Kodiak(KOD) - 2023 Q3 - Quarterly Report

FORM 10-Q Filing Information Basic filing information for Kodiak Sciences Inc.'s Form 10-Q, including SEC details and company classification Registrant Information Basic filing information for Kodiak Sciences Inc.'s Form 10-Q, including SEC details and company classification as a non-accelerated filer and smaller reporting company - Kodiak Sciences Inc. filed its Form 10-Q for the quarterly period ended September 30, 2023[2] Company Classification | Classification | Status | | :------------- | :----- | | Non-accelerated filer | Yes | | Smaller reporting company | Yes | Securities Registered | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | :------------------ | :---------------- | :---------------------------------------- | | Common stock, par value $0.0001 | KOD | The Nasdaq Stock Market LLC | - As of October 31, 2023, the registrant had 52,472,291 shares of common stock outstanding[4] Special Note Regarding Forward-Looking Statements Clarifies that the report contains forward-looking statements, subject to risks and uncertainties, identified by specific terminology Nature of Forward-Looking Statements Clarifies that the report contains forward-looking statements, subject to risks and uncertainties, identified by specific terminology - The report contains forward-looking statements based on current expectations and projections, subject to risks and uncertainties[6] - Forward-looking statements are identified by terms such as 'may,' 'will,' 'expect,' 'believe,' 'anticipate,' 'project,' 'estimate,' and similar expressions[7] - Key areas of forward-looking statements include the success, cost, and timing of development activities, clinical trials, regulatory filings, and the ability to obtain funding and market acceptance[8][11] Selected Risks Affecting Our Business Highlights critical risks: clinical stage development, net losses, dependence on lead product candidates, and drug development uncertainties Overview of Key Risks Highlights critical risks including clinical stage development, net losses, dependence on lead product candidates, and uncertainties in drug development and regulatory approval - The company is in the clinical stage of drug development with a limited operating history and no approved products, making future success difficult to evaluate[13] - Kodiak Sciences Inc. has incurred significant net losses since inception and expects this trend to continue[13] - The company's prospects are heavily dependent on the success of its tarcocimab and KSI-501 product candidates, which are currently in clinical development[13] - Drug development is highly uncertain, with risks including clinical trial failures, regulatory approval delays, intense competition, and challenges in manufacturing and intellectual property protection[13] Table of Contents PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Presents unaudited condensed consolidated financial statements: balance sheets, statements of operations, stockholders' equity, cash flows, and notes Condensed Consolidated Balance Sheets Snapshot of the company's financial position, detailing assets, liabilities, and stockholders' equity at specific dates Condensed Consolidated Balance Sheets (in thousands) | Metric | September 30, 2023 | December 31, 2022 | | :-------------------------------- | :------------------- | :------------------ | | Assets | | | | Cash and cash equivalents | $345,668 | $190,433 | | Marketable securities | — | $288,500 | | Total current assets | $350,927 | $486,005 | | Total assets | $547,652 | $666,628 | | Liabilities and Stockholders' Equity | | | | Accounts payable | $38,589 | $9,130 | | Accrued and other current liabilities | $23,170 | $33,440 | | Total current liabilities | $70,774 | $52,496 | | Total liabilities | $245,235 | $230,461 | | Total stockholders' equity | $302,417 | $436,167 | | Accumulated deficit | $(1,093,015) | $(892,040) | Condensed Consolidated Statements of Operations and Comprehensive Loss Details company revenues, expenses, and net loss over specific periods, reflecting operational performance Condensed Consolidated Statements of Operations and Comprehensive Loss (in thousands) | Metric | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :------------------------------------------------------------------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Research and development expenses | $36,188 | $61,676 | $159,669 | $211,597 | | General and administrative expenses | $18,312 | $17,802 | $54,278 | $55,716 | | Total operating expenses | $54,500 | $79,478 | $213,947 | $267,313 | | Loss from operations | $(54,500) | $(79,478) | $(213,947) | $(267,313) | | Interest income | $4,536 | $2,484 | $12,836 | $4,054 | | Net loss | $(50,007) | $(77,038) | $(200,975) | $(263,375) | | Net loss per common share, basic and diluted | $(0.95) | $(1.47) | $(3.84) | $(5.04) | Condensed Consolidated Statements of Stockholders' Equity Outlines changes in equity accounts: common stock, additional paid-in capital, and accumulated deficit - Total stockholders' equity decreased from $436,167 thousand at December 31, 2022, to $302,417 thousand at September 30, 2023, primarily due to net losses[22] - Additional paid-in capital increased by $65,918 thousand from December 31, 2022, to September 30, 2023, driven by stock-based compensation expense and common stock issuances[22] - The accumulated deficit grew from $(892,040) thousand at December 31, 2022, to $(1,093,015) thousand at September 30, 2023, reflecting ongoing net losses[22] Condensed Consolidated Statements of Cash Flows Summarizes cash inflows and outflows from operating, investing, and financing activities over specific periods Condensed Consolidated Statements of Cash Flows (in thousands) | Metric | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :------------------------------------------------ | :----------------------------- | :----------------------------- | | Net cash provided by (used in) operating activities | $(121,944) | $(151,384) | | Net cash provided by (used in) investing activities | $277,024 | $(403,511) | | Net cash provided by (used in) financing activities | $155 | $1,798 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $155,235 | $(553,097) | | Cash, cash equivalents and restricted cash, at end of period | $351,992 | $184,737 | Notes to Unaudited Condensed Consolidated Financial Statements Detailed explanations and additional information supporting the unaudited condensed consolidated financial statements Note 1. The Company Describes Kodiak Sciences Inc. as a clinical-stage biopharmaceutical company focused on retinal diseases and its liquidity - Kodiak Sciences Inc. is a clinical-stage biopharmaceutical company focused on researching, developing, and commercializing transformative therapeutics for high-prevalence retinal diseases[26] - As of September 30, 2023, the Company had $345.7 million in cash and cash equivalents, which is believed to be sufficient for anticipated operating and capital expenditure requirements for the next 12 months[27] Note 2. Summary of Significant Accounting Policies Outlines the key accounting principles, estimates, and assumptions used in preparing the financial statements - The financial statements are unaudited and prepared in accordance with GAAP for interim periods, consistent with the 2022 Annual Report on Form 10-K[28][29] - Management's estimates and assumptions, such as for accrued R&D and stock-based compensation, are critical to financial reporting[32] - No impairment loss was recognized for long-lived assets despite the wind-down decision for the tarcocimab program, as estimated undiscounted net cash flows exceeded carrying amounts[33] - The company monitors macroeconomic uncertainties (e.g., health epidemics, inflation, geopolitical conflicts) and acknowledges inherent risks common to clinical-stage biotech companies[35][36] - No new significant accounting pronouncements were issued or adopted during the three and nine months ended September 30, 2023[40] Note 3. Accrued and Other Current Liabilities Details the composition of accrued and other current liabilities, including clinical trial costs and salaries Accrued and Other Current Liabilities (in thousands) | Category | September 30, 2023 | December 31, 2022 | | :------------------------------------ | :------------------- | :------------------ | | Accrued clinical trial and related costs | $9,791 | $18,334 | | Accrued manufacturing and R&D costs | $6,306 | $5,978 | | Accrued salaries and benefits | $5,405 | $6,033 | | Accrued legal fees and professional fees | $176 | $283 | | Accrued property and equipment | — | $1,893 | | Accrued other liabilities | $1,492 | $919 | | Total accrued and other current liabilities | $23,170 | $33,440 | Note 4. Fair Value Measurements Presents the fair value hierarchy and measurements for financial assets and liabilities, primarily money market funds Fair Value Measurements at September 30, 2023 (in thousands) | Category | Level 1 | Level 2 | Level 3 | Total | | :--------------- | :------ | :------ | :------ | :------ | | Money market funds | $331,478 | — | — | $331,478 | | Total | $331,478 | — | — | $331,478 | Fair Value Measurements at December 31, 2022 (in thousands) | Category | Level 1 | Level 2 | Level 3 | Total | | :--------------- | :------ | :------ | :------ | :------ | | Money market funds | $173,617 | — | — | $173,617 | | U.S. treasury securities | — | $288,500 | — | $288,500 | | Total | $173,617 | $288,500 | — | $462,117 | - The fair value of the liability related to the sale of future royalties is based on Level 3 inputs, reflecting current estimates of future royalty payments[43] Note 5. Marketable Securities Details the company's marketable securities holdings, including changes over the reporting period - As of September 30, 2023, the Company had no marketable securities, a decrease from $288.5 million in U.S. treasury securities at December 31, 2022[44] Marketable Securities as of December 31, 2022 (in thousands) | Category | Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | | :--------------- | :------------- | :--------------- | :---------------- | :--------- | | U.S. treasury securities | $289,807 | — | $(1,307) | $288,500 | | Total | $289,807 | — | $(1,307) | $288,500 | Note 6. Derivatives Describes the company's use of derivative instruments to manage foreign currency risk - The Company uses foreign currency forward contracts, not designated as hedges, to manage foreign currency cash flow risks. As of September 30, 2023, no outstanding derivative instruments were held[45] Note 7. Commitments and Contingencies Outlines significant contractual obligations, manufacturing agreements, and potential legal contingencies - The Company has a manufacturing agreement with Lonza Ltd for clinical and commercial supply of drug substance, including a custom-built Ursus facility commissioned as a cGMP facility in January 2023[46][47][50] - Fixed assets of approximately 75.0 million Swiss Francs (equivalent to $81.7 million) for leasehold improvements and machinery were capitalized as of January 31, 2023, with $26.8 million unpaid as of September 30, 2023[51] - Manufacturing payments totaling approximately 150.0 million Swiss Francs may be incurred from 2022 through 2030 for potential clinical and commercial supply[49] - The Company is not aware of any legal proceedings that could have a material adverse effect on its financial position, results of operations, or cash flows[55] Note 8. Stock-Based Compensation Details the company's stock-based compensation plans, option activity, and related expenses - The number of shares available under the 2018 Equity Incentive Plan increased by approximately 2.1 million shares in both January 2023 and 2022 due to an automatic increase provision[58] Stock Option Activity (as of September 30, 2023) | Metric | Number of Options | Weighted Average Exercise Price | | :-------------------------- | :---------------- | :------------------------------ | | Outstanding at Dec 31, 2022 | 16,542,107 | $51.48 | | Granted | 3,285,000 | $7.12 | | Forfeited or canceled | (1,190,462) | $54.95 | | Outstanding at Sep 30, 2023 | 18,629,117 | $43.45 | Stock-Based Compensation Expense (in thousands) | Category | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :-------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Research and development | $2,733 | $14,947 | $32,093 | $45,031 | | General and administrative | $11,213 | $11,235 | $33,634 | $35,224 | | Total stock-based compensation | $13,946 | $26,182 | $65,727 | $80,255 | Note 9. Net Loss per Common Share Provides net loss per common share calculation and lists common share equivalents excluded from diluted EPS Common Share Equivalents Excluded from Diluted Net Loss per Share | Category | As of September 30, 2023 | As of September 30, 2022 | | :---------------------- | :----------------------- | :----------------------- | | Outstanding stock options | 18,629,117 | 16,621,343 | | Unvested restricted shares | 186,267 | 283,877 | | Total | 18,815,384 | 16,905,220 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management's perspective on financial condition and operational results, focusing on retinal disease therapeutics, clinical updates, and financial performance Overview Introduces Kodiak Sciences as a biopharmaceutical company focused on retinal diseases and its lead product candidates - Kodiak Sciences is a biopharmaceutical company dedicated to developing transformative therapeutics for high-prevalence retinal diseases, leveraging its ABC Platform™[65] - The lead investigational medicine, tarcocimab, is an anti-VEGF antibody biopolymer conjugate for retinal vascular diseases, including diabetic eye disease and wet age-related macular degeneration[65] - KSI-501 is a bispecific investigational medicine targeting IL-6 and VEGF, currently in a Phase 1 clinical study for diabetic macular edema[66] Recent Updates Provides recent developments regarding clinical trials for tarcocimab and KSI-501, manufacturing, and technology platform advancements Tarcocimab Clinical Program Update Updates on tarcocimab clinical trial results across various retinal diseases, including successes and challenges - The DAYLIGHT study for wet AMD met its primary endpoint of non-inferior visual acuity gains for monthly tarcocimab versus aflibercept[68] - GLEAM and GLIMMER studies for DME did not meet primary efficacy endpoints, with tarcocimab showing lower visual acuity gains compared to aflibercept, partly due to an unexpected increase in cataract adverse events (19% vs 9%)[69][70] - The BEACON trial for RVO demonstrated matched efficacy and comparable safety with differentiated durability for tarcocimab versus aflibercept, with 47% of tarcocimab patients requiring no additional injections in the second 6 months after 4 initiating doses[73][74] - The GLOW study for diabetic retinopathy met its primary endpoint, showing a 29-fold increased response rate (41.1% vs 1.4% for sham) in 2-step DRSS improvement, and an 89% decreased risk of sight-threatening complications[75] - Based on three successful Phase 3 trials (DAYLIGHT, BEACON, GLOW), Kodiak plans an additional pivotal study with a commercial formulation of tarcocimab to support a single BLA for RVO, wet AMD, and NPDR[76] Antibody Biopolymer Conjugate Drug Substance Manufacturing Details the commissioning of the Ursus manufacturing facility and strategic alternatives for its future use - The Ursus facility, a custom-built manufacturing site with Lonza, was commissioned as a cGMP facility in January 2023 and began manufacturing commercial-scale batches of tarcocimab in Q1 2023[77] - Following recent tarcocimab clinical program updates, Kodiak is exploring strategic and operational alternatives for the Ursus facility's future use[77] KSI-501 Program Update Updates on KSI-501 development, a bispecific investigational medicine, and its Phase 1 clinical study - KSI-501, a bispecific anti-IL-6 antibody/anti-VEGF trap fusion protein, is designed to inhibit both VEGF-mediated angiogenesis and IL-6 mediated inflammation, potentially offering greater therapeutic efficacy[78] - The Phase 1 trial for KSI-501 in DME patients has completed enrollment and dosing across all dose levels[79] - Due to late-onset cataracts observed with tarcocimab, Kodiak intends to explore development of KSI-501 in both its unconjugated protein and bioconjugate forms[79] Technology Platform Development Describes the company's advancements in its 'triplet' platform for multi-targeting therapeutics - Kodiak is advancing its 'triplet' platform, which combines small molecules and a biologic to create multi-targeting therapeutics with a high drug-antibody ratio (DAR) for sustained inhibition in multifactorial ophthalmic and systemic diseases[80] Components of Operating Results Explains primary components of operating expenses, interest income, and other income/expense - Research and development expenses primarily consist of payroll, laboratory supplies, consulting, contract manufacturing, and CRO fees for product candidate and ABC Platform development[82] - General and administrative expenses include payroll, professional fees (legal, accounting), public company compliance costs, and allocated overhead[84] - Interest income is mainly derived from cash, cash equivalents, and marketable securities[85] - Other income (expense), net, includes changes in fair value and settlement of derivative contracts, tax expense, and amortized issuance costs from royalty sales[86] Results of Operations Analyzes financial performance for the three and nine months ended September 30, 2023, focusing on expense and net loss changes Summary of Operations (in thousands) | Metric | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Change (3M) | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | Change (9M) | | :-------------------------- | :------------------------------ | :------------------------------ | :---------- | :----------------------------- | :----------------------------- | :---------- | | Research and development | $36,188 | $61,676 | $(25,488) | $159,669 | $211,597 | $(51,928) | | General and administrative | $18,312 | $17,802 | $510 | $54,278 | $55,716 | $(1,438) | | Loss from operations | $(54,500) | $(79,478) | $24,978 | $(213,947) | $(267,313) | $53,366 | | Interest income | $4,536 | $2,484 | $2,052 | $12,836 | $4,054 | $8,782 | | Net loss | $(50,007) | $(77,038) | $27,031 | $(200,975) | $(263,375) | $62,400 | - Research and development expenses decreased by $25.5 million for the three months and $51.9 million for the nine months ended September 30, 2023, primarily due to the wind-down of the tarcocimab development program[88] - General and administrative expenses slightly increased by $0.5 million for the three months but decreased by $1.4 million for the nine months, mainly due to lower professional fees[93] Liquidity and Capital Resources; Plan of Operations Discusses cash position, funding sources, future capital requirements, and cash flow activities - As of September 30, 2023, Kodiak had $345.7 million in cash and cash equivalents, primarily funded through equity sales, convertible notes, and royalty sales[94] - The Company expects its current cash and cash equivalents to be sufficient for at least 12 months, despite ongoing net losses and anticipated increases in expenses for product development and commercialization[95][97] - Future funding requirements are uncertain and depend on factors like clinical trial progress, manufacturing scale-up, regulatory approvals, and intellectual property costs[96][101] - Net cash used in operating activities was $121.9 million for the nine months ended September 30, 2023, while net cash provided by investing activities was $277.0 million, largely from marketable securities maturities[102][103][104] Item 3. Quantitative and Qualitative Disclosures About Market Risk No material changes to market risk disclosures were reported since the 2022 Annual Report on Form 10-K - No material changes to market risk disclosures were reported during the nine months ended September 30, 2023, compared to the Annual Report on Form 10-K for 2022[109] Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective, with no material changes in internal control over financial reporting - Management concluded that the Company's disclosure controls and procedures were effective at a reasonable assurance level as of September 30, 2023[111] - There were no material changes in internal control over financial reporting during the quarter ended September 30, 2023[112] PART II. OTHER INFORMATION Item 1. Legal Proceedings Confirms no pending legal claims or actions that could materially adversely affect operations or financial condition - As of the report date, there are no pending claims or actions against Kodiak Sciences Inc. that could materially adversely affect its results of operations or financial condition[114] Item 1A. Risk Factors Details various risks materially affecting business, financial condition, and growth, covering drug development, regulatory, operational, and financial aspects Risks Related to the Discovery, Development and Commercialization of Our Product Candidates Highlights risks in drug discovery, development, and commercialization, including clinical trial failures, competition, and manufacturing - The company is a clinical-stage biopharmaceutical company with no approved products and a limited operating history, making future success uncertain[116][117] - Prospects are heavily dependent on tarcocimab and KSI-501, with past Phase 3 trials for tarcocimab (GLEAM and GLIMMER) failing primary efficacy endpoints due to lower visual acuity gains and increased cataracts[118][120][125] - Despite previous setbacks, Kodiak plans an additional pivotal study with a commercial formulation of tarcocimab to support a single BLA for RVO, wet AMD, and NPDR, but success and FDA acceptance are not assured[124][125] - Drug development is inherently risky, with potential for clinical trial delays, failures to demonstrate efficacy/safety, undesirable side effects (e.g., cataracts with tarcocimab), and difficulties in patient enrollment[126][132][137][138][142][144] - The company faces significant competition from major pharmaceutical and biotechnology companies with greater resources and established products, including new therapies like Vabysmo and high-dose aflibercept[151][152][153][154] - Manufacturing product candidates is highly complex, susceptible to contamination and supply disruptions, and relies on single-source third-party suppliers for key raw materials, particularly for tarcocimab and KSI-501[156][158][160][161] - Commercialization success is uncertain due to the lack of sales/marketing infrastructure, potential for unfavorable pricing regulations, limited third-party reimbursement, and competition from biosimilar products[164][167][170][171][175] - The development timeline of tarcocimab may impact the full utilization of the Ursus manufacturing facility, potentially leading to excess capital expenditures[177] - Product liability lawsuits pose a significant risk, potentially leading to substantial liabilities, commercialization limitations, and reputational harm[179][180] Risks Related to Regulatory Approval and Other Legal Compliance Matters Addresses risks of lengthy regulatory approval, ongoing compliance, healthcare legislation, and potential misconduct - The regulatory approval process is lengthy, unpredictable, and may require additional studies or result in limited approvals, preventing product revenue generation[181][182][184] - Data from clinical trials conducted outside the U.S. may not be accepted by the FDA, requiring costly and time-consuming additional trials[185] - Obtaining approval in one jurisdiction does not guarantee approval in others, and foreign regulatory requirements can cause significant delays and costs[186][187] - Approved products remain subject to extensive ongoing regulatory scrutiny, including manufacturing, labeling, promotion, and post-marketing studies, with non-compliance leading to severe penalties[188][189][190][192] - Healthcare legislative measures, such as the ACA and the Inflation Reduction Act of 2022 (IRA), aim to reduce costs and may negatively impact drug pricing, reimbursement, and the company's profitability[194][197][199] - The company is exposed to risks of misconduct by employees or third parties, including non-compliance with regulatory standards, healthcare fraud and abuse laws, and insider trading, which could lead to significant fines and reputational harm[200][201][202][204] - Stringent and evolving data privacy and security obligations (e.g., GDPR, CCPA) pose risks of regulatory investigations, fines, litigation, and business disruptions if compliance fails[205][207][210] - Non-compliance with environmental, health, and safety laws, or accidental contamination from hazardous materials, could result in fines, penalties, and adverse effects on business success[211][212] - Business activities are subject to anti-bribery and anti-corruption laws like the FCPA, with violations potentially leading to fines, criminal sanctions, and business prohibitions[213][214] Risks Related to Our Reliance on Third Parties Discusses risks from dependence on third parties for clinical trials, manufacturing, raw materials, and collaborations - The company relies heavily on third parties (CROs, medical institutions, clinical investigators) for clinical trials and preclinical testing, and their unsatisfactory performance or termination of engagements could delay product development[215][217] - Exclusive reliance on third-party manufacturers for drug substance carries risks of non-compliance with cGMP, production difficulties, supply shortages, and increased costs, potentially delaying clinical trials or commercialization[219][221][223][224] - Sharing trade secrets with third parties increases the risk of misappropriation or unauthorized disclosure, harming the company's competitive position[225] - Dependence on third-party suppliers for raw materials exposes the company to risks of limited control over pricing, availability, and quality, potentially disrupting manufacturing[226] - Future collaborations with third parties for product development and commercialization may involve shared or limited control, potential disputes, and risks of collaborators not committing sufficient resources or pursuing competing products[227][228][229][231] Risks Related to Our Intellectual Property Covers risks concerning patent protection, intellectual property enforcement, infringement claims, and trade secret confidentiality - Inability to obtain and maintain broad patent protection for the ABC Platform and product candidates could allow competitors to commercialize similar technologies, adversely affecting the business[232][236][237] - The patent prosecution process is expensive and complex, with no assurance that patent applications will issue or provide sufficient protection, and issued patents may be challenged or invalidated[234][238][245] - Protecting intellectual property globally is expensive and challenging, as foreign laws may not offer the same level of protection as U.S. laws, potentially allowing competitors to use inventions in other jurisdictions[240][241] - Changes in U.S. patent laws (e.g., first-inventor-to-file system, post-grant proceedings) and Supreme Court rulings have increased uncertainty and costs for patent prosecution and enforcement[246][247][248][249] - Failure to obtain patent term extensions or data exclusivity for product candidates could allow competitors to enter the market sooner, harming the business[250] - Claims challenging inventorship or ownership of intellectual property, or the inability to protect trade secret confidentiality, could lead to loss of rights, litigation costs, and competitive harm[251][252][253][254][255] - Third-party claims of intellectual property infringement are a significant risk in the competitive biotechnology industry, potentially leading to litigation, injunctions, substantial damages, or delays in commercialization[257][259][260][264][265] - Inadequate protection of trademarks and trade names could hinder brand recognition and competitive effectiveness[269] Risks Related to Our Operations Examines operational risks: dependence on key personnel, managing growth, cybersecurity, business disruptions, and international operations - The company is highly dependent on key managerial, scientific, and medical personnel, and the inability to attract and retain qualified individuals could hinder business strategy implementation[271][272][274] - Managing organizational growth, including hiring new employees and expanding consultant networks, presents challenges that could divert management attention and impact development goals[275][277] - Engaging in acquisitions, in-licensing, or strategic partnerships carries risks such as increased expenses, dilution to stockholders, assumption of liabilities, and integration difficulties[278][279] - Compromised security measures or data breaches, including cyberattacks and ransomware, could result in significant fines, litigation, business interruptions, and reputational harm, especially with reliance on third-party service providers[281][282][284][287] - Business disruptions from natural disasters, power shortages, or health epidemics could seriously harm revenue and financial condition, increasing costs and delaying product development[289][290][291][298][301] - International operations are subject to economic, political, and regulatory risks, including currency fluctuations, differing regulatory requirements, trade barriers, and geopolitical events like Brexit and the Russia-Ukraine conflict[292][293][295][296][297] - The ability to use net operating loss carryforwards (NOLs) may be limited by ownership changes (Sections 382 and 383 of the Code) and changes in tax laws (e.g., Tax Act, CARES Act, IRA)[302][303] - Changes in tax laws or regulations, including new federal legislation like the IRA, could adversely affect business operations, cash flow, and financial performance[304] Risks Related to Our Business, Financial Condition and Capital Requirements Focuses on financial risks: economic conditions, net losses, funding uncertainty, and need for additional capital - Unfavorable U.S. and global economic conditions, including inflation, rising interest rates, bank failures, and geopolitical conflicts, could adversely affect the business, financial condition, and access to capital[305][307][308][309][310] - The company has incurred significant net losses since inception ($1,093.0 million accumulated deficit as of Sep 30, 2023) and anticipates continued and increasing losses, impacting stockholders' equity and working capital[311][312][314] - Generating revenue and achieving profitability is highly uncertain, dependent on successful clinical development, regulatory approvals, scalable manufacturing, market acceptance, and effective commercialization[315][316][318][319] - Failure to obtain additional financing when needed could force delays, scaling back, or discontinuation of research and development programs, severely impacting the business[320][321][322] - Due to limited resources, the company must prioritize product candidates, risking allocation to less profitable or successful opportunities and potentially foregoing valuable rights[323][324] - Foreign currency exchange rate fluctuations may impact financial position and results, despite hedging activities[325] Risks Related to Ownership of Our Common Stock Addresses risks for common stock owners: stock price volatility, dilution, corporate governance, and limitations on stockholder influence - The market price of common stock is highly volatile, influenced by clinical trial results, regulatory developments, competition, and broader economic conditions, potentially leading to substantial losses for investors[326][327][328] - Raising additional capital through equity offerings will dilute existing stockholders, while debt financing could impose restrictive covenants[329] - Significant ownership by principal stockholders could limit other stockholders' ability to influence key transactions, including a change of control[330] - Delaware law and provisions in the company's charter documents may discourage, delay, or prevent a change in control or management, potentially depressing the stock price[331][332][334] - Bylaw provisions designating Delaware courts and U.S. federal district courts as exclusive forums for disputes may limit stockholders' ability to choose a favorable judicial forum[335][336] - Negative research or cessation of coverage by securities analysts could cause the stock price to decline[337] - Future sales of a substantial number of common shares in the public market, or the perception of such sales, could depress the market price[338] - Failure to maintain an effective system of internal control over financial reporting could result in material misstatements and adversely affect business, financial position, and results of operations[339][342] Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities Reports no unregistered sales of equity securities, use of proceeds, or issuer purchases during the reporting period - No unregistered sales of equity securities, use of proceeds, or issuer purchases of equity securities occurred during the period[344] Item 3. Defaults Upon Senior Securities Confirms no defaults upon senior securities occurred during the reporting period - No defaults upon senior securities were reported[345] Item 4. Mine Safety Disclosures Confirms no mine safety disclosures are required for the reporting period - No mine safety disclosures were reported[346] Item 5. Other Information States that no other information is required to be reported in this section - No other information was reported[347] [