Closing Date, but on or prior to the second anniversary following the Closing Date, and (iii) 1.0% of the principal amount outstanding if the prepayment occurs after the second anniversary following the Closing Date.
Removed
We will recognize royalty and milestone revenues under the Kaken License Agreement if and when appropriate under the relevant accounting rules (see Note 8 to our financial statements).
Added
We will pay a final payment of 4.00% of the aggregate commitment amounts for Tranche 1, Tranche 2 and Tranche 3, which shall be increased to include the commitment amount of Discretionary Tranche 4 upon the funding of such tranche, on the earlier of (x) the Maturity Date and (y) the date that we prepay all of the outstanding principal amount of the Loans in full.
Removed
The decrease in clinical development expenses of $4.5 million was primarily driven by (i) a decrease of $8.5 million due to the termination of the CAHmelia-203 study, (ii) a decrease of $2.5 million due to completion of the POWER study, (iii) a decrease of $3.8 million due to completion of enrollment in the CAHmelia-204 study, partially offset by (iv) clinical development costs related to the Allievex asset purchase of $8.9 million and (v) an increase of $1.0 million related to additional dose ranging cohorts in the CAHptain-205 clinical trial.
Added
On the Closing Date, we paid to the Lender a commitment fee of $0.4 million. The Loan Agreement contains customary representations, warranties and covenants, including covenants by the company limiting, among other things, additional indebtedness, liens, guaranties, mergers and consolidations, substantial asset sales, investments and loans, certain corporate changes, transactions with affiliates and fundamental changes.
Removed
The increase in manufacturing expenses of $3.9 million was primarily driven by manufacturing costs related to the Allievex asset purchase of $5.9 million, partially offset by a decrease of $1.0 million related to the termination of the CAHmelia-203 study.
Added
The Loan Agreement provides for events of default customary for term loans of this type, including but not limited to non-payment, breaches or defaults in the performance of covenants, insolvency, bankruptcy and the occurrence of a material adverse effect on the company.
Removed
The decrease in personnel related expenses of $1.5 million was primarily driven by a decrease of $1.3 million in salaries due to reduced headcount, partially offset by an increase of $0.5 million in stock-based compensation expense.
Added
After the occurrence of an event of default, the Agent may (i) accelerate payment of all obligations, impose an increased rate of interest, and terminate the Lender’s commitments under the Loan Agreement and (ii) exercise any other right or remedy provided by contract or applicable law, including a foreclosure on our assets.
Removed
As of December 31, 2024, we had cash and cash equivalents of $38.8 million.
Added
General and Administrative Expenses General and administrative expenses consist primarily of personnel-related costs, including salaries, bonuses, benefits, and stock-based compensation expense, for executive, finance, and other administrative functions.
Removed
Material Cash Requirements As of December 31, 2024, future payments of principal and interest on the Term Loan, which commenced repayment in January 2023 and matures in January 2026, were $1.8 million. For a description of the terms of the Loan Agreement, see the section titled “Material Agreements — Loan Agreement with Silicon Valley Bank” above.
Added
Change in Fair Value of Warrants The change in fair value of warrants consists of the change in the fair value of the warrant liability.
Removed
Net cash used in fiscal 2024 includes cash paid of $10.6 million for the Allievex asset purchase which was offset by a decrease in payments driven by the termination of the CAHmelia-203 study and completion of the studies for CAHmelia-204, CAHmelia-205 and POWER.
Added
The decrease in clinical development expenses of $15.9 million was primarily related to the discontinuation of the tildacerfont CAH development program of $14.0 million.
Removed
Additionally, cash used in fiscal 2023 was offset by the receipt of the $15.0 million upfront payment under the Kaken License Agreement in April 2023. Cash Used in Investing Activities For the year ended December 31, 2024, no cash was provided by investing activities.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+0 added−0 removed3 unchanged
Biggest changeWhile we believe our cash and cash equivalents do not contain excessive risk, we cannot provide absolute assurance that in the future our investments will not be subject to adverse changes in market value. Additionally, the interest rate for our Term Loan is variable.
Biggest changeWhile we believe our cash and cash equivalents do not contain excessive risk, we cannot provide absolute assurance that in the future our investments will not be subject to adverse changes in market value. Additionally, the interest rates for our loans are variable.
As of December 31, 2024 and 2023, a hypothetical 1% change in interest rates would not have had a material effect on our financial statements. We do not currently engage in hedging transactions to manage our exposure to interest rate risk. Foreign Currency Exchange Risk Our operations include activities in the United States.
As of December 31, 2025 and 2024, a hypothetical 1% change in interest rates would not have had a material effect on our financial statements. We do not currently engage in hedging transactions to manage our exposure to interest rate risk. Foreign Currency Exchange Risk Our operations include activities in the United States.
While we are seeing, and expect to continue to see, inflation due to geopolitical and macroeconomic, as of December 31, 2024, we do not expect anticipated changes in inflation to have a material effect on our business, financial condition or results of operations for future reporting periods. 98 Table of Contents
While we are seeing, and expect to continue to see, inflation due to geopolitical and macroeconomic uncertainties, as of December 31, 2025, we do not expect anticipated changes in inflation to have a material effect on our business, financial condition or results of operations for future reporting periods. 98 Table of Contents
Item 7A. Quantitative and Qu alitative Disclosures About Market Risk. Interest Rate Risk Our cash and cash equivalents as of December 31, 2024 consisted of $38.8 million in bank deposits and money market funds. Previously, we have held U.S treasury securities and corporate bonds. Such interest-earning instruments carry a degree of interest rate risk.
Item 7A. Quantitative and Qu alitative Disclosures About Market Risk. Interest Rate Risk Our cash and cash equivalents as of December 31, 2025 consisted of $48.9 million in bank deposits and money market funds. Previously, we have held U.S treasury securities and corporate bonds. Such interest-earning instruments carry a degree of interest rate risk.

Other SPRB 10-K year-over-year comparisons