Financial Performance and Losses - The company has incurred significant losses since inception and expects to continue incurring losses for the foreseeable future, with no revenues generated to date[175]. - The company incurred significant net losses of $53.5 million, $28.1 million, and $15.5 million for the years ended December 31, 2020, 2019, and 2018, respectively, with an accumulated deficit of $144.0 million as of December 31, 2020[185]. - The company has not generated any revenue from drug sales to date and has financed operations primarily through private placements and IPO proceeds[185]. - The company expects to incur significant expenses and increasing operating losses for the foreseeable future, with future capital requirements dependent on various factors including clinical trial costs and regulatory reviews[189]. - The company expects substantial increases in expenses related to ongoing development activities for eprenetapopt and other product candidates[362]. Clinical Trials and Product Development - The pivotal Phase 3 MDS trial for the lead product candidate, eprenetapopt, failed to meet its predefined primary endpoint, which may materially harm the business[175]. - The pivotal Phase 3 trial for eprenetapopt failed to meet its predefined primary endpoint of complete remission (CR) rate[195]. - Clinical trials for eprenetapopt include patients with deteriorating health, with common adverse events reported such as nausea, vomiting, and fatigue[197]. - Serious adverse events in trials included febrile neutropenia, pneumonia, and sepsis, with some patient deaths reported possibly related to eprenetapopt[197]. - The company is conducting multiple clinical trials for its product candidates, including eprenetapopt and APR-548, with various phases currently enrolling patients[322]. Regulatory and Approval Challenges - The company has never obtained marketing approval for any product candidate, and the approval process is expensive, time-consuming, and uncertain[181]. - Regulatory authorities may require additional clinical trials or impose restrictions on approved products, affecting commercialization[199]. - The company faces challenges in obtaining marketing approval for p53 reactivators, as this has never been done before[195]. - The company may face significant delays in obtaining reimbursement for newly approved drugs, which could adversely affect its operating results[216]. - The company must comply with extensive regulatory requirements, including safety reporting, quality control, and advertising restrictions for approved drugs[267]. Competition and Market Risks - The company faces substantial competition, which may result in others commercializing products before it does[179]. - The company is dependent on the success of eprenetapopt, and difficulties in patient enrollment for clinical trials could delay necessary marketing approvals[175]. - The company operates in a highly competitive environment with major pharmaceutical and biotechnology companies, which may have greater resources and expertise[208]. - The success of product candidates will depend on market acceptance, efficacy, safety, and competitive pricing compared to existing treatments[206]. Intellectual Property and Patent Risks - The company may not be able to protect its intellectual property rights effectively, which could allow competitors to develop similar products[179]. - The company does not own or license any composition of matter patents for eprenetapopt, which is in the public domain[230]. - The current patent portfolio for eprenetapopt consists of method-of-use and formulation patent claims, which may not prevent competitors from using the same product candidate for other uses[232]. - The company may face challenges in maintaining valid and enforceable patents, which could adversely affect its business and financial condition[234]. - The company’s ability to stop unauthorized third parties from using its product candidates depends on valid and enforceable patents or trade secrets[230]. Funding and Financial Resources - The company may need substantial additional funding, which may not be available on acceptable terms, potentially delaying or eliminating research and development programs[175]. - Existing cash and cash equivalents as of December 31, 2020, are expected to fund operations into 2023, but changing circumstances may require seeking additional funds sooner[187]. - The company may need to transition from a research-focused entity to one capable of supporting commercial activities, which poses additional risks[187]. - If the company fails to raise additional capital when needed, it may have to delay or eliminate research and development programs or commercialization efforts[189]. Compliance and Legal Risks - The company must comply with Good Clinical Practice (GCP) regulations, and failure to do so could result in unreliable clinical data and delays in marketing approvals[222]. - The company is subject to ongoing changes in healthcare regulations that could impact the profitability of its products[273]. - The company faces substantial costs to ensure compliance with healthcare laws and regulations, and violations could lead to significant penalties, damages, and operational restructuring[283]. - The company is exposed to significant risks related to employee misconduct, which could lead to substantial fines or sanctions impacting business operations[285]. Market and Economic Conditions - The company expects that healthcare reform measures may lead to more rigorous coverage criteria and downward pressure on drug prices[275]. - Legislative changes may result in aggregate reductions in Medicare payments to providers of up to 2% per fiscal year through 2030[274]. - The company anticipates that pricing negotiations with governmental authorities outside the United States may delay revenue generation after marketing approval[275]. - The company may face significant costs and management diversion due to potential securities class action litigation following stock price declines, which is common in the pharmaceutical sector[309]. Employee and Operational Growth - The company anticipates significant growth in employee numbers and operational scope, particularly in drug development and clinical operations[294]. - The company may face challenges in managing growth due to limited financial resources and management experience[294]. - The company does not maintain "key person" insurance for its executives, which could impede its objectives if key personnel leave[294]. - General and administrative expenses are anticipated to rise as the company increases its headcount to support research and development activities[333].

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ⌧ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 OR ◻ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-39069 Aprea Therapeutics, Inc. (Exact name of registrant as specified in its charter) Delaware 84- 2246769 (State or ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ⌧ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2020 OR ◻ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-39069 Aprea Therapeutics, Inc. (Exact name of registrant as specified in its charter) Delaware 84- 2246769 (State or other ...

PART I FINANCIAL INFORMATION [Item 1. Financial Statements](index=7&type=section&id=Item%201.%20Financial%20Statements) This section presents Aprea Therapeutics, Inc.'s unaudited condensed consolidated financial statements for the quarter ended March 31, 2020, including balance sheets, statements of operations and comprehensive loss, statements of convertible preferred stock and stockholders' deficit, and cash flows, along with accompanying notes detailing the company's business, accounting policies, and financial position [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) | Metric | March 31, 2020 ($) | December 31, 2019 ($) | |:----------------------------|--------------------|-----------------------| | Cash and cash equivalents | 122,513,357 | 130,088,869 | | Total current assets | 124,604,298 | 133,044,747 | | Total assets | 125,125,130 | 133,607,885 | | Total current liabilities | 11,544,228 | 9,061,734 | | Total liabilities | 11,771,516 | 9,364,355 | | Total stockholders' equity | 113,353,614 | 124,243,530 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) | Metric | Three Months Ended March 31, 2020 ($) | Three Months Ended March 31, 2019 ($) | Change ($) | Change (%) | |:----------------------------------------------|:--------------------------------------|:--------------------------------------|:-------------|:-----------| | Research and development | 9,096,122 | 3,678,444 | 5,417,678 | 147.29% | | General and administrative | 2,776,468 | 729,326 | 2,047,142 | 280.68% | | Total operating expenses | 11,872,590 | 4,407,770 | 7,464,820 | 169.36% | | Interest income (expense) | 224,442 | (3,348) | 227,790 | -6803.76% | | Foreign currency gain | 2,247,891 | 935,916 | 1,311,975 | 140.18% | | Total other income (expense) | 2,472,333 | 932,568 | 1,539,765 | 165.11% | | Net loss | (9,400,257) | (3,475,202) | (5,925,055) | 170.51% | | Foreign currency translation | (2,424,653) | (2,031,175) | (393,478) | 19.37% | | Total comprehensive loss | (11,824,910) | (5,506,377) | (6,318,533) | 114.75% | | Net loss per share, basic and diluted | (0.45) | (2.97) | 2.52 | -84.85% | | Weighted-average common shares outstanding | 21,052,726 | 1,171,193 | 19,881,533 | 16975.48% | [Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders' Deficit](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Convertible%20Preferred%20Stock%20and%20Stockholders'%20Deficit) - Total stockholders' equity decreased from **$124,243,530** at December 31, 2019, to **$113,353,614** at March 31, 2020, primarily due to a net loss of **$9,400,257** and a foreign currency translation loss of **$2,424,653**[18](index=18&type=chunk) - Additional paid-in capital increased by **$934,962**, reflecting **$29,491** from stock option exercises and **$905,471** from stock-based compensation during the three months ended March 31, 2020[18](index=18&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | Cash Flow Activity | Three Months Ended March 31, 2020 ($) | Three Months Ended March 31, 2019 ($) | |:--------------------------------|:--------------------------------------|:--------------------------------------| | Net cash used in operating | (7,541,625) | (4,197,346) | | Net cash used in investing | (12,165) | — | | Net cash provided by financing | 29,523 | 5,432,654 | | Net increase (decrease) in cash | (7,524,267) | 1,235,308 | | Cash and cash equivalents—end | 122,513,357 | 65,682,547 | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [1. Nature of business and basis of presentation](index=10&type=section&id=1.%20Nature%20of%20business%20and%20basis%20of%20presentation) - Aprea Therapeutics, Inc. is a clinical-stage biopharmaceutical company focused on developing cancer therapeutics that reactivate mutant tumor suppressor protein p53, with principal operations starting in 2006[21](index=21&type=chunk) - The Company completed a corporate reorganization in September 2019, making Aprea Therapeutics AB a wholly-owned subsidiary[22](index=22&type=chunk) - The Company believes its cash balance of approximately **$122.5 million** as of March 31, 2020, is sufficient to fund operations into 2023[27](index=27&type=chunk) [2. Summary of significant accounting policies](index=11&type=section&id=2.%20Summary%20of%20significant%20accounting%20policies) - The financial statements are prepared in conformity with U.S. GAAP and on a going concern basis, consolidating the accounts of Aprea Therapeutics, Inc. and its wholly-owned subsidiaries[24](index=24&type=chunk)[29](index=29&type=chunk) - The Company adopted ASU No. 2018-07 (Stock Compensation) and ASU 2016-13 (Credit Losses) on January 1, 2020, with no material impact on financial condition or results of operations[50](index=50&type=chunk)[51](index=51&type=chunk) - Net loss per share is calculated using the weighted-average number of common shares outstanding, with potentially dilutive securities excluded due to anti-dilutive effects from net losses[47](index=47&type=chunk) [3. Leases](index=17&type=section&id=3.%20Leases) - The Company adopted ASC 842 on January 1, 2019, recognizing right-of-use assets and lease liabilities for operating leases, primarily for office and laboratory space in Boston (expiring December 2021) and Solna, Sweden (expiring June 2022)[53](index=53&type=chunk)[54](index=54&type=chunk) | Metric | Three Months Ended March 31, 2020 ($) | Three Months Ended March 31, 2019 ($) | |:--------------------------------------------------------------------|:--------------------------------------|:--------------------------------------| | Operating lease cost | 55,768 | 25,782 | | Operating cash flows paid for amounts included in lease liabilities | 62,909 | 30,409 | | Future Lease Payments | Operating Leases ($) | |:----------------------|:---------------------| | 2020 | 181,068 | | 2021 | 243,719 | | 2022 | 58,747 | | Total Lease Payments | 483,534 | | Less: Imputed Interest| (17,475) | | Total Lease Liabilities | 466,059 | [4. Accrued expenses](index=18&type=section&id=4.%20Accrued%20expenses) | Accrued Expense Category | March 31, 2020 ($) | December 31, 2019 ($) | |:-------------------------|:-------------------|:----------------------| | Professional fees | 103,067 | 207,917 | | Compensation and benefits| 1,109,672 | 961,790 | | Research and development | 6,637,811 | 4,992,311 | | Other | 448,219 | 480,535 | | Total accrued expenses | 8,298,769 | 6,642,553 | [5. Stockholders' equity (deficit)](index=18&type=section&id=5.%20Stockholders'%20equity%20(deficit)) - The Company's authorized capital stock is **440,000,000** shares, comprising **400,000,000** common stock shares (**$0.001** par value) and **40,000,000** preferred stock shares (**$0.001** par value)[58](index=58&type=chunk) - Stock-based compensation expense significantly increased to **$905,471** for the three months ended March 31, 2020, from **$97,946** in the prior year period[60](index=60&type=chunk) [6. Income Taxes](index=18&type=section&id=6.%20Income%20Taxes) - The Company reported no income tax expense due to operating losses and has a full valuation allowance against net deferred tax assets, indicating uncertainty about their future realization[61](index=61&type=chunk) - The CARES Act, enacted March 27, 2020, is not expected to materially impact the Company's income taxes due to its history of operating losses[65](index=65&type=chunk) [7. Commitments and contingencies](index=20&type=section&id=7.%20Commitments%20and%20contingencies) - As of March 31, 2020, the Company has not recorded a provision for any contingent losses, as no material liabilities were deemed probable and reasonably estimable[66](index=66&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides an overview of Aprea Therapeutics' financial condition and operational results, highlighting its focus on developing APR-246 for cancer, significant operating losses, and the impact of the COVID-19 pandemic. It details the components of operating expenses, critical accounting policies, and liquidity, emphasizing the need for future financing to support ongoing development and potential commercialization [Overview](index=21&type=section&id=Overview) - Aprea Therapeutics is a clinical-stage biopharmaceutical company developing novel cancer therapeutics that reactivate mutant p53 tumor suppressor protein, with lead candidate APR-246 (eprenetapopt) in late-stage clinical development for hematologic malignancies[69](index=69&type=chunk) - APR-246 has received Orphan Drug, Fast Track, and Breakthrough Therapy designations from the FDA for MDS, and Orphan Drug designation from the European Commission for MDS, AML, and ovarian cancer[69](index=69&type=chunk) - The Company incurred net losses of **$9.4 million** for Q1 2020 and **$3.5 million** for Q1 2019, with an accumulated deficit of **$99.9 million** as of March 31, 2020[72](index=72&type=chunk) - The COVID-19 pandemic initially caused a decrease in patient screening and enrollment in clinical trials, but screening activity has recently increased. The Company has not observed disruptions in its clinical supply chain for APR-246 to date[80](index=80&type=chunk)[81](index=81&type=chunk) [Components of our results of operations](index=25&type=section&id=Components%20of%20our%20results%20of%20operations) - The Company has not generated any revenue from product sales and does not expect to in the near future, relying on potential future product sales or collaboration/license agreements[83](index=83&type=chunk) - Research and development expenses are expensed as incurred and include costs for CROs, CMOs, personnel, consultants, laboratory supplies, and regulatory compliance[84](index=84&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk) - General and administrative expenses primarily cover executive, finance, corporate, business development, and administrative functions, including legal, accounting, insurance, and personnel costs[93](index=93&type=chunk) - Foreign currency gain increased due to the strengthening of the U.S. dollar against the Swedish Krona[96](index=96&type=chunk) [Critical accounting policies and use of estimates](index=28&type=section&id=Critical%20accounting%20policies%20and%20use%20of%20estimates) - Accrued research and development expenses are estimated based on contract terms, service progress, and vendor information, with potential adjustments for variations in actual performance[101](index=101&type=chunk)[102](index=102&type=chunk) - Stock-based compensation expense is measured at fair value on the grant date using the Black-Scholes option pricing model and recognized over the service period[103](index=103&type=chunk)[105](index=105&type=chunk) - The fair value of common stock for private periods was determined by the board, considering third-party valuations and various objective and subjective factors, including R&D progress and market conditions[105](index=105&type=chunk)[106](index=106&type=chunk) [Emerging growth company and smaller reporting company status](index=33&type=section&id=Emerging%20growth%20company%20and%20smaller%20reporting%20company%20status) - The Company is an 'emerging growth company' (EGC) and 'smaller reporting company,' allowing for reduced disclosure requirements, but has irrevocably opted out of the extended transition period for new accounting standards[111](index=111&type=chunk)[113](index=113&type=chunk)[115](index=115&type=chunk)[441](index=441&type=chunk)[442](index=442&type=chunk)[443](index=443&type=chunk) [Results of operations](index=35&type=section&id=Results%20of%20operations) | Metric | Three Months Ended March 31, 2020 ($) | Three Months Ended March 31, 2019 ($) | Change ($) | |:--------------------------------------|:--------------------------------------|:--------------------------------------|:-------------| | Research and development | 9,096,122 | 3,678,444 | 5,417,678 | | General and administrative | 2,776,468 | 729,326 | 2,047,142 | | Total operating expenses | 11,872,590 | 4,407,770 | 7,464,820 | | Interest income (expense) | 224,442 | (3,348) | 227,790 | | Foreign currency gain | 2,247,891 | 935,916 | 1,311,975 | | Total other income (expense) | 2,472,333 | 932,568 | 1,539,765 | | Net loss | (9,400,257) | (3,475,202) | (5,925,055) | - Research and development expenses increased by **$5.4 million**, primarily due to the advancement of the pivotal Phase 3 clinical trial of APR-246 for TP53 mutant MDS[116](index=116&type=chunk) - General and administrative expenses rose by **$2.1 million**, driven by increases in insurance, non-cash stock-based compensation, legal and accounting fees, and personnel costs, largely due to public company operations[117](index=117&type=chunk) [Liquidity and capital resources](index=36&type=section&id=Liquidity%20and%20capital%20resources) - As of March 31, 2020, the Company had **$122.5 million** in cash and cash equivalents, expected to fund operations into 2023[127](index=127&type=chunk) | Cash Flow Activity | Three Months Ended March 31, 2020 ($) | Three Months Ended March 31, 2019 ($) | |:--------------------------------|:--------------------------------------|:--------------------------------------| | Net cash used in operating | (7,541,625) | (4,197,346) | | Net cash used in investing | (12,165) | — | | Net cash provided by financing | 29,523 | 5,432,654 | - Cash used in operating activities increased by **$3.2 million**, primarily due to a **$5.9 million** increase in net loss, partially offset by changes in operating assets and liabilities and non-cash stock-based compensation[121](index=121&type=chunk) - Future funding requirements are expected to increase substantially due to ongoing development of APR-246 and other product candidates, as well as costs associated with operating as a public company[124](index=124&type=chunk)[126](index=126&type=chunk) [Contractual obligations and commitments](index=39&type=section&id=Contractual%20obligations%20and%20commitments) - Details regarding contractual obligations are provided in Note 3 'Leases' to the condensed consolidated financial statements[133](index=133&type=chunk) [Recent accounting pronouncements](index=39&type=section&id=Recent%20accounting%20pronouncements) - New accounting pronouncements are discussed in Note 2 to the condensed consolidated financial statements[134](index=134&type=chunk) [Off-balance sheet arrangements](index=40&type=section&id=Off-balance%20sheet%20arrangements) - The Company did not have any off-balance sheet arrangements during the periods presented or currently[135](index=135&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section outlines the Company's exposure to market risks, specifically interest rate risk and foreign currency exchange rate risk, noting that historical fluctuations in interest income have been insignificant and no derivative financial instruments are used to hedge foreign exchange exposure - The Company's primary market risk exposure is interest income sensitivity from cash equivalents (bank deposits and money market accounts), though historical fluctuations have been insignificant[136](index=136&type=chunk) - Foreign currency exchange rate risk arises from non-U.S. dollar functional currency subsidiaries (Aprea AB and Aprea Personal AB), but the Company does not believe it has significant direct foreign exchange risk and does not use derivative instruments to hedge this exposure[137](index=137&type=chunk)[138](index=138&type=chunk) [Item 4. Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the effectiveness of the Company's disclosure controls and procedures as of March 31, 2020, concluding they were effective at a reasonable assurance level. There have been no material changes in internal control over financial reporting during the most recent fiscal quarter - As of March 31, 2020, the Company's disclosure controls and procedures were evaluated by management and deemed effective at a reasonable level of assurance[139](index=139&type=chunk)[140](index=140&type=chunk) - There have been no material changes in the Company's internal control over financial reporting during the most recent fiscal quarter[141](index=141&type=chunk) PART II OTHER INFORMATION [Item 1. Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) The Company is not currently involved in any material legal proceedings - The Company is not currently subject to any material legal proceedings[142](index=142&type=chunk) [Item 1A. Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) This section details significant risks associated with investing in Aprea Therapeutics, Inc., covering financial stability, product development and commercialization, reliance on third parties, intellectual property protection, regulatory compliance, human resources, and common stock volatility. Key risks include substantial losses, the need for additional funding, the unproven nature of its therapeutic approach, intense competition, and the impact of the COVID-19 pandemic on operations and clinical trials [Risks related to our financial position and need for additional capital](index=41&type=section&id=Risks%20related%20to%20our%20financial%20position%20and%20need%20for%20additional%20capital) - The Company has incurred significant losses since inception, with a net loss of **$9.4 million** for Q1 2020 and an accumulated deficit of **$99.9 million** as of March 31, 2020, and expects to continue incurring losses for the foreseeable future[145](index=145&type=chunk) - The Company will need substantial additional funding to support ongoing operations, clinical trials, and potential commercialization, which may not be available on acceptable terms or at all, potentially forcing delays or termination of programs[153](index=153&type=chunk)[154](index=154&type=chunk) - Raising additional capital through equity or convertible debt could dilute existing stockholders' ownership interests and impose restrictive covenants on operations[157](index=157&type=chunk)[158](index=158&type=chunk) [Risks related to the discovery, development and commercialization of our product candidates](index=45&type=section&id=Risks%20related%20to%20the%20discovery,%20development%20and%20commercialization%20of%20our%20product%20candidates) - The Company's future success is substantially dependent on the timely marketing approval and commercialization of its lead product candidate, APR-246, which is currently in multiple clinical trials[160](index=160&type=chunk) - Enrollment in clinical trials, particularly for indications with small patient populations and exacerbated by COVID-19, may be difficult, leading to delays or prevention of marketing approvals[166](index=166&type=chunk)[167](index=167&type=chunk)[170](index=170&type=chunk) - The reactivation of p53 is a novel and unproven therapeutic approach, and there is no guarantee of demonstrating safety and efficacy in larger-scale clinical trials for APR-246[171](index=171&type=chunk) - Serious adverse events, including deaths, have occurred in APR-246 clinical trials, which could lead to trial suspension, termination, or denial of marketing approval[174](index=174&type=chunk)[176](index=176&type=chunk)[177](index=177&type=chunk) - Clinical trials are lengthy, expensive, and uncertain; preclinical and early-stage results may not predict later success, and regulatory authorities may disagree with trial design or data interpretation[178](index=178&type=chunk)[179](index=179&type=chunk)[181](index=181&type=chunk)[184](index=184&type=chunk)[186](index=186&type=chunk)[187](index=187&type=chunk) - The Company faces substantial competition from major pharmaceutical and biotechnology companies with greater resources and expertise in the highly competitive cancer drug sector[204](index=204&type=chunk)[205](index=205&type=chunk)[206](index=206&type=chunk) - IT system failures, cybersecurity attacks, or data breaches could compromise sensitive information, disrupt operations, and expose the Company to liability and reputational harm, especially given the lack of formally implemented policies and procedures[211](index=211&type=chunk)[212](index=212&type=chunk)[213](index=213&type=chunk) [Risks related to our dependence on third parties](index=67&type=section&id=Risks%20related%20to%20our%20dependence%20on%20third%20parties) - The Company relies on third parties (CROs, clinical data management organizations, medical institutions, clinical investigators) to conduct clinical trials and some research, which reduces control and poses risks if they fail to perform satisfactorily or meet deadlines[243](index=243&type=chunk)[244](index=244&type=chunk)[246](index=246&type=chunk)[247](index=247&type=chunk) - The Company is dependent on a single third-party manufacturer for the active pharmaceutical ingredient (API) of APR-246, increasing the risk of insufficient supply, delays, or unacceptable costs if the manufacturer cannot perform as agreed[249](index=249&type=chunk)[251](index=251&type=chunk)[257](index=257&type=chunk) - Entering into strategic collaborations for product development and commercialization carries risks, including limited control over collaborator resources, potential non-performance, and disagreements that could delay or terminate programs[259](index=259&type=chunk)[260](index=260&type=chunk)[261](index=261&type=chunk) [Risks related to our intellectual property](index=75&type=section&id=Risks%20related%20to%20our%20intellectual%20property) - The Company's commercial success depends on obtaining and maintaining patent, trademark, and trade secret protection for its technologies and product candidates, including APR-246, for which it does not own composition-of-matter patents[264](index=264&type=chunk)[265](index=265&type=chunk)[266](index=266&type=chunk)[276](index=276&type=chunk) - Method-of-use and formulation patent claims for APR-246 may not prevent competitors from marketing identical APIs for different uses or with different formulations, and off-label use is difficult to prevent[275](index=275&type=chunk)[277](index=277&type=chunk) - Issued patents covering the Company's product candidates could be narrowed, invalidated, or found unenforceable if challenged in court or before administrative bodies, potentially limiting the ability to prevent competition[278](index=278&type=chunk)[279](index=279&type=chunk)[280](index=280&type=chunk)[283](index=283&type=chunk) - The Company may be subject to claims challenging inventorship of its intellectual property, which could lead to litigation, loss of rights, and significant costs[284](index=284&type=chunk) - Failure to obtain patent term extension or data exclusivity for product candidates could allow competitors to enter the market sooner, materially harming the business[285](index=285&type=chunk)[286](index=286&type=chunk) - The Company may be unable to acquire or in-license necessary third-party proprietary rights for its product candidates or technologies on reasonable terms, potentially forcing abandonment of development programs[287](index=287&type=chunk)[288](index=288&type=chunk)[289](index=289&type=chunk)[291](index=291&type=chunk) - Changes in U.S. patent law, such as the America Invents Act, could increase uncertainties and costs in patent prosecution and enforcement, potentially diminishing the value of patents[292](index=292&type=chunk)[293](index=293&type=chunk)[294](index=294&type=chunk)[295](index=295&type=chunk) - Lawsuits to protect or enforce patents are costly, time-consuming, and may be unsuccessful, potentially leading to substantial damages, injunctions, or diversion of management attention[296](index=296&type=chunk)[297](index=297&type=chunk)[300](index=300&type=chunk)[301](index=301&type=chunk)[302](index=302&type=chunk)[304](index=304&type=chunk) - Protecting intellectual property rights globally is expensive and challenging, as foreign laws may not offer the same protection as the U.S., and compulsory licensing laws or enforcement difficulties could impair competitive position[306](index=306&type=chunk)[307](index=307&type=chunk) - Non-compliance with procedural requirements by governmental patent agencies could lead to abandonment or lapse of patent rights, allowing competitors to enter the market earlier[308](index=308&type=chunk)[309](index=309&type=chunk) - Claims that employees or consultants have wrongfully used or disclosed trade secrets of former employers, or claims asserting ownership of the Company's IP, could result in litigation, loss of rights, and significant expenses[310](index=310&type=chunk)[311](index=311&type=chunk)[312](index=312&type=chunk) - Confidentiality agreements may not prevent unauthorized disclosure of trade secrets, and competitors could independently develop equivalent information, harming the Company's competitive position[313](index=313&type=chunk)[314](index=314&type=chunk)[315](index=315&type=chunk) [Risks related to regulatory and marketing approval and other legal compliance matters](index=93&type=section&id=Risks%20related%20to%20regulatory%20and%20marketing%20approval%20and%20other%20legal%20compliance%20matters) - The Company has never obtained marketing approval for a product candidate, and the approval process is unpredictable, expensive, and time-consuming, with potential delays or denials from regulatory authorities[319](index=319&type=chunk)[320](index=320&type=chunk)[322](index=322&type=chunk)[323](index=323&type=chunk)[324](index=324&type=chunk)[325](index=325&type=chunk)[327](index=327&type=chunk) - Failure to obtain marketing approval in foreign jurisdictions, which have varying regulatory requirements and pricing controls, would prevent product candidates from being marketed abroad and could be impacted by events like Brexit[329](index=329&type=chunk)[330](index=330&type=chunk)[331](index=331&type=chunk)[332](index=332&type=chunk)[333](index=333&type=chunk) - Even with orphan drug designation for APR-246, exclusivity may not prevent competing products if they demonstrate clinical superiority or if the Company cannot assure sufficient supply[334](index=334&type=chunk)[335](index=335&type=chunk)[336](index=336&type=chunk)[337](index=337&type=chunk)[338](index=338&type=chunk) - Post-approval, products are subject to ongoing regulatory requirements, including safety reporting, manufacturing compliance (cGMPs), and promotional restrictions, with non-compliance leading to severe penalties[339](index=339&type=chunk)[340](index=340&type=chunk)[341](index=341&type=chunk)[342](index=342&type=chunk)[343](index=343&type=chunk)[344](index=344&type=chunk)[345](index=345&type=chunk) - Changes in regulatory policies, such as those from the 21st Century Cures Act or executive actions, could increase the difficulty and cost of obtaining marketing approval and affect product pricing[346](index=346&type=chunk)[347](index=347&type=chunk)[348](index=348&type=chunk)[349](index=349&type=chunk) - Breakthrough therapy, fast track, or priority review designations do not guarantee faster development or approval, and the FDA retains discretion to grant or withdraw such designations[367](index=367&type=chunk)[369](index=369&type=chunk)[370](index=370&type=chunk)[372](index=372&type=chunk)[373](index=373&type=chunk)[374](index=374&type=chunk) - Relationships with healthcare providers and payors are subject to anti-kickback, fraud and abuse, and other healthcare laws (e.g., False Claims Act, HIPAA, Sunshine Act), with potential for significant penalties for non-compliance[375](index=375&type=chunk)[376](index=376&type=chunk)[378](index=378&type=chunk)[381](index=381&type=chunk)[382](index=382&type=chunk)[384](index=384&type=chunk)[386](index=386&type=chunk)[388](index=388&type=chunk)[389](index=389&type=chunk) - Employee misconduct, including non-compliance with regulatory standards or fraud, could lead to significant liability, regulatory sanctions, and reputational harm[390](index=390&type=chunk)[391](index=391&type=chunk) - Failure to comply with environmental, health, and safety laws could result in fines, penalties, or substantial costs, impacting research and development efforts[392](index=392&type=chunk)[393](index=393&type=chunk)[394](index=394&type=chunk)[395](index=395&type=chunk) - International operations are subject to anti-bribery (FCPA), anti-corruption, and trade control laws, with non-compliance risking significant civil and criminal penalties and reputational damage[396](index=396&type=chunk)[397](index=397&type=chunk)[398](index=398&type=chunk)[399](index=399&type=chunk)[400](index=400&type=chunk)[401](index=401&type=chunk)[402](index=402&type=chunk) - Security breaches, data loss, or IT system disruptions could compromise sensitive information, leading to legal claims, regulatory penalties (e.g., HIPAA, CCPA), reputational harm, and operational disruptions[403](index=403&type=chunk)[404](index=404&type=chunk)[405](index=405&type=chunk)[406](index=406&type=chunk)[407](index=407&type=chunk)[409](index=409&type=chunk)[410](index=410&type=chunk) - Clinical trial programs in the EEA/UK are subject to GDPR, imposing stringent data protection requirements, restrictions on data transfers, and potential for significant fines for non-compliance[411](index=411&type=chunk)[412](index=412&type=chunk)[413](index=413&type=chunk) [Risks related to employee matters and managing growth](index=121&type=section&id=Risks%20related%20to%20employee%20matters%20and%20managing%20growth) - The Company's future success is highly dependent on retaining key executives and attracting qualified scientific, clinical, manufacturing, and sales/marketing personnel, which is challenging given industry competition[414](index=414&type=chunk)[415](index=415&type=chunk)[416](index=416&type=chunk) - Anticipated significant growth in employees and operations, particularly in drug development and commercialization, may be difficult to manage effectively due to limited financial resources and management experience[417](index=417&type=chunk)[418](index=418&type=chunk) [Risks related to tax matters](index=121&type=section&id=Risks%20related%20to%20tax%20matters) - The Company has significant deferred tax assets (**$19.7 million** as of December 31, 2019) but has a full valuation allowance, indicating uncertainty about their realization due to insufficient future taxable income, potential corporate tax rate reductions, or ownership changes[419](index=419&type=chunk)[420](index=420&type=chunk)[421](index=421&type=chunk)[422](index=422&type=chunk)[424](index=424&type=chunk) - The Tax Cuts and Jobs Act of 2017 (TCJA) and its GILTI provisions could make financial results difficult to predict, requiring the Company to include foreign subsidiary income in taxable income even without cash distributions[425](index=425&type=chunk)[428](index=428&type=chunk) - Foreign subsidiaries may become subject to U.S. federal income tax and branch profits tax if deemed engaged in a U.S. trade or business, which could reduce after-tax returns[426](index=426&type=chunk)[427](index=427&type=chunk) [Risks related to our common stock](index=125&type=section&id=Risks%20related%20to%20our%20common%20stock) - Executive officers, directors, and principal stockholders collectively own approximately **90%** of common stock, allowing them to exert significant control over corporate decisions and potentially prevent acquisitions[429](index=429&type=chunk)[430](index=430&type=chunk) - Provisions in the corporate charter and Delaware law could make an acquisition more difficult and limit stockholders' ability to influence management, potentially depressing the stock price[431](index=431&type=chunk)[432](index=432&type=chunk)[433](index=433&type=chunk) - The price of the Company's common stock has been and is likely to remain volatile, influenced by clinical trial results, regulatory actions, competition, and general market conditions, including the impact of COVID-19[436](index=436&type=chunk)[437](index=437&type=chunk)[438](index=438&type=chunk) - As an 'emerging growth company' and 'smaller reporting company,' reduced disclosure requirements may make the common stock less attractive to investors, potentially leading to a less active trading market and increased volatility[440](index=440&type=chunk)[441](index=441&type=chunk)[443](index=443&type=chunk) - The Company does not anticipate paying cash dividends, making capital appreciation the sole source of gain for investors in the foreseeable future[448](index=448&type=chunk)[449](index=449&type=chunk) - Sales of a substantial number of common stock shares by existing stockholders in the public market could cause the stock price to fall[450](index=450&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=134&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports no unregistered sales of equity securities during the period. It also details the completion of the Company's IPO on October 7, 2019, which generated approximately $90.9 million in net proceeds, none of which have been used to date, with no material change in the planned use of proceeds - No unregistered sales of equity securities occurred during the reported period[455](index=455&type=chunk) - The Company completed its IPO on October 7, 2019, selling **6,516,667** shares of common stock at **$15.00** per share, generating approximately **$90.9 million** in net proceeds[455](index=455&type=chunk)[456](index=456&type=chunk) - None of the net proceeds from the IPO have been used to date, and there has been no material change in the planned use of proceeds[457](index=457&type=chunk) [Item 3. Defaults Upon Senior Securities](index=135&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to the Company for the reporting period - This item is not applicable[458](index=458&type=chunk) [Item 4. Mine Safety Disclosures](index=135&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company for the reporting period - This item is not applicable[458](index=458&type=chunk) [Item 5. Other Information](index=135&type=section&id=Item%205.%20Other%20Information) There is no other information to report under this item - No other information is reported under this item[458](index=458&type=chunk) [Item 6. Exhibits](index=136&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including certifications from the CEO and CFO under Sections 302 and 906 of the Sarbanes-Oxley Act, and XBRL Instance Taxonomy documents | Exhibit Number | Description of Document | |:---------------|:-----------------------------------------------------------------------------------------------------------------------| | 31.1 | Certification of the Registrant's Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | | 31.2 | Certification of the Registrant's Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | | 32.1* | Certification of the Registrant's Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | | 32.2* | Certification of the Registrant's Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | | 101.INS | XBRL Instance Taxonomy | | 101.SCH | XBRL Taxonomy Extension Schema Document | | 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | | 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | | 101.LAB | XBRL Taxonomy Extension Labels Linkbase Document | | 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the year ended December 31, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | --- | --- | --- | |---------------------------------------------------------------------------------------------------------------|------------------------------------------------------|------ ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2019 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-39069 Aprea Therapeutics, Inc. (Exact name of registrant as specified in its charter) Delaware 84-2246769 (State or o ...