RAPT Therapeutics(RAPT) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) The unaudited condensed financial statements provide a detailed financial overview for the periods ended June 30, 2025, and December 31, 2024 Condensed Balance Sheets as of June 30, 2025 and December 31, 2024 | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | % Change | | :-------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :------- | | Cash and cash equivalents | $41,886 | $169,735 | $(127,849) | (75.3)% | | Marketable securities | $127,061 | $61,320 | $65,741 | 107.2% | | Total current assets | $172,859 | $235,236 | $(62,377) | (26.5)% | | Total assets | $178,410 | $240,325 | $(61,915) | (25.8)% | | Total current liabilities | $13,043 | $48,351 | $(35,308) | (73.0)% | | Total liabilities | $14,002 | $50,421 | $(36,419) | (72.2)% | | Total stockholders' equity | $164,408 | $189,904 | $(25,496) | (13.4)% | Condensed Statements of Operations and Comprehensive Loss for the Three- and Six-Months Ended June 30, 2025 and 2024 | Metric (in thousands, except per share) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change ($) | Change (%) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change ($) | Change (%) | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------- | :--------- | :--------------------------- | :--------------------------- | :--------- | :--------- | | Research and development | $12,340 | $22,640 | $(10,300) | (45)% | $24,382 | $47,421 | $(23,039) | (49)% | | General and administrative | $7,195 | $6,690 | $505 | 8% | $14,418 | $14,427 | $(9) | * | | Total operating expenses | $19,535 | $29,330 | $(9,795) | (33)% | $38,800 | $61,848 | $(23,048) | (37)% | | Loss from operations | $(19,535) | $(29,330) | $9,795 | (33)% | $(38,800) | $(61,848) | $23,048 | (37)% | | Other income, net | $1,892 | $1,667 | $225 | 13% | $3,992 | $3,664 | $328 | 9% | | Net loss | $(17,643) | $(27,663) | $10,020 | (36)% | $(34,808) | $(58,184) | $23,376 | (40)% | | Net loss per share, basic and diluted | $(0.65) | $(5.69) | $5.04 | (88.6)% | $(1.29) | $(12.01) | $10.72 | (89.3)% | Condensed Statements of Stockholders' Equity for the Six-Months Ended June 30, 2025 and 2024 | Metric (in thousands) | December 31, 2024 | March 31, 2025 | June 30, 2025 | | :-------------------- | :---------------- | :------------- | :------------ | | Total Stockholders' Equity | $189,904 | $177,372 | $164,408 | | Net loss | $(17,165) | $(17,643) | $(34,808) (total for 6 months) | | Stock-based compensation | $4,648 | $4,537 | $9,185 (total for 6 months) | | Issuances of common stock under employee stock plans | — | $161 | $161 (total for 6 months) | Condensed Statements of Cash Flows for the Six-Months Ended June 30, 2025 and 2024 | Activity (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change ($) | | :---------------------- | :----------------------------- | :----------------------------- | :--------- | | Operating activities | $(63,685) | $(55,238) | $(8,447) | | Investing activities | $(64,325) | $35,100 | $(99,425) | | Financing activities | $161 | $9,737 | $(9,576) | | Net decrease in cash and cash equivalents | $(127,849) | $(10,401) | $(117,448) | | Cash and cash equivalents at end of period | $41,886 | $37,077 | $4,809 | Notes to Condensed Financial Statements 1. Organization - RAPT Therapeutics is a clinical-stage immunology-based biopharmaceutical company focused on discovering, developing, and commercializing novel therapies for inflammatory, immunological diseases, and oncology[21] - The company's lead drug candidate, RPT904, is a half-life extended monoclonal antibody for allergic diseases, licensed worldwide (excluding Jemincare Territory)[21][64] - Tivumecirnon is an oral small-molecule CCR4 antagonist for oncology, with worldwide rights (excluding Hanmi Territory)[21][65] - Development of zelnecirnon, a small molecule CCR4 antagonist for inflammatory disease, ceased in November 2024 due to a serious adverse event of liver failure in a Phase 2 trial[21][66] - The company incurred a net loss of $34.8 million and used $63.7 million of cash in operations for the six months ended June 30, 2025[22] - As of June 30, 2025, the company had $168.9 million in cash, cash equivalents, and marketable securities, and $159.8 million in working capital[22] - Management believes current cash and cash equivalents and marketable securities will provide sufficient funds for at least 12 months from the filing date, but additional capital will be needed for research and development activities[23] 2. Summary of Significant Accounting Policies - The company effected a 1-for-8 reverse stock split on June 16, 2025, retroactively adjusting all share and per-share data in the financial statements[25][67] - The company operates in one segment, with performance assessed based on cash runway and net loss[26][27] - Marketable securities are classified as available-for-sale, carried at estimated fair value, with unrealized gains and losses reported as a component of accumulated other comprehensive income (loss)[31] - The company retrospectively adopted ASU 2023-07 (Segment Reporting) on January 1, 2024, with no material impact on its financial statements[37] - The company is currently evaluating the impact of ASU 2024-03 (Expense Disaggregation Disclosures) and ASU 2023-09 (Improvements to Income Tax Disclosures), effective for fiscal years beginning after December 15, 2026, and December 15, 2024, respectively[38][39] 3. Fair Value Measurements Fair Value of Financial Assets | Financial Assets (in thousands) | Fair Value Hierarchy Level | Amortized Cost (June 30, 2025) | Fair Value (June 30, 2025) | Amortized Cost (Dec 31, 2024) | Fair Value (Dec 31, 2024) | | :------------------------------ | :------------------------- | :----------------------------- | :------------------------- | :----------------------------- | :------------------------- | | Money market funds | Level 1 | $12,252 | $12,252 | $152,776 | $152,776 | | Corporate debt | Level 2 | $31,084 | $31,087 | $17,772 | $17,790 | | Asset-backed securities | Level 2 | $6,373 | $6,375 | $3,820 | $3,825 | | Commercial paper | Level 2 | $56,613 | $56,611 | $16,795 | $16,795 | | U.S. government agency securities | Level 2 | $62,365 | $62,378 | $39,743 | $39,770 | | Total Marketable Securities | | $127,045 | $127,061 | $61,270 | $61,320 | - As of June 30, 2025, unrealized losses on marketable securities totaled $11,000, primarily due to interest rate changes rather than credit losses[44] Maturity Profile of Marketable Securities | Maturity Profile (in thousands) | June 30, 2025 | | :------------------------------ | :------------ | | Maturing in one year or less | $120,016 | | Maturing after one year through five years | $7,045 | | Total | $127,061 | 4. Property and Equipment Net Property and Equipment | Category (in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------- | :------------ | :---------------- | | Laboratory equipment | $7,078 | $7,035 | | Leasehold improvements | $3,295 | $3,295 | | Computer equipment | $688 | $707 | | Furniture and fixtures | $411 | $411 | | Total property and equipment | $11,472 | $11,448 | | Less accumulated depreciation and amortization | $(10,502) | $(10,081) | | Property and equipment, net | $970 | $1,367 | - Depreciation and amortization expense was $0.5 million for the six months ended June 30, 2025, compared to $0.6 million for the same period in 2024[46] 5. Accrued Expenses Composition of Accrued Expenses | Category (in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------- | :------------ | :---------------- | | Accrued research and development expenses | $2,361 | $1,239 | | Accrued compensation | $3,346 | $6,723 | | Accrued professional and consulting services | $747 | $1,493 | | Other | $129 | $142 | | Total accrued expenses | $6,583 | $9,597 | 6. Common Stock Shares Reserved for Future Issuance | Shares Reserved for Future Issuance (as of June 30, 2025) | Number of Shares | | :------------------------------------------------------- | :--------------- | | Options issued and outstanding (2025, 2019, 2015 Plans) | 3,391,339 | | Shares available for future grants (2025 Inducement Plan) | 62,500 | | Shares available for future grants (2025 Equity Incentive Plan) | 1,017,658 | | Pre-funded warrants issued and outstanding | 10,425,428 | | Shares reserved (2019 Employee Stock Purchase Plan) | 556,346 | | Total | 15,453,271 | - No shares were sold under the ATM Sales Agreement during the three and six months ended June 30, 2025. As of June 30, 2025, $140.6 million of common stock remained available for future issuance under the ATM Sales Agreement[49] 7. Stock-Based Compensation - The RAPT Therapeutics, Inc. Inducement Plan was adopted on March 25, 2025, reserving 62,500 shares for grants to new employees or directors; no awards had been granted as of June 30, 2025[50] - The 2025 Equity Incentive Plan was adopted on March 25, 2025, and approved on May 29, 2025, initially reserving 4,408,997 shares, including new shares and rollovers from previous plans[51] Stock Option Activity | Metric | Number of Shares Outstanding | Weighted Average Exercise Price Per Share | Aggregate Intrinsic Value (in thousands) | | :-------------------------- | :--------------------------- | :---------------------------------------- | :--------------------------------------- | | Balances at Dec 31, 2024 | 625,337 | $167.52 | $1 | | Stock options granted | 2,839,586 | $8.00 | | | Stock options exercised | — | — | | | Stock options forfeited | (73,584) | $95.37 | | | Balances at June 30, 2025 | 3,391,339 | $35.24 | $1,081 | - The Amended and Restated 2019 Employee Stock Purchase Plan removed its evergreen provision and reserved an additional 500,000 shares of common stock[53] Stock-Based Compensation Expense (in thousands) | Period | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Research and development | $1,826 | $2,632 | $3,699 | $5,269 | | General and administrative | $2,711 | $2,752 | $5,486 | $5,513 | | Total stock-based compensation expense | $4,537 | $5,384 | $9,185 | $10,782 | - An option repricing effective November 13, 2024, reduced the exercise price of eligible options to $12.56, resulting in $1.6 million of total incremental stock-based compensation expense, with $0.5 million recognized for the six months ended June 30, 2025[56][57][59][60] 8. Net Loss Per Share Net Loss Per Share Calculation | Metric (in thousands, except per share) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net loss | $(17,643) | $(27,663) | $(34,808) | $(58,184) | | Weighted average shares used in computing net loss per share, basic and diluted | 26,949,752 | 4,858,345 | 26,938,008 | 4,843,527 | | Net loss per share, basic and diluted | $(0.65) | $(5.69) | $(1.29) | $(12.01) | - Potential dilutive securities, including stock options and estimated ESPP shares, totaling 3.4 million for 2025 and 0.7 million for 2024, were anti-dilutive and thus excluded from the diluted net loss per share calculation[61] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition, operational results, clinical programs, and future plans Overview - RAPT Therapeutics is a clinical-stage immunology-based biopharmaceutical company focused on inflammatory, immunological diseases, and oncology[63] - RPT904, the lead drug candidate for allergic diseases, is a half-life extended monoclonal antibody licensed worldwide (excluding Jemincare Territory) and showed improved half-life and IgE reduction compared to omalizumab in a Phase 1 trial[63][64] - Tivumecirnon, an oncology drug candidate, is an oral small-molecule CCR4 antagonist that demonstrated greater confirmed objective response rate and progression-free survival in a Phase 2 NSCLC trial when combined with pembrolizumab[65] - The company ceased development of zelnecirnon, its small molecule CCR4 antagonist for inflammatory disease, in November 2024, following a clinical hold by the FDA due to a serious adverse event of liver failure[66] - A 1-for-8 reverse stock split was effected on June 16, 2025, retroactively adjusting all share and per-share data[67] - Geopolitical and macroeconomic developments pose potential future impacts on business operations, supply chain, and clinical trials, though no significant financial impact was observed during the six months ended June 30, 2025[68][69] Financial Overview - The company has incurred net losses since inception, with an accumulated deficit of $649.4 million as of June 30, 2025[70] - Net losses were $34.8 million for the six months ended June 30, 2025, and $58.2 million for the same period in 2024[70] - Operations have been primarily financed through equity sales, including net proceeds of $143.0 million from a private placement in December 2024[71] - As of June 30, 2025, the company had $168.9 million in cash, cash equivalents, and marketable securities, and $159.8 million in working capital[71] - Substantial additional funding will be required in the foreseeable future to support ongoing operations, expand the pipeline, and advance drug candidates through clinical development and regulatory approval[72][73] Components of Operating Results - Research and development (R&D) costs are expensed as incurred, with external costs tracked by drug candidate and internal costs spread across multiple candidates[74][81] - R&D expenses decreased in the quarter and six months ended June 30, 2025, due to the early closure of the zelnecirnon clinical trials and program termination, but are expected to increase in future years for RPT904 and other programs[77] - General and administrative (G&A) expenses include personnel-related costs, professional fees, facilities costs, and public company operating expenses[78] - Other income, net, primarily consists of interest earned on cash, cash equivalents, and marketable securities[80] Critical Accounting Policies, Significant Judgments and Use of Estimates - The company's condensed financial statements are prepared in accordance with U.S. GAAP, requiring estimates and assumptions that affect reported amounts[82] - There have been no significant changes in critical accounting policies and estimates during the six months ended June 30, 2025, compared to the prior annual report[83] Results of Operations Comparison of the Three Months Ended June 30, 2025 and 2024 Key Metrics | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | $ Change | % Change | | :-------------------- | :--------------------------- | :--------------------------- | :------- | :------- | | Research and development | $12,340 | $22,640 | $(10,300) | (45)% | | General and administrative | $7,195 | $6,690 | $505 | 8% | | Total operating expenses | $19,535 | $29,330 | $(9,795) | (33)% | | Net loss | $(17,643) | $(27,663) | $10,020 | (36)% | - The decrease in research and development expenses was primarily due to a $7.0 million decrease in zelnecirnon development costs, a $2.9 million decrease in personnel costs, and a $0.8 million decrease in tivumecirnon development costs, partially offset by a $1.9 million increase in RPT904 development costs[85][86] - The increase in general and administrative expenses was primarily driven by a $0.4 million increase in consulting costs and a $0.1 million increase in facilities costs[88] - Other income, net, increased by $0.2 million, primarily due to higher invested cash balances[89] Comparison of the Six Months Ended June 30, 2025 and 2024 Key Metrics | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | $ Change | % Change | | :-------------------- | :--------------------------- | :--------------------------- | :------- | :------- | | Research and development | $24,382 | $47,421 | $(23,039) | (49)% | | General and administrative | $14,418 | $14,427 | $(9) | * | | Total operating expenses | $38,800 | $61,848 | $(23,048) | (37)% | | Net loss | $(34,808) | $(58,184) | $23,376 | (40)% | - The decrease in research and development expenses was primarily due to a $14.6 million decrease in zelnecirnon development costs, a $6.5 million decrease in personnel costs, and a $1.7 million decrease in tivumecirnon development costs, partially offset by a $2.9 million increase in RPT904 development costs[91][92] - General and administrative expenses remained flat, with a $0.2 million decrease in personnel costs offset by a $0.2 million increase in facilities costs[93] - Other income, net, increased by $0.3 million, primarily due to higher invested cash balances[94] Liquidity and Capital Resources; Plan of Operations - The company has primarily financed operations through equity sales, including $143.0 million in net proceeds from a private placement in December 2024[95] - As of June 30, 2025, the company had $168.9 million in cash, cash equivalents, and marketable securities[95] - Current cash and marketable securities are believed to be sufficient to fund anticipated operations for at least the next 12 months[96] - Substantial additional funding will be required for ongoing R&D and potential commercialization, which may be raised through equity or debt financings, strategic alliances, or other capital sources[96][97][99] - The company regained compliance with Nasdaq's minimum bid price rule on June 20, 2025, following a 1-for-8 reverse stock split effected on June 16, 2025[100][101][102] - Net cash used in operating activities was $63.7 million for the six months ended June 30, 2025, including a $35.0 million upfront license fee payment to Jemincare[104] - Net cash used in investing activities was $64.3 million for the six months ended June 30, 2025, primarily due to purchases of marketable securities[107] - Net cash provided by financing activities was $0.2 million for the six months ended June 30, 2025, from employee stock plans[109] Smaller Reporting Company Status - The company qualifies as a "smaller reporting company" under the Exchange Act, allowing it to utilize scaled disclosures, including exemption from auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act[111] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, RAPT Therapeutics, Inc is exempt from providing these disclosures - The company is not required to provide quantitative and qualitative disclosures about market risk due to its status as a "smaller reporting company"[112] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025 - Management, with the participation of the CEO and CFO, concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2025[113] - There were no changes in internal control over financial reporting during the fiscal quarter ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[114] PART II. OTHER INFORMATION Item 1. Legal Proceedings Management believes no current legal claims would materially affect the company's financial condition - Management believes there are no currently pending claims or actions that would have a material adverse effect on the company's results of operations, financial condition, or cash flows[115] Item 1A. Risk Factors The company faces significant risks in clinical development, financial sustainability, and market dynamics - Investing in the company's common stock involves a high degree of risk, and the occurrence of any described risks could materially and adversely affect its business, financial condition, results of operations, prospects, and stock price[116] Summary of Risk Factors - Product candidates may fail or suffer delays in clinical development, materially affecting commercial viability[117][118] - The company is a clinical-stage therapeutics company with a history of losses and may never achieve or maintain profitability[117][125] - The company may not be successful in building a pipeline of drug candidates and has no history of successfully developing drugs[117][134] - The market may not be receptive to current or future drug candidates, potentially preventing revenue generation from sales or licensing[117][135] - Undesirable side effects caused by drug candidates could compromise the ability to market and derive revenue, as seen with the cessation of the zelnecirnon program[117][138][139] - Substantial additional funds are needed for drug candidate development, and there is no guarantee of sufficient future funding[117][143] - Reliance on third parties for preclinical studies and clinical trials poses risks of delays if they fail to perform as required[117][156] - Dependence on third-party manufacturers for drug candidates and clinical supplies may lead to limited, interrupted, or unsatisfactory supply[117][164] - The company faces intense competition from entities developing similar drug candidates, many of which are larger and better funded[117][170] - Inability to develop internal sales, marketing, and distribution capabilities or secure third-party agreements could hinder commercialization[117][182] - International operations expose the company to business, political, operational, and financial risks[120][183] - Stringent and evolving data privacy and security laws, regulations, and contractual obligations pose risks of investigations, penalties, and business disruptions[120][266] - The company's stock price may be volatile, and purchasers of common stock could incur substantial losses[120][293] - Raising additional capital may cause dilution to stockholders, restrict operations, or require relinquishing rights to technologies or drug candidates[120][298] Risks Related to Our Business - The company has no products with regulatory approval and its ability to achieve profitability depends on successfully developing and commercializing drug candidates, which involves extensive and uncertain preclinical studies and clinical trials[118][119][121][123] - The company has a history of net losses, with an accumulated deficit of $649.4 million as of June 30, 2025, and expects to continue incurring significant operating losses[125] - Success in early clinical trials or preclinical studies may not be indicative of results in later trials, and preliminary data may differ materially from final data[127][132][133] - The company has no history of successfully developing drugs to commercialization and may not be successful in building a pipeline of viable drug candidates[134] - Market acceptance of drug candidates is uncertain and depends on factors such as safety, efficacy, pricing, and reimbursement, which could adversely affect revenue generation[135][136] - Undesirable side effects from drug candidates could lead to clinical trial delays, regulatory approval issues, or product recalls, as exemplified by the cessation of the zelnecirnon program due to liver failure[138][139] - The company requires substantial additional funding for its research, development, and commercialization efforts, with current funds projected to last at least 12 months, but future capital needs are significant and uncertain[143][144][145] - Limited financial and managerial resources necessitate prioritization of development programs, potentially leading to missed opportunities for more profitable drug candidates[151] - Inability to enter into or maintain collaborations or strategic transactions on acceptable terms could hinder drug candidate development and commercialization[152][155] - Reliance on third-party clinical investigators, CROs, and CDMOs for preclinical studies and clinical trials means less control over timing and quality, potentially causing delays[156][157] - Difficulties in enrolling sufficient eligible patients in clinical trials could delay development activities and increase costs[159][160] - Dependence on third-party contract manufacturers, some of which are sole-source vendors, for drug candidate supply poses risks of limitations, interruptions, or quality issues[164][165][166][167] - Estimates of market opportunities for drug candidates may be incorrect, leading to smaller treatable populations and adverse effects on business prospects[168][169] - The biopharmaceutical industry is highly competitive, with many larger and better-funded companies developing competing treatments, which could adversely affect the company's ability to commercialize drug candidates[170][171][172][173] - The company's success depends on attracting and retaining qualified key management, technical personnel, and employees; a workforce reduction in July 2024 (40% headcount) could lead to disruptions and loss of expertise[148][174][176][177][178] - Managing growth and expanding operations, including development, regulatory, and manufacturing capabilities, presents challenges due to limited experience[179][180] - The company currently lacks internal sales, marketing, and distribution capabilities, requiring significant investment or reliance on third parties for commercialization[182] - International operations expose the company to various risks, including conflicting laws, regulatory hurdles, political instability, trade restrictions, and foreign currency fluctuations[183][184][185][186][187] - Governmental price controls in foreign markets could adversely affect future profitability and the ability to commercialize approved drug candidates[189] - Disease outbreaks, epidemics, and pandemics could disrupt operations, clinical trials, and supply chains, exacerbating existing risks[190][191][192] - Concentration of operations in the San Francisco Bay Area makes the company vulnerable to natural disasters or other unplanned events, potentially disrupting business continuity[194] Risks Related to Our Intellectual Property - The company's success depends on obtaining and maintaining intellectual property rights, primarily patents, which is an expensive, complex, and time-consuming process with uncertain outcomes[195][196][197][198][199] - Issued patents and patent applications may be challenged by third parties, potentially leading to narrowing, invalidation, or unenforceability of patent rights[199][200][212] - Some intellectual property may be co-owned with third parties, potentially allowing competitors access or requiring cooperation for enforcement[201] - Failure to comply with obligations under license or collaboration agreements could result in damages or loss of essential intellectual property rights[202][203][204][205] - Patents have a limited lifespan, and extensions may not be sufficient or granted, potentially allowing competitors to commercialize similar products earlier[206][207] - Changes in U.S. patent law (e.g., Leahy-Smith Act) or foreign patent laws (e.g., Unitary Patent system in Europe) could diminish the value or narrow the scope of patent protection[209][210][211] - Third parties may initiate legal proceedings alleging infringement, misappropriation, or violation of their intellectual property rights, leading to costly litigation, damages, or injunctions[219][220][221][224][225] - The company may be unable to obtain necessary or exclusive licenses to third-party intellectual property, potentially forcing abandonment of relevant drug candidates[215][226] - In-licensed patent rights may be subject to U.S. government march-in rights if government-funded, potentially harming competitive position[227] - Protecting the confidentiality of trade secrets is difficult, and disclosure or independent development by competitors could materially harm the company's competitive position[228][229] - The company may face claims of wrongful use or disclosure of trade secrets from employees' or consultants' former employers, leading to litigation and diversion of resources[230] - Non-compliance with procedural, document submission, or fee payment requirements imposed by government patent agencies can result in the abandonment or lapse of patent rights[231] - Trademarks and trade names may be challenged or infringed, affecting name recognition and competitive effectiveness[232] - Intellectual property rights have limitations and may not adequately protect against all potential threats, such as competitors designing around patents or independently developing similar technologies[233][234] Legal and Regulatory Risks - Clinical development is a lengthy, expensive, and uncertain process, with a high risk of failure, and early results may not predict future trial outcomes[235][236][237] - Obtaining U.S. and foreign regulatory approval for drug candidates is costly, time-consuming, and unpredictable, with no guarantee of success, and potential for delays or denials[240][241][242][243][244] - Even with regulatory approval, the company will be subject to ongoing regulatory obligations, including post-marketing testing and surveillance, and non-compliance could lead to penalties or market withdrawal[245][246][258] - Healthcare legislative reforms (e.g., ACA, IRA, OBBBA) and government scrutiny over drug pricing could adversely affect the business by limiting reimbursement, increasing pricing pressures, or reducing demand[247][248][249][250][251][252][253][254][255] - Failure to comply with healthcare fraud and abuse laws (e.g., Anti-Kickback Statute, False Claims Act, HIPAA) by the company or its partners could result in significant penalties, fines, and reputational harm[256][257] - Commercialization success depends on adequate third-party payor coverage and reimbursement; unfavorable policies or price controls could materially harm the business[259][260][261] - The company is subject to U.S. and foreign anti-corruption and anti-money laundering laws, and non-compliance by employees or third parties could lead to investigations, sanctions, and significant penalties[262][263] - The business entails significant product liability risk, and insufficient insurance coverage could have a material adverse effect[264] - Misconduct by employees, principal investigators, consultants, or commercial partners, including non-compliance with regulatory standards, could lead to enforcement actions and reputational damage[265] - The company is subject to stringent and evolving U.S. and foreign data privacy and security obligations (e.g., HIPAA, GDPR, state privacy laws), and non-compliance or security incidents could result in investigations, fines, litigation, and business disruptions[266][269][270][271][272][273][274][275] - Compromise of information technology systems or data, including cyber-attacks and ransomware, could lead to regulatory actions, litigation, financial losses, and operational disruptions[276][277][278][279][280][281][282][283][284][285][286][287][288] - Non-compliance with environmental and health and human safety laws, particularly concerning hazardous materials, could result in substantial costs, fines, or penalties[289] - Increasing scrutiny and reporting obligations related to environmental, social, and governance (ESG) matters may impact the business and compliance costs[290] Risks Related to Ownership of Our Common Stock - The company's quarterly operating results are expected to fluctuate significantly, which may cause its stock price to fluctuate or decline[291][292] - The stock price has been and is likely to remain highly volatile, influenced by factors such as clinical trial results, regulatory developments, competition, and general market conditions[293][294][295] - The 1-for-8 reverse stock split may not achieve its intended results of a sustained price increase and could lead to reduced trading liquidity and increased volatility[296][297] - Raising additional capital through equity or convertible debt offerings will dilute existing stockholders' ownership, and debt financing may impose restrictive covenants[298][299] - Lack of research or adverse opinions from securities analysts could lead to a decline in stock price and trading volume[301] - Principal stockholders own a significant percentage of the stock, enabling them to exert substantial control over corporate actions, potentially conflicting with other stockholders' interests[302][303] - As a "smaller reporting company," the election of reduced reporting requirements may make the common stock less attractive to some investors, potentially affecting trading market and price volatility[304] - The ability to use net operating loss carryforwards (NOLs) and other tax attributes to offset future taxable income may be subject to limitations due to ownership changes or changes in tax laws[305][306] - Changes in tax laws or regulations, such as those under the OBBBA or IRA, could adversely affect the company's business, cash flow, financial condition, or results of operations[307] - The company does not anticipate paying cash dividends in the foreseeable future, making capital appreciation the sole source of gain for stockholders[308] - The volatility of the stock price increases the risk of incurring significant costs from securities class action litigation[309] - Anti-takeover provisions in charter documents and Delaware law could make an acquisition more difficult and potentially prevent stockholders from replacing current management[310][311] - Exclusive forum provisions in the amended certificate of incorporation designate specific courts for certain disputes, potentially limiting stockholders' ability to choose a favorable judicial forum[312][313][315][316] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities or use of proceeds - No unregistered sales of equity securities or use of proceeds were reported[317] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities - No defaults upon senior securities were reported[318] Item 4. Mine Safety Disclosures This item is not applicable to the company's operations - Mine Safety Disclosures are not applicable to the company[319] Item 5. Other Information The company reported no other information for this item - No other information was reported for this item[320] Item 6. Exhibits This section lists all exhibits filed as part of the Quarterly Report on Form 10-Q - Exhibits filed include the Amended and Restated Certificate of Incorporation, Certificate of Amendment, Amended and Restated Bylaws, 2025 Equity Incentive Plan, various stock option and RSU agreements, Amended and Restated 2019 Employee Stock Purchase Plan, Non-Employee Director Compensation Policy, and certifications (31.1, 31.2, 32.1)[323] Signatures The report is duly signed by the company's President and CEO and its Chief Financial Officer - The report is signed by Brian Wong, M.D., Ph.D., President and Chief Executive Officer, and Rodney Young, Chief Financial Officer[327]