Risk Factors Dashboard

Once a year, publicly traded companies issue a comprehensive report of their business, called a 10-K. A component mandated in the 10-K is the ‘Risk Factors’ section, where companies disclose any major potential risks that they may face. This dashboard highlights all major changes and additions in new 10K reports, allowing investors to quickly identify new potential risks and opportunities.

Risk Factors - ATNX

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Item 1A. Risk Factors.

Investing in our common stock involves a high degree of risk. You should consider carefully the following risk factors, as well as the other information in this report, including our consolidated financial statements and related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, before deciding whether to invest in our common stock. The occurrence of any of the events or developments described below could harm our business, financial condition and results of operations and growth prospects. In such an event, the market price of our common stock could decline, and you may lose all or part of your investment.

Risks Related to Our Financial Position and Need for Additional Capital

We have incurred net losses every year since our inception and anticipate that we will continue to incur net losses for the foreseeable future, and as a result, our management has identified and our auditors agreed that there is a substantial doubt about our ability to continue as a going concern.

Investment in pharmaceutical product development is highly speculative because it entails substantial upfront costs and expenses and significant risk that a drug candidate will fail to gain regulatory approval or become commercially viable. Since our formation, we have relied on a combination of public and private securities offerings, public-private partnerships, the issuance of convertible notes and public grants to fund our operations. We have devoted most of our financial resources to research and development, including our non-clinical development activities and clinical trials, and only one of the product candidates we developed has been commercialized to date. We have devoted most of our financial resources to research and development, including our non-clinical development activities and clinical trials. We have not generated substantial revenue from product sales to date, and we continue to incur significant development and other expenses related to our ongoing operations. As a result, we incurred losses in the last two fiscal years. For the years ended December 31, 2022 and 2021, we reported net losses of $104.4 million and $202.0 million, respectively, and had an accumulated deficit of $1,016.8 million as of December 31, 2022. Substantially all of our operating losses have resulted from costs incurred in connection with our research and development programs and from selling, general and administrative expenses associated with our operations. As a result, we incurred losses in 2021, 2020 and 2019. For the years ended December 31, 2021, 2020 and 2019, we reported net losses of $202.0 million, $148.4 million and $125.5 million, respectively, and had an accumulated deficit of $913.4 million as of December 31, 2021. Substantially all of our operating losses have resulted from costs incurred in connection with our research and development programs and from selling, general and administrative expenses associated with our operations.

We expect to continue to incur losses for the foreseeable future, and we expect these losses to increase as we pivot to focus on the cell therapy platform and continue our development of, and seek regulatory approvals for, our product candidates. Because none of the potential product candidates in the cell therapy platform were as advanced in the review process as Oral Paclitaxel in the Orascovery platform before we received the CRL, we expect to continue to incur losses for longer than initially anticipated. Typically, it takes many years to develop a new drug before it is available for treating patients. We may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business. The size of our future net losses will depend, in part, on the rate of future growth of our expenses, our ability to generate revenue and the timing and amount of milestones, payments due pursuant to our financing arrangements, and other required payments to third parties in connection with our potential future arrangements with third parties. If any of our drug candidates fail in clinical trials or do not gain regulatory approval, or if approved, fail to achieve market acceptance, we may never become profitable. Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods. Our prior losses and expected future losses have had, and will continue to have, an adverse effect on our stockholders’ equity and working capital.

We expect our research and development expenses to continue to be significant in connection with our continued investment in our drug candidates and our ongoing and planned clinical trials for our drug candidates. In addition, as a public company, we incur additional costs associated with operating as a public company. As a result, we expect to continue to incur significant operating losses and negative cash flows from operations for the foreseeable future. These losses have had and will continue to have a material adverse effect on our stockholders’ equity, financial position, cash flows and working capital.

The report of our independent registered public accounting firm that accompanies our audited consolidated financial statements contains an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern. Our consolidated financial statements do not include any adjustments that might result if we are unable to continue as a going concern. If we are unable to continue as a going concern, holders of our securities might lose their entire investment. These factors, among others, may make it difficult to raise any additional capital and may cause us to be unable to continue to operate our business or force us to seek bankruptcy protection. These factors, among others, may make it difficult to raise any additional capital and may cause us to be unable to continue to operate our business.

Our strategic pivot to focus on our cell therapy platform and our disposal of non-core assets may not result in anticipated savings, could result in total costs and expenses that are greater than expected, could make it more difficult to retain qualified personnel and may significantly disrupt our operations, each of which could have a material adverse effect on our business.

In 2022, we began a strategic pivot to become a cell therapy company and monetized non-core assets to raise capital to support the development of our cell therapy platform. We sold (i) certain of our rights to payments under the Almirall License Agreement for Klisyri, (ii) our rights to the Dunkirk Facility, and (iii) our interest in our API manufacturing business in China. We also exited the APS 503B sterile compounding business. The process of monetizing these assets has been disruptive to our daily operating activities

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and resulted in a shift in focus of our business. To the extent we are able to monetize other non-core assets, the attention of our management team may be diverted and our operating activities may be further disrupted.

There can be no assurance that our divestiture of these assets will be successful, or that the sale of any additional non-core assets will raise sufficient funds for us to continue our business. We may not realize in full the anticipated benefits, savings and improvements in our strategic pivot efforts due to unforeseen difficulties, delays, disruptions or unexpected costs. The costs of disposing of the assets may exceed the cost savings we generate. Any cost-saving measures we implement, including further workforce reductions, may distract remaining employees from our business, cause unplanned employee attrition, reduce employee morale and productivity, disrupt our disclosure controls and procedures and internal control over financial reporting, yield other unanticipated consequences and damage our reputation. Any cost-saving measures we implement, including any workforce reduction, may distract remaining employees from our business, cause unplanned employee attrition, reduce employee morale and productivity, disrupt our disclosure controls and procedures and internal control over financial reporting, yield other unanticipated consequences and damage our reputation.

There can be no assurance that our focus on our cell therapy platform will be successful, result in the advancement of a proprietary drug product, or yield any revenue in the future. The drug development process is expensive, can take many years to complete, and its outcome is inherently uncertain. We may suffer significant additional setbacks in focusing on our cell therapy platform and may never become profitable. Any of these factors could have a material adverse effect on our business.

Our financial results are subject to volatility related to our revenue and expenses, and we have not yet been and may never become profitable.

Our financial results are subject to volatility based on a number of factors, including the timing of milestone licensing fees that we receive or are required to pay, the amount and timing of our debt repayment obligations, the change in product types sold by APD and whether those products are in high demand, our ability to predict the products in high demand in the market, competition in the market for generic drugs. Our ability to generate revenue and become profitable depends upon our ability to successfully complete the development of, and obtain the necessary regulatory approvals for, our proprietary drug candidates, which may not occur for many years. Our ability to achieve revenue and profitability is dependent on our 46 ability to complete the development of our proprietary drug candidates, obtain necessary regulatory approvals, and have our proprietary drugs manufactured and successfully marketed. Our revenue and gross margins are also subject to fluctuation due to changes in APD product mix and the expenses we incur to continue our research and development and commercialization efforts. Our revenue and gross margins are also subject to fluctuation due to changes in product mix and the expenses we incur to continue our research and development and commercialization efforts.

We expect to continue to incur substantial losses through the projected development of our drug candidates. None of our current proprietary drug candidates have been approved for marketing in the U.S. or any other jurisdiction, and they may never receive such approval. Our ability to achieve revenue and profitability is dependent on our ability to complete the development of our proprietary drug candidates, obtain necessary regulatory approvals, and have our proprietary drugs manufactured and successfully marketed. Our ability to achieve revenue and profitability is dependent on our 46 ability to complete the development of our proprietary drug candidates, obtain necessary regulatory approvals, and have our proprietary drugs manufactured and successfully marketed.

Even if we receive regulatory approval of our proprietary drug candidates for commercial sale, we do not know when they will generate revenue, if at all. Our ability to generate revenue from product sales of our drug candidates depends on a number of factors, including our ability to:

complete research regarding, and non-clinical and clinical development of, our proprietary drug candidates;
formulate appropriate dosing protocols, drug preparations and capsule encapsulation methods;
obtain regulatory approvals and marketing authorizations for drug candidates for which we complete clinical trials;
develop a sustainable and scalable manufacturing processes, including establishing and maintaining commercially viable supply relationships with third parties;
compliantly launch and commercialize proprietary drug candidates for which we obtain regulatory approvals and marketing authorizations, either directly or with a collaborator or distributor;
obtain market acceptance of our proprietary drug candidates and their routes of administration as viable treatment options;
obtain optimal pricing for products in key global markets;
obtain adequate coverage and reimbursement for our proprietary drug candidates from government (including U.S. federal healthcare programs) and private payors;
identify, assess, acquire and/or develop new proprietary drug candidates;
address any competing technological and market developments;
negotiate and maintain favorable terms in any collaboration, licensing or other arrangements into which we may enter;
maintain, protect and expand our portfolio of intellectual property rights, including patents, trade secrets and know-how;
successfully commercialize our U.S. specialty pharmaceutical products; and
attract, hire and retain qualified personnel.

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In addition, because of the numerous risks and uncertainties associated with drug development, we are unable to predict the timing or amount of increased expenses, or if we will be able to achieve profitability. Our expenses could increase beyond expectations if we are required by the FDA or regulatory authorities in other jurisdictions to perform studies in addition to those that we currently anticipate. In addition, our expenses could increase beyond expectations if we are required by the FDA, NMPA, or regulatory authorities in other jurisdictions to perform studies in addition to those that we currently anticipate. For example, we will incur additional expenses to re-engage with the FDA by discussing the data from the I-SPY2 TRIAL with respect to our mBC NDA, but we cannot assure you that those discussions will be more successful than the NDA for which we received the CRL.

If we fail to become profitable, we may be unable to continue our operations at planned levels and be forced to further reduce our operations or cease operations. Failure to become profitable may adversely affect the market price of our common stock and our ability to raise capital and continue operations. Failure to become and remain profitable may adversely affect the market price of our common stock and our ability to raise capital and continue operations. A decline in the value of our company could cause you to lose all or part of your investment. A decline in the value of our company could also cause you to lose all or part of your investment.

We will need to obtain additional financing to fund our operations, and if we are unable to obtain such financing, we may be unable to complete the development and commercialization of our drug candidates or continue to operate our business.

To date, we have financed our operations with the proceeds from debt financings, public and private securities offerings, public-private partnerships, the issuance of convertible notes and public grants, If we are unable to monetize assets or raise additional capital, we believe that the existing cash and cash equivalents, restricted cash, and short-term investments will fund operations into the second quarter of 2023 and will not be sufficient to fund our operations through the next twelve months beyond the date of the issuance of our consolidated financial statements. Our drug candidates require substantial investment for clinical studies and regulatory review before they can provide us with any product sales revenue, if any. Our drug candidates will require the completion of clinical studies and regulatory review, substantial investment before they can provide us with any product sales revenue. Our operations have consumed substantial amounts of cash since inception. The net cash used for our operating activities from continuing operations was $64.3 million, and $129.8 million for the years ended December 31, 2022 and 2021, respectively. The net cash used for our operating activities from continuing operations was $138.3 million, $127.8 million, and $97.0 million for the years ended December 31, 2021, 2020, and 2019 respectively. We expect to continue to spend substantial amounts on advancing the clinical development of our proprietary drug candidates. Moreover, our research and development expenses and other contractual commitments are substantial and may increase in the future.

If we are unable to raise additional capital, we would not have sufficient cash on hand or available liquidity that can be utilized to repay our outstanding debt if Oaktree Fund Administration, LLC as an administrative agent, and the lenders party thereto (collectively, "Oaktree") declares the amounts due under the senior secured loan agreement and related security agreements, as amended, (the “Senior Credit Agreement”) immediately due and payable. We do not have access to additional capital under the Senior Credit Agreement. We could spend our available financial resources much faster than expected and may need to raise additional funds sooner than anticipated. If we are unable to monetize assets or raise capital when needed or on attractive terms, we will be forced to delay, reduce or eliminate our research and development programs or future commercialization efforts. If we are unable to raise capital when needed or on attractive terms, we will be forced to delay, reduce or eliminate our research and development programs or future commercialization efforts. Our inability to obtain additional funding when needed could seriously harm our business or make it impossible for us to continue to operate our business, and may cause us to seek bankruptcy protection. Our inability to obtain additional funding when needed could seriously harm our business or make it impossible for us to continue to operate our business.

We may not be able to repay, refinance, or restructure our substantial indebtedness owed to our senior secured lender, which would have a material adverse effect on our financial condition and may cause us to seek bankruptcy protection.

We anticipate that we will need to raise a significant amount of debt or equity capital in the future in order to repay our outstanding debt obligations owed under the Senior Credit Agreement and to continue to fund our operations. We are required to make quarterly amortizing payments until the maturity date of June 19, 2026, when then the remaining balance of the principal plus accrued and unpaid interest will be due. If we are unable to raise sufficient capital to repay these obligations and we are otherwise unable to extend the maturity dates or refinance these obligations, we would be in default. On March 7 and March 13, 2023, we received notices of certain alleged defaults and reservations of rights from Oaktree related to the Senior Credit Agreement. The alleged defaults relate to (i) the Company exceeding the $10.0 million threshold for incurring additional indebtedness by having accounts payable owed to counterparties overdue by more than 90 days, (ii) the Company’s obligation to provide notice to Oaktree related to the foregoing, and (iii) the Company’s obligation to provide notice to Oaktree regarding the recent reverse stock split. Upon the occurrence of an Event of Default, Oaktree has the right to accelerate all amounts outstanding under the Senior Credit Agreement, in addition to other remedies available to it as a secured creditor of ours. If an event of default were to occur, Oaktree will have the right to accelerate all amounts outstanding under the Senior Credit Agreement, in addition to other remedies available to it as a secured creditor of ours. If Oaktree accelerates the maturity of the indebtedness under the Senior Credit Agreement, we do not have sufficient capital available to pay the amounts due on a timely basis, if at all, and there is no guarantee that we would be able to repay, refinance or restructure the payments due under the Senior Credit Agreement. In addition, an Event of Default under the Senior Credit Agreement may trigger cross-default under our other agreements, , which could increase our obligations or reduce our rights under those agreements of the Company. The Company responded to Oaktree, including grounds upon which the Company disputes each of the alleged defaults. The Company has not reached a mutual agreement with Oaktree on this matter.

We cannot provide any assurances that we will be able to raise the necessary amount of capital to repay these obligations or that we will be able to extend the maturity dates or otherwise refinance these obligations. If we are unable to monetize assets or raise additional capital, we may breach additional financial covenants under the Senior Credit Agreement. If we are unable to raise additional capital or monetize assets, we may breach financial covenants under the Senior Credit Agreement. The outstanding principal balance under the Senior Credit Agreement was $44.7 million as of December 31, 2022. If we are unable to monetize assets or raise additional capital, we would not have sufficient cash on hand or available liquidity that can be utilized to repay the outstanding debt if

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Oaktree accelerated the maturity of all amounts outstanding under the Senior Credit Agreement. Oaktree has the right to exercise its rights and remedies to collect, which includes foreclosing on our assets if we are unable to pay the amounts due. Accordingly, a default leading to Oaktree accelerating the maturity of the indebtedness under the Senior Credit Agreement would have a material adverse effect on our business and, if Oaktree exercises its rights and remedies, we would likely be forced to seek bankruptcy protection.

Covenants in the agreements governing our existing debt agreements restrict the manner in which we conduct our business.

The Senior Credit Agreement contains various covenants that limit, subject to certain exemptions, our ability and/or our certain of our subsidiaries’ ability to, among other things, incur additional indebtedness or liens; make investments; consummate business combinations such as mergers and dispositions; prepay other indebtedness; apply the funds raised by monetizing non-core assets to our operations without restrictions; and to declare dividends and other distributions, subject to certain exceptions, including specific exceptions with respect to product commercialization and development activities. For example, when we have been able to monetize our non-core assets, we have been required to make mandatory prepayments of principal, accrued and unpaid interest, and certain fees to Oaktree in addition to the quarterly amortization payments due under the terms of the Senior Credit Agreement. In addition, we received a notice of default and reservation of rights from Oaktree related to incurring additional indebtedness by having accounts payable owed to counterparties and overdue by more than 90 days in excess of the threshold in the Senior Credit Agreement. Oaktree has the right to accelerate all amounts outstanding under the Senior Credit Agreement, in addition to other remedies available to it as a secured creditor of ours.

The Senior Credit Agreement contains certain financial covenants, including, among other things, maintenance of minimum liquidity and a minimum revenue test, measured quarterly until the last day of the second consecutive fiscal quarter where the consolidated leverage ratio does not exceed 4.5 to 1, provided that thereafter we cannot allow our consolidated leverage ratio to exceed 4.5 to 1, measured quarterly. The Senior Credit Agreement requires that we maintain a minimum liquidity amount in cash or permitted cash equivalent investments of $10.0 million. The Senior Credit Agreement requires that we maintain a minimum liquidity amount in cash or permitted cash equivalent investments of $20.0 million. Our obligations under the Senior Credit Agreement are guaranteed by certain of our existing domestic subsidiaries and subsequently acquired or organized subsidiaries subject to certain exceptions. Our obligations under the Senior Credit Agreement and the related guarantees thereunder are secured, subject to customary permitted liens and other agreed upon exceptions, by (i) a pledge of all of the equity interests of our direct subsidiaries, and (ii) a perfected security interest in all of our tangible and intangible assets.

The restrictions contained in our Senior Credit Agreement governing our debt could adversely affect our ability to:

finance our operations;
make needed capital expenditures;
dispose of certain of our assets without consent of the lender;
make strategic acquisitions or investments or enter into alliances;
withstand a future downturn in our business or the economy in general;
engage in business activities, including future opportunities, that may be in our interest; and
plan for or react to market conditions or otherwise execute our business strategies.

A breach of any of these covenants, subject to certain cure rights of the Company, could result in an additional default under the agreements governing our debt. Further, additional indebtedness that we incur in the future may subject us to further covenants. If a default under any such debt agreement is not cured or waived, the default could result in the acceleration of debt, which could require us to repay debt prior to the date it is otherwise due and that could adversely affect our financial condition. If Oaktree accelerates the maturity of indebtedness under the Senior Credit Agreement, the lenders may seek repayment through our subsidiary guarantors or by executing on the security interest granted pursuant to the Senior Credit Agreement and related security agreements. If we default under the Senior Credit Agreement, the lenders may seek repayment through our subsidiary guarantors or by executing on the security interest granted pursuant to the Senior Credit Agreement and related security agreements. If we are unable to monetize assets or raise additional capital, we may breach additional financial covenants under the Senior Credit Agreement. If we are unable to raise additional capital or monetize assets, we may breach financial covenants under the Senior Credit Agreement. The outstanding principal balance under the Senior Credit Agreement was $44.7 million as of December 31, 2022. If we are unable to monetize assets or raise additional capital, we would not have sufficient cash on hand or available liquidity that can be utilized to repay the outstanding debt in the event Oaktree accelerates its maturity. Accordingly, if Oaktree exercises its rights and remedies by accelerating the maturity of the indebtedness under the Senior Credit Agreement, it would have a material adverse effect on our business and we would likely be forced to seek bankruptcy protection.

Our ability to comply with the covenants, restrictions and specified financial ratios contained in the Senior Credit Agreement may be affected by events beyond our control, including prevailing economic, financial, and industry conditions. Even if we are able to comply with all of the applicable covenants, the restrictions on our ability to manage our business in our sole discretion could adversely affect our business by, among other things, limiting our ability to take advantage of financings, mergers, acquisitions, and other corporate opportunities that we believe would be beneficial to us.

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An impairment of long-lived assets could have a material adverse effect on our results of operations.

We review the recoverability of our long-lived assets at least annually or more frequently when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. Changes in market conditions, including further increases in interest rates, exchange rate fluctuations, or other changes in the future outlook of value may lead to an impairment of our long-lived assets in the future. The sale of assets, exit of a business, or change in our business strategy may lead to additional impairment charges. Any significant impairment could have a material adverse effect on our results of operations. We cannot accurately predict the amount and timing of any future impairment of assets, and we may be required to take additional charges relating to certain of our reporting units. We cannot accurately predict the amount and timing of any future impairment of assets, and, going forward, we may be required to take additional charges relating to certain of our reporting units. Any such charges would have an adverse effect on our financial results.

We are a party to ongoing legal proceedings and, while we cannot predict the outcome of those proceedings and other contingencies with certainty, if we settle these claims or the proceedings are not decided in our favor, our business and financial condition could be materially adversely affected.

We have been, and may in the future be, subject to various legal and regulatory proceedings, including class action litigation. It is inherently difficult to assess the outcome of these matters, and there can be no assurance that we will prevail in any proceeding or litigation. Legal and regulatory matters of any degree of significance could result in substantial cost and diversion of our efforts, which by itself could have a material adverse effect on our financial condition and operating results.

As disclosed in Part I, Item 3, “Legal Proceedings,” following our receipt of the CRL in February 2021 and the subsequent decline of the market price of our common stock, two purported class action lawsuits were filed against the Company and certain members of its management team, along with a related shareholder derivative lawsuit. In addition, we are subject to a breach of contract claim brought by Exyte U.S., Inc. against us and ImmunityBio, Inc., in connection with the design and build of the Dunkirk Facility by Exyte for the Company. If we settle these claims or the litigation is not resolved in our favor, we may suffer reputational damage and incur legal costs, settlements or judgments that exceed the amounts covered by our existing insurance policies. We can provide no assurances that our insurer will insure the legal costs, settlements or judgements we incur in excess of our deductible. If we are not successful in defending ourselves from these claims, or if our insurer does not insure us against legal costs we incur in excess of our deductible, the result may materially adversely affect our business, results of operations and financial condition. Defending against these and any future lawsuits and legal proceedings, regardless of their merit, may involve significant expense, be disruptive to our business operations and divert our management's attention and resources. Negative publicity surrounding these legal proceedings may also harm our reputation, our stock price, and adversely impact our business and financial condition.

Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies or drug candidates.

We may seek additional funding through a combination of equity offerings, debt financings, collaborations, licensing arrangements, and selling our non-core assets. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms may include liquidation or other preferences that adversely affect your rights as a holder of our common stock. The incurrence of additional indebtedness or the issuance of certain equity securities could result in increased fixed payment obligations and could also result in certain additional restrictive covenants, such as limitations on our ability to incur additional debt or issue additional equity, limitations on our ability to acquire or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. In addition, issuance of additional equity securities, or the possibility of such issuance, may cause the market price of our common stock to decline. In the event that we enter into collaborations or licensing arrangements or sell non-core assets in order to raise capital, we may be required to accept unfavorable terms, including relinquishing or licensing to a third party on unfavorable terms our rights to technologies or proprietary drug candidates that we otherwise would seek to develop or commercialize ourselves or potentially reserve for future potential arrangements when we might be able to achieve more favorable terms. In the event that we enter into collaborations or licensing arrangements in order to raise capital, we may be required to accept unfavorable terms, including relinquishing or licensing to a third party on unfavorable terms our rights to technologies or proprietary drug candidates that we otherwise would seek to develop or commercialize ourselves or potentially reserve for future potential arrangements when we might be able to achieve more favorable terms.

Risks Related to Clinical Development of Our Proprietary Drug Candidates

Our clinical candidates are still in the development stage and have not yet received regulatory approval, which may make it difficult to evaluate our current business and predict our future performance.

Our operations to date have focused on organizing and staffing our company, business planning, raising capital, establishing our intellectual property portfolio and conducting preclinical studies and clinical trials of our drug candidates. Other than Klisyri, which is being commercialized primarily by out-license partners, we have not obtained regulatory approval for our drug candidates. We do not have and, in the near term, do not expect to develop sales and marketing activities necessary for successful commercialization of the drug candidates we intend to commercialize. Consequently, any predictions you make about our future success or viability may not be accurate. Because we are changing our focus from our Orascovery platform to our cell therapy platform, we may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown challenges.

We are focused on the discovery and development of innovative drugs for the treatment of cancers. The fact that we have not yet, among other things, demonstrated our ability to initiate or complete large-scale clinical trials, particularly in light of the rapidly

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evolving cancer treatment field, may make it difficult to evaluate our current business and predict our future performance. These constraints make any assessment of our future success or viability subject to significant uncertainty. We will encounter risks and difficulties frequently experienced by early-stage companies in rapidly evolving fields as we seek to transition to a cell therapy company. We will encounter risks and difficulties frequently experienced by early-stage companies in rapidly evolving fields as we seek to transition to a company capable of supporting commercial activities. If we do not address these risks and difficulties successfully, our business will suffer. We depend substantially on the success of our proprietary drug candidates, which are in pre-clinical and clinical development.

Our business and the ability to generate revenue related to product sales from our proprietary drug candidates will depend on the successful development, regulatory approval and commercialization for the treatment of patients with our drug candidates, which are still in development, and other drugs we may develop. Clinical development is a lengthy and expensive process with an uncertain outcome. We have invested a significant portion of our efforts and financial resources in the development of our existing drug candidates and drug candidates for which we have suspended development. We have invested a significant portion of our efforts and financial resources in the development of our existing drug candidates. Our investment in our drug candidates may not be successful. The success of our proprietary drug candidates will depend on several factors, including:

successful enrollment in, and completion of, clinical studies;
receipt of regulatory approvals from the FDA and other regulatory authorities for our drug candidates;
establishing commercial manufacturing capabilities;
conducting our clinical trials compliantly and efficiently, and in many cases, relying on third parties to do so;
obtaining, maintaining and protecting our intellectual property rights, including patent, trade secrets, know-how and regulatory exclusivity;
ensuring we do not infringe, misappropriate or otherwise violate the patent, trade secret or other intellectual property rights of third parties;
competition with other drug candidates and drugs; and
continued acceptable safety profile for our drug candidates following regulatory approval, if received.

Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain. Failure can occur at any time during the clinical trial process. Drug candidates in later stages of clinical trials may fail to show the desired safety and efficacy traits despite having progressed through preclinical studies and initial clinical trials. In some instances, there can be significant variability in safety and/or efficacy results between different trials of the same product candidate due to numerous factors, including changes in trial procedures set forth in protocols, differences in the size and type of the patient populations, including genetic differences, patient adherence to the dosing regimen and other trial protocols and the rate of dropout among clinical trial participants. In the case of any trials we conduct, results may differ from early trials due to the larger number of patients, clinical trial sites and additional countries and populations involved in such trials. A number of companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in advanced clinical trials due to lack of efficacy or adverse safety profiles, notwithstanding promising results in earlier trials. Our future clinical trial results may not be favorable as previous trials with the same compound, even with the same indication.

Because most of our clinical candidates are in the development stage and have not yet received regulatory approval, we may never be able to generate sufficient revenues and cash flows to continue our operations.

We may not be successful in our efforts to identify or discover additional drug candidates. Due to our limited resources and access to capital, we must and have in the past decided to prioritize development of certain product candidates; these decisions may prove to have been wrong and may adversely affect our business.

Historically, we have focused our drug discovery efforts on developing our cancer platform, particularly our Orascovery product candidates. Following our receipt of the CRL for Oral Paclitaxel, we paused pursuing regulatory approval for Oral Paclitaxel monotherapy for the treatment of mBC in the U.S. and paused development on our other Orascovery product candidates. While we now plan to discuss the I-SPY 2 TRIAL data with the FDA with respect to our mBC NDA for Oral Paclitaxel, we have redeployed our resources to developing our cell therapy platform. If our platform fails to identify potential drug candidates, our business could be materially harmed. Additionally, our management, at the direction of our board of directors, has discretion in prioritizing which product candidates to develop.

Research programs to pursue the development of our drug candidates for additional indications and to identify new drug candidates and disease targets require substantial technical, financial and human resources whether or not we ultimately are successful. Our research programs may initially show promise in identifying potential indications and/or drug candidates, yet fail to yield results for clinical development for a number of reasons, including:

the research methodology used may not be successful in identifying potential indications and/or drug candidates;

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potential drug candidates may, after further study, be shown to lack efficacy, have harmful adverse effects, pose a safety risk to patients as compared to existing drugs, or other characteristics that indicate they are unlikely to be effective drugs; or
it may take greater human and financial resources to identify additional therapeutic opportunities for our drug candidates or to develop suitable potential drug candidates through internal research programs than we possess, thereby limiting our ability to diversify and expand our drug portfolio.

Because we have limited financial and managerial resources, we focus on research programs and drug candidates for specific indications. As a result, we may forego or delay pursuit of opportunities with other drug candidates or for other indications that later prove to have greater commercial potential or a greater likelihood of success. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities.

Accordingly, there can be no assurance that we will be able to identify therapeutic opportunities for our drug candidates or to develop suitable potential drug candidates through internal research programs, which could materially adversely affect our future growth and prospects. We may focus our efforts and resources on potential drug candidates or other potential programs that ultimately prove to be unsuccessful.

If we encounter difficulties enrolling patients in our clinical trials, our clinical development activities could be delayed or otherwise adversely affected.

The timely completion of clinical trials in accordance with their protocols depends, among other things, on our ability to enroll a sufficient number of patients who remain in the trial until its conclusion. We and our research partners have from time to time and may in the future experience difficulties in patient enrollment in our clinical trials for a variety of reasons, including:

the availability of a sizeable population of eligible patients;
the design of the trial;
our ability to recruit clinical trial investigators with the appropriate competencies and experience;
competing clinical trials for similar therapies or other new therapeutics;