Y-mAbs(YMAB) - 2022 Q3 - Quarterly Report

FORM 10-Q Cover Page Information This section provides key identifying information for Y-mAbs Therapeutics, Inc.'s Form 10-Q filing, including filer status and outstanding shares - Y-mAbs Therapeutics, Inc. (Delaware, 47-4619612) is a large accelerated filer, with its common stock (YMAB) registered on the Nasdaq Global Select Market[2][3] - As of November 2, 2022, there were 43,668,130 shares of Common Stock ($0.0001 par value) outstanding[4] Forward-Looking Statements This section cautions that the report contains forward-looking statements subject to substantial risks and uncertainties that may cause actual results to differ materially - This report contains forward-looking statements regarding business strategy, future operations, financial position, revenue, costs, products, approvals, R&D, collaborations, market growth, and future results, which involve substantial risks and uncertainties that may cause actual results to differ materially[6][7] - The company undertakes no obligation to publicly update or review any forward-looking statement, except as required by law[8] - Actual results or events could differ materially from disclosed plans, intentions, and expectations, particularly due to factors detailed in the 'Risk Factors' section[10] Summary of Risk Factors This section outlines numerous risks that could adversely affect the company's business, financial condition, and operational results, including commercialization and regulatory challenges - The business is subject to numerous risks that could adversely affect its objectives, financial condition, results of operations, cash flows, and prospects[12] - Key risks include challenges in commercializing DANYELZA and other product candidates (omburtamab), obtaining regulatory approvals (especially for omburtamab after a negative Advisory Committee vote), implementing business strategy, managing pricing/reimbursement, and conducting clinical trials[12][14] - Macroeconomic conditions (inflation, supply chain, geopolitical events like the Ukraine-Russia conflict) and health epidemics (COVID-19) have adversely affected and may continue to affect operations and financial results[17] PART I — FINANCIAL INFORMATION This part presents the company's consolidated financial statements, notes, and management's discussion and analysis of financial condition and results of operations Item 1. Consolidated Financial Statements This section presents the unaudited consolidated financial statements, including the Balance Sheets, Statements of Net Loss and Comprehensive Loss, Statements of Changes in Stockholders' Equity, and Statements of Cash Flows for Y-mAbs Therapeutics, Inc. for the periods ended September 30, 2022, and December 31, 2021 (for balance sheet) or September 30, 2021 (for income and cash flow statements) | Metric | September 30, 2022 | December 31, 2021 | | :-------------------------------- | :----------------- | :------------------ | | ASSETS | | | | Cash and cash equivalents | $114,526 | $181,564 | | Total current assets | $133,244 | $202,261 | | TOTAL ASSETS | $143,915 | $212,783 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | Total current liabilities | $32,015 | $27,875 | | TOTAL LIABILITIES | $36,017 | $32,677 | | TOTAL STOCKHOLDERS' EQUITY | $107,898 | $180,106 | | Metric | Three months ended Sep 30, 2022 | Three months ended Sep 30, 2021 | Nine months ended Sep 30, 2022 | Nine months ended Sep 30, 2021 | | :------------------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Product revenue, net | $12,537 | $8,965 | $32,820 | $23,299 | | Total revenues | $12,537 | $8,965 | $33,820 | $25,299 | | Total operating costs and expenses | $38,554 | $37,669 | $127,478 | $104,974 | | Loss from operations | $(26,017) | $(28,704) | $(93,658) | $(79,675) | | Gain from sale of priority review voucher, net | — | — | — | $62,010 | | NET LOSS | $(27,526) | $(28,858) | $(96,725) | $(18,382) | | Net loss per share, basic and diluted | $(0.63) | $(0.66) | $(2.21) | $(0.43) | | Metric | Nine months ended September 30, 2022 | Nine months ended September 30, 2021 | | :------------------------------------------ | :----------------------------------- | :----------------------------------- | | Net cash used in operating activities | $(67,260) | $(68,693) | | Net cash provided by investing activities | — | $61,498 | | Net cash provided by financing activities | $84 | $108,214 | | Net increase / (decrease) in cash and cash equivalents | $(67,038) | $101,096 | | Cash and cash equivalents at end of period | $114,526 | $215,730 | Notes to Consolidated Financial Statements This section provides detailed notes to the unaudited consolidated financial statements, offering further context and breakdown of the company's financial position, operations, and cash flows, as well as significant accounting policies and recent events NOTE 1—Organization and Description of Business This note describes Y-mAbs Therapeutics, Inc. as a commercial-stage biopharmaceutical company focused on developing antibody-based cancer therapies - Y-mAbs Therapeutics, Inc. is a commercial-stage biopharmaceutical company focused on developing and commercializing novel, antibody-based therapeutic products for the treatment of cancer[31] - The company was incorporated on April 30, 2015, in Delaware and is headquartered in New York[32] NOTE 2—Basis of Presentation This note outlines the company's financial position, including accumulated losses, cash reserves, and the need for future financing to support drug development and commercialization - The company has incurred losses since inception (except for Q1 2021) and faces significant risks related to drug candidate development, regulatory approval, market acceptance, and the need for additional financing[33] - DANYELZA was FDA-approved in November 2020, but other drug candidates require substantial R&D and regulatory efforts prior to commercialization[34] - As of September 30, 2022, the accumulated deficit was $437.2 million, and cash and cash equivalents were $114.5 million, expected to fund operations for at least the next 12 months[35][37][39] NOTE 3—Summary of Significant Accounting Policies This note details the significant accounting policies and estimates used in preparing the financial statements, covering revenue recognition, cash equivalents, and R&D expenses - Financial statements are prepared in accordance with GAAP, requiring management to make significant estimates and assumptions for net product revenues, R&D expenses, milestone/royalty accruals, and stock option valuation[41][43] - Cash equivalents are highly liquid instruments with original maturities of three months or less, held in highly rated securities, and valued at Level 2 within the fair value hierarchy[46][56] - Product revenue from DANYELZA sales is recognized when the customer obtains control, generally upon receipt at the end-user hospital, and is net of estimated rebates, chargebacks, discounts, and returns[61][62][64] - License revenue is recognized using a five-step model, assessing distinct performance obligations; a $1.0 million milestone payment was recognized in Q2 2022 for the updated FDA BLA dossier for DANYELZA[65] NOTE 4—Product Revenue This note provides a breakdown of product revenue from DANYELZA sales, including allowances and major customer contributions | Period | 2022 | 2021 | | :-------------------------------- | :--------- | :--------- | | Three months ended September 30 | $12,537 | $8,965 | | Nine months ended September 30 | $32,820 | $23,299 | - Product revenues are recorded net of allowances for rebates, chargebacks, discounts, and returns; as of September 30, 2022, accounts receivable allowances were $734,000 and accrued liabilities were $2,451,000[71] | Metric | Balance, Dec 31, 2021 | Current provisions | Payments/credits | Change in estimate | Balance, Sep 30, 2022 | | :-------------------------------- | :-------------------- | :---------------- | :--------------- | :----------------- | :-------------------- | | Contractual Allowances and Discounts | $13 | $65 | $(59) | — | $19 | | Government Rebates | $3,027 | $3,459 | $(2,653) | $(709) | $3,124 | | Returns | $61 | $379 | $(398) | — | $42 | | Total | $3,101 | $3,903 | $(3,110) | $(709) | $3,185 | - McKesson and AmerisourceBergen accounted for 78% and 14% of gross product revenue for the three months ended September 30, 2022, respectively, and 69% and 16% for the nine months ended September 30, 2022, respectively[73] NOTE 5—Net Loss Per Share This note details the calculation of basic and diluted net loss per share, including the impact of potentially dilutive securities | Metric | Three months ended Sep 30, 2022 | Three months ended Sep 30, 2021 | Nine months ended Sep 30, 2022 | Nine months ended Sep 30, 2021 | | :------------------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net income /(loss) (numerator) | $(27,526) | $(28,858) | $(96,725) | $(18,382) | | Weighted-average shares (denominator), basic and diluted | 43,718 | 43,598 | 43,715 | 43,019 | | Basic net income / (loss) per share | $(0.63) | $(0.66) | $(2.21) | $(0.43) | - Potentially dilutive securities, including stock options and restricted stock units totaling 7,119,332 shares as of September 30, 2022, were excluded from diluted EPS calculations due to the net loss[76] NOTE 6—Inventories This note provides a breakdown of inventory categories and discusses the classification of noncurrent inventories and a quality-related charge | Category | September 30, 2022 | December 31, 2021 | | :--------------- | :----------------- | :------------------ | | Raw Materials | $1,500 | — | | Work In Progress | $8,870 | $4,741 | | Finished Goods | $1,088 | $771 | | Total Inventories | $11,458 | $5,512 | - As of September 30, 2022, $1.5 million of raw material and $3.716 million of work in progress inventories were classified as noncurrent assets, expected to be utilized beyond one year from the balance sheet date[77] - A $1.2 million charge was recorded in cost of goods sold during the three and nine months ended September 30, 2022, related to a commercial batch that did not meet quality specifications[78] NOTE 7—Intangible Assets, Net This note details the company's intangible assets, primarily related to DANYELZA, and their amortization schedule | Date | Amount | Accumulated Amortization | Net Book Value | | :----------------- | :--------- | :----------------------- | :------------- | | September 30, 2022 | $1,800 | $270 | $1,530 | | December 31, 2021 | $1,800 | $137 | $1,663 | - Intangible assets, net, totaling $1.530 million as of September 30, 2022, relate to capitalized milestone payments for DANYELZA and are amortized on a straight-line basis over a 10-year useful life, with annual amortization expected to be $180,000 from 2022 to 2026[79][80] NOTE 8—Accrued Liabilities This note provides a detailed breakdown of the company's accrued liabilities by category, including licensing, clinical, compensation, and manufacturing costs | Category | September 30, 2022 | December 31, 2021 | | :------------------------------------ | :----------------- | :------------------ | | Accrued licensing milestone and royalty payments | $1,593 | $3,090 | | Accrued clinical costs | $985 | $915 | | Accrued compensation and board fees | $4,073 | $1,877 | | Accrued manufacturing costs | $6,466 | $2,622 | | Accrued sales reserves | $2,451 | $2,615 | | Other | $1,524 | $1,421 | | Total | $17,092 | $12,540 | NOTE 9—License Agreements and Commitments This note outlines the company's various license agreements with MSK and MSK/MIT, detailing associated cash payments, expenses, accrued liabilities, and potential future milestone payments - The company has license agreements with MSK (MSK License, CD33 License, MabVax Agreement) and MSK/MIT (SADA License Agreement) for patent and intellectual property rights, involving contingent milestone and royalty payments[82] | Agreement | Cash paid (9M 2022) | Cash paid (9M 2021) | Expense (9M 2022) | Expense (9M 2021) | Accrued liabilities (Current, Sep 30, 2022) | Accrued liabilities (Non-current, Sep 30, 2022) | Accrued liabilities (Current, Dec 31, 2021) | Accrued liabilities (Non-current, Dec 31, 2021) | | :-------- | :------------------ | :------------------ | :---------------- | :---------------- | :------------------------------------------ | :--------------------------------------------- | :------------------------------------------ | :--------------------------------------------- | | MSK | $2,871 | $1,480 | $2,513 | $531 | $828 | $1,950 | $1,486 | $1,650 | | CD33 | — | $100 | — | — | $150 | $300 | — | $450 | | MabVax | — | $10 | $10 | $10 | $10 | — | — | — | | SADA | $1,000 | $1,000 | — | — | $605 | — | $1,605 | — | | Agreement | Maximum Clinical Milestones | Maximum Regulatory Milestones | Maximum Sales-based Milestones | | :-------- | :-------------------------- | :---------------------------- | :----------------------------- | | MSK | $2,450 | $9,000 | $20,000 | | CD33 | $550 | $500 | $7,500 | | MabVax | $200 | $1,200 | — | | SADA | $4,730 | $18,125 | $23,750 | - Former CEO Dr. Claus Møller's departure resulted in $1.589 million in cash compensation and a $9.286 million non-cash stock-based compensation expense, totaling $10.875 million recorded in SG&A for the nine months ended September 30, 2022[97] NOTE 10—Stockholders' Equity This note provides information on the company's common stock, treasury shares, and proceeds from a public offering - As of September 30, 2022, the company had 43,668,130 shares of common stock outstanding[100] - In July 2022, one non-employee researcher repaid a Secured Promissory Note, leading to the company recording and subsequently cancelling 57,887 treasury shares at an acquisition cost of $0.963 million[103] - A public offering in February 2021 resulted in the issuance of 2,804,878 shares of common stock, generating aggregate net proceeds of approximately $107.725 million[105] NOTE 11—Share-Based Compensation This note details the company's stock-based compensation expenses, outstanding options, and restricted stock units - Stock-based compensation for stock options was $3.257 million for Q3 2022 and $21.822 million for 9M 2022, with the latter including $9.286 million related to the former CEO's departure[108][110] | Metric | September 30, 2022 | December 31, 2021 | | :------------------------------------ | :----------------- | :------------------ | | Options Outstanding and expected to vest | 7,083,767 | 6,687,128 | | Weighted average exercise price | $21.28 | $22.43 | | Aggregate intrinsic value (in thousands) | $23,619 | $26,412 | | Weighted average remaining contractual life (years) | 6.70 | 7.21 | - Unrecognized compensation expense for employee stock options was $25.520 million as of September 30, 2022, expected to vest over a period of 2.47 years[117] | Metric | September 30, 2022 | December 31, 2021 | | :------------------------------------ | :----------------- | :------------------ | | Restricted Stock Units Outstanding and expected to vest | 35,565 | 28,907 | | Weighted average grant price | $18.42 | $28.04 | | Weighted average remaining vesting life (years) | 2.00 | 1.82 | NOTE 12—Related Party Transactions This note discloses transactions with MSK, a related party and shareholder, including expensed costs and amounts due - MSK is a shareholder and a party to several agreements, with total expensed costs of $1.221 million for Q3 2022 and $4.028 million for 9M 2022[123] - As of September 30, 2022, the total amount due to MSK was $4.761 million, comprising $0.275 million in accounts payable and $4.486 million in accrued liabilities[123] NOTE 13—Income Taxes This note explains the company's income tax position, including the absence of current or deferred taxes due to net losses and the maintenance of a full valuation allowance - No current or deferred income taxes were provided due to net losses of $27.526 million for Q3 2022 and $96.725 million for 9M 2022[124] - The company maintains a full valuation allowance on its U.S. and foreign deferred tax assets, based on historical and forecasted cumulative losses[126] NOTE 14—Other Benefits This note describes the company's employee benefit programs, including 401(k) and retirement plans, and the absence of matching contributions - The company offers a 401(k) savings plan for U.S. employees and a retirement program for Danish subsidiary employees, but no matching contributions were made by the company for the three or nine months ended September 30, 2022 and 2021[127][128] NOTE 15—Gain from Sale of Priority Review Voucher This note details the gain recognized from the sale of a Priority Review Voucher in 2021 and the absence of such a gain in 2022 - In January 2021, the company sold its DANYELZA Priority Review Voucher (PRV) for $105.0 million, recognizing a net gain of $62.010 million during the nine months ended September 30, 2021[130] - No corresponding gain from PRV sales was recognized during the three and nine months ended September 30, 2022[131] NOTE 16—Subsequent Event This note describes the FDA's priority review of omburtamab's BLA and the subsequent negative Advisory Committee vote, indicating uncertainty for approval - The FDA accepted the Biologics License Application (BLA) for omburtamab for priority review in May 2022, with an action date of November 30, 2022[132] - On October 28, 2022, the Oncologic Drugs Advisory Committee voted 16 to 0 that the BLA did not provide sufficient evidence to conclude that omburtamab improves overall survival, making FDA approval uncertain[132] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results of operations, highlighting key business developments, financial performance, liquidity, and capital resources Overview This overview introduces Y-mAbs as a commercial-stage biopharmaceutical company, highlighting its key product DANYELZA, the status of omburtamab, and its history of operating losses - Y-mAbs is a commercial-stage biopharmaceutical company focused on developing novel, antibody-based therapeutic products for cancer, leveraging proprietary platforms[134] - DANYELZA® (naxitamab-gqgk) was FDA-approved in November 2020 for relapsed/refractory high-risk neuroblastoma and is being commercialized in the United States[135] - Omburtamab's BLA for CNS leptomeningeal metastases from NB was resubmitted in March 2022 and accepted for priority review in May 2022, but the Advisory Committee voted 16-0 against its efficacy in October 2022[138] - The company has incurred significant net operating losses, with an accumulated deficit of $437.2 million as of September 30, 2022, and expects continued losses due to R&D and commercialization costs[148] Recent Developments This section summarizes recent key events, including the FDA's review of omburtamab and DANYELZA's international marketing approvals - Omburtamab's BLA for CNS/LM from NB was accepted for priority review by the FDA in May 2022, but the Advisory Committee voted 16 to 0 on October 28, 2022, that the BLA did not provide sufficient evidence for overall survival improvement[157] - DANYELZA received marketing approval in Israel on August 30, 2022, and a regulatory filing was submitted to the Brazilian Health Regulatory Agency on September 26, 2022[158] Known Trends, Geopolitical Events and Uncertainties This section discusses the adverse impacts of the COVID-19 pandemic, the Russia-Ukraine conflict, and rising inflation on the company's operations and financial results - The COVID-19 pandemic continues to adversely impact operations, including DANYELZA commercialization efforts and clinical trial activities, leading to delays and potential long-term effects on the work environment[159][160][161] - The Russia-Ukraine conflict has led to the termination of DANYELZA clinical trials and suspension of regulatory activities in Russia, negatively impacting commercialization plans and causing volatility in global financial markets[163][164] - Rising inflation and increased recession risk are affecting the business, potentially increasing operating costs (clinical trial materials, labor, R&D) and impacting the ability to raise capital[165] Components of Our Results of Operations This section defines the key components of the company's financial results, including product revenue, license revenue, cost of goods sold, and operating expenses - Product revenue is derived from sales of DANYELZA, recognized when the customer obtains control; license revenue comes from payments for licensing rights to DANYELZA and omburtamab[166][167][184] - Cost of goods sold includes direct and indirect manufacturing and distribution costs for DANYELZA, such as materials, third-party services, freight, labor, overhead, royalties, and inventory write-offs[168] - Research and development expenses are expensed as incurred, covering personnel, research, manufacturing, license fees, and clinical trial costs, and are expected to increase significantly[171][176] - Selling, general, and administrative expenses include employee-related costs, facility costs, legal fees, and consulting services, anticipated to increase to support R&D and commercialization[177][178] Critical Accounting Policies and Significant Judgments and Estimates This section highlights the critical accounting policies that require significant management judgment and estimates, such as revenue recognition, R&D accruals, and stock option valuation - Key accounting policies require significant judgments and estimates, including those for net product revenues (rebates, chargebacks, discounts), accruals for R&D expenses, milestone and royalty payments, and the valuation of stock options[180][182] - Revenue recognition for license arrangements follows a five-step model, assessing distinct performance obligations and allocating the transaction price[189] - Stock options are valued using the Black-Scholes option pricing model, with assumptions for risk-free interest rate, zero expected dividend yield, and volatility based on peer companies and historical Y-mAbs share price[197][198] Results of Operations This section provides a detailed analysis of the company's financial performance, comparing revenues and expenses for the three and nine months ended September 30, 2022, and 2021 | Metric | Three months ended Sep 30, 2022 | Three months ended Sep 30, 2021 | Change (Amount) | Change (Percentage) | | :---------------- | :------------------------------ | :------------------------------ | :---------------- | :------------------ | | Product revenue, net | $12,537 | $8,965 | $3,572 | 40% | | Total revenues | $12,537 | $8,965 | $3,572 | 40% | - Product revenue increased by 40% for Q3 2022 compared to Q3 2021, driven by an increase in new US patients and a $0.7 million benefit from a change in estimate[201] | Metric | Three months ended Sep 30, 2022 | Three months ended Sep 30, 2021 | Change (Amount) | Change (Percentage) | | :-------------------------------- | :------------------------------ | :------------------------------ | :---------------- | :------------------ | | Cost of goods sold | $2,475 | $550 | $1,925 | 350% | | Research and development | $22,453 | $23,131 | $(678) | (3)% | | Selling, general, and administrative | $13,626 | $13,988 | $(362) | (3)% | | Total operating costs and expenses | $38,554 | $37,669 | $885 | 2% | - Cost of goods sold increased significantly (350%) in Q3 2022, primarily due to a $1.2 million charge for a batch that did not meet quality specifications[202] | Metric | Nine months ended Sep 30, 2022 | Nine months ended Sep 30, 2021 | Change (Amount) | Change (Percentage) | | :---------------- | :----------------------------- | :----------------------------- | :---------------- | :------------------ | | Product revenue, net | $32,820 | $23,299 | $9,521 | 41% | | License revenue | $1,000 | $2,000 | $(1,000) | (50)% | | Total revenues | $33,820 | $25,299 | $8,521 | 34% | - Total revenues increased by 34% for 9M 2022, driven by a 41% increase in product revenue from DANYELZA sales and a $1.0 million license revenue from an updated FDA BLA Dossier for DANYELZA[210][211] | Metric | Nine months ended Sep 30, 2022 | Nine months ended Sep 30, 2021 | Change (Amount) | Change (Percentage) | | :-------------------------------- | :----------------------------- | :----------------------------- | :---------------- | :------------------ | | Cost of goods sold | $5,447 | $843 | $4,604 | 546% | | License royalties | $100 | $210 | $(110) | (52)% | | Research and development | $71,785 | $64,488 | $7,297 | 11% | | Selling, general, and administrative | $50,146 | $39,433 | $10,713 | 27% | | Total operating costs and expenses | $127,478 | $104,974 | $22,504 | 21% | - Net loss for 9M 2022 was $(96.7) million, a significant increase from $(18.4) million in 9M 2021, primarily due to the absence of the $62.0 million PRV gain recognized in 2021 and increased operating expenses[209][222] Liquidity and Capital Resources This section discusses the company's financial liquidity, capital needs, and cash flow activities, including sources of funding and future operational projections - The company has incurred significant net operating losses and expects to continue doing so, financing operations through common stock sales, DANYELZA revenues, and the 2021 PRV sale[224] | Metric | Nine months ended Sep 30, 2022 | Nine months ended Sep 30, 2021 | Change (Amount) | Change (Percentage) | | :------------------------------------------ | :----------------------------- | :----------------------------- | :---------------- | :------------------ | | Net cash used in operating activities | $(67,260) | $(68,693) | $1,433 | (2)% | | Net cash provided by investing activities | — | $61,498 | $(61,498) | (100)% | | Net cash provided by financing activities | $84 | $108,214 | $(108,130) | (100)% | | Net increase / (decrease) in cash and cash equivalents | $(67,038) | $101,096 | $(168,134) | (166)% | - Net cash provided by investing activities decreased by $61.5 million for 9M 2022, due to the absence of the $62.0 million PRV sale proceeds received in 2021[230] - As of September 30, 2022, cash and cash equivalents were $114.5 million, expected to fund operations through mid-2024, assuming DANYELZA revenues increase 10% annually and no new partnerships or omburtamab approval[235][237] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section discusses the company's exposure to market risks, primarily interest rate risk and foreign currency exchange risk, and how these risks are managed - The company is exposed to market risk related to changes in interest rates, but it is considered immaterial due to investments primarily in highly rated, short-term money market funds[253] - The primary foreign currency exchange risk is to the Danish Kroner (DKK); an immediate 10% change in the DKK to USD exchange rate would not have any material effect on cash balances[254] Item 4. Controls and Procedures This section details the evaluation of the company's disclosure controls and procedures and reports on any changes in internal control over financial reporting - Management, with the participation of the Interim CEO and CFO, concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of September 30, 2022[255] - There was no change in the company's internal control over financial reporting during the quarter ended September 30, 2022, that materially affected, or is reasonably likely to materially affect, internal control over financial reporting[257] PART II — OTHER INFORMATION This part covers legal proceedings, detailed risk factors, and other miscellaneous information not included in the financial statements Item 1. Legal Proceedings This section describes ongoing legal proceedings, specifically two lawsuits against the company and Mr. Thomas Gad regarding alleged short swing profits - The company is a nominal defendant in two lawsuits (Deborah Donoghue and Mark Rubenstein) filed in the U.S. District Court, Southern District of New York, alleging short swing profits by Mr. Thomas Gad from a transaction on March 10, 2021[258][260] - Mr. Gad's motion to dismiss the Donoghue lawsuit was denied, and the case has entered the discovery phase; the company and Mr. Gad believe the claims are without merit and intend to vigorously defend the actions[260] Item 1A. Risk Factors This extensive section details various risks that could materially and adversely affect the company's business, financial condition, results of operations, and future growth prospects, including financial, operational, regulatory, intellectual property, and market-related challenges - The company has a limited operating history and has incurred significant losses since inception, with an accumulated deficit of approximately $437.2 million as of September 30, 2022, and expects to continue incurring significant losses[262][264] - Omburtamab's BLA faces significant uncertainty after the Advisory Committee voted 16 to 0 that it did not provide sufficient evidence for overall survival improvement, making FDA approval uncertain[263][285][351] - The company will need substantial additional funding to finance operations, complete product development, and commercialization, and failure to obtain such funding could force delays, reductions, or termination of programs[278][280] - Drug development is a lengthy, expensive, and uncertain process; clinical trials may fail to demonstrate safety and efficacy, leading to additional costs, delays, or inability to obtain marketing approval[286][287] - The COVID-19 pandemic and the Russia-Ukraine conflict have adversely impacted operations, including commercialization efforts, clinical trials, supply chains, and financial markets, leading to increased costs and uncertainty[298][311] - Commercial success of DANYELZA and future approved products depends on market acceptance by physicians, patients, and third-party payors, which is uncertain, especially for small target patient populations[316][328][329] - The company relies on third parties for clinical trials and manufacturing, including SpectronRx for omburtamab radiolabeling, and failures or disruptions by these parties could harm development and commercialization[370][375][379] - Protecting intellectual property (patents, trademarks, trade secrets) is difficult, costly, and uncertain, with risks of invalidation, infringement by third parties, or loss of licensed rights, which could materially adversely affect the business[499][501][508] - The company is highly dependent on its executive officers and key personnel, and the loss of their services could materially harm the business, as evidenced by recent management changes[546][547] - The price of the common stock has been and is likely to be volatile, influenced by clinical trial results, regulatory actions, competition, and macroeconomic conditions, which could result in substantial losses for investors[592][595] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section states that there were no unregistered sales of equity securities or use of proceeds to report for the period - No unregistered sales of equity securities or use of proceeds were reported[619] Item 3. Defaults Upon Senior Securities This section states that there were no defaults upon senior securities to report for the period - No defaults upon senior securities were reported[620] Item 4. Mine Safety Disclosures This section states that mine safety disclosures are not applicable to the company's operations - Mine safety disclosures are not applicable to the company[621] Item 5. Other Information This section states that there is no other information to report for the period - No other information was reported[622] Item 6. Exhibits This section lists the exhibits filed as part of the Quarterly Report on Form 10-Q, including corporate documents, stock option agreements, certifications, and XBRL data files - The report includes various exhibits such as the Amended and Restated Certificate of Incorporation and Bylaws, stock option grant notices, a separation agreement for the former CEO, and certifications by principal executive and financial officers[623] - Interactive Data Files (XBRL) are also included as exhibits, providing structured data for financial reporting[629]