MacroGenics(MGNX) - 2023 Q3 - Quarterly Report

FORM 10-Q Filing Information Filing Details Details SEC filing information for MacroGenics, Inc.'s Form 10-Q, identifying it as a non-accelerated and smaller reporting company - The report is a Quarterly Report on Form 10-Q for the period ended September 30, 2023[2] - MacroGenics, Inc. is incorporated in Delaware and classified as a non-accelerated filer and a smaller reporting company[2][3] - As of November 3, 2023, 62,029,447 shares of common stock were outstanding[3] Table of Contents Forward-Looking Statements Nature and Risks of Forward-Looking Statements Forward-looking statements are based on current expectations, with actual results potentially differing due to clinical, regulatory, financing, and macroeconomic factors - Forward-looking statements are based on current expectations and assumptions, are inherently uncertain, and actual results may differ materially[8] - Key uncertainties include product candidate development, clinical trial outcomes, regulatory approvals, financing needs, and ability to raise additional capital[10] - The company does not undertake any obligation to update or revise forward-looking statements, except as required by law[9] PART I. FINANCIAL INFORMATION ITEM 1. Financial Statements Presents unaudited consolidated financial statements, including balance sheets, income, equity, cash flow, and detailed notes for specified periods Consolidated Balance Sheets | Metric | Sep 30, 2023 (in thousands) | Dec 31, 2022 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------- | :------- | | Total current assets | $291,319 | $222,180 | $69,139 | 31.1% | | Total assets | $339,972 | $280,468 | $59,504 | 21.2% | | Total current liabilities | $51,291 | $48,611 | $2,680 | 5.5% | | Total liabilities | $145,992 | $138,455 | $7,537 | 5.4% | | Total stockholders' equity | $193,980 | $142,013 | $51,967 | 36.6% | Consolidated Statements of Operations and Comprehensive Income (Loss) | Metric | 3 Months Ended Sep 30, 2023 (in thousands) | 3 Months Ended Sep 30, 2022 (in thousands) | Change (in thousands) | % Change | 9 Months Ended Sep 30, 2023 (in thousands) | 9 Months Ended Sep 30, 2022 (in thousands) | Change (in thousands) | % Change | | :------------------------------------ | :----------------------------------------- | :----------------------------------------- | :-------------------- | :------- | :----------------------------------------- | :----------------------------------------- | :-------------------- | :------- | | Total revenues | $10,397 | $41,734 | $(31,337) | (75.1%) | $48,029 | $78,842 | $(30,813) | (39.1%) | | Total costs and expenses | $45,899 | $66,689 | $(20,790) | (31.2%) | $166,919 | $212,242 | $(45,323) | (21.4%) | | Loss from operations | $(35,502) | $(24,955) | $(10,547) | (42.3%) | $(118,890) | $(133,401) | $14,511 | 10.9% | | Gain on royalty monetization arrangement | $50,000 | $0 | $50,000 | N/A | $150,930 | $0 | $150,930 | N/A | | Net income (loss) | $17,554 | $(24,813) | $42,367 | N/A | $37,014 | $(132,560) | $169,574 | N/A | | Basic EPS | $0.28 | $(0.40) | $0.68 | N/A | $0.60 | $(2.16) | $2.76 | N/A | | Diluted EPS | $0.28 | $(0.40) | $0.68 | N/A | $0.60 | $(2.16) | $2.76 | N/A | Consolidated Statements of Stockholders' Equity | Metric | Dec 31, 2022 (in thousands) | Sep 30, 2023 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------- | :------- | | Total Stockholders' Equity | $142,013 | $193,980 | $51,967 | 36.6% | | Accumulated Deficit | $(1,093,694) | $(1,056,680) | $37,014 | (3.4%) | | Additional Paid-In Capital | $1,235,095 | $1,250,074 | $14,979 | 1.2% | Consolidated Statements of Cash Flows | Metric | 9 Months Ended Sep 30, 2023 (in thousands) | 9 Months Ended Sep 30, 2022 (in thousands) | Change (in thousands) | % Change | | :------------------------------------ | :----------------------------------------- | :----------------------------------------- | :-------------------- | :------- | | Net cash used in operating activities | $(50,168) | $(116,279) | $66,111 | 56.9% | | Net cash provided by (used in) investing activities | $(118,906) | $76,503 | $(195,409) | (255.4%) | | Net cash provided by financing activities | $150,088 | $300 | $149,788 | 49929.3% | | Net change in cash and cash equivalents | $(18,986) | $(39,476) | $20,490 | 51.9% | | Cash and cash equivalents at end of period | $89,898 | $83,993 | $5,905 | 7.0% | Notes to Consolidated Financial Statements (unaudited) Provides detailed disclosures and explanations for figures in consolidated financial statements, covering operations, accounting policies, and financial calculations 1. Nature of Operations MacroGenics, a biopharmaceutical company with three FDA-approved cancer therapeutics, expects current resources to fund operations for at least twelve months - MacroGenics is a biopharmaceutical company focused on developing, manufacturing, and commercializing innovative antibody-based therapeutics for cancer[24] - Three products originating from the company's pipeline have received U.S. FDA approval: MARGENZA (margetuximab-cmkb), TZIELD (teplizumab-mzwv), and ZYNYZ™ (retifanlimab-dlwr)[24] - The company believes its current resources are sufficient to fund its operating plans for a minimum of twelve months from the 10-Q filing date, relying on revenue from collaborations, product sales, royalties, and available capital sources[27] 2. Summary of Significant Accounting Policies Details accounting policies for future royalty liability and interest expense, noting no material impact from new accounting pronouncements on financial statements - Net proceeds from sales of future royalty payments are accounted for as a liability, amortized using the effective interest method over the arrangement term, based on current estimates of future royalties[32] - The effective interest rate and related non-cash interest expense are adjusted prospectively if estimates of future royalty payments or their timing materially change[32] - No new accounting pronouncements issued or effective since the 2022 Annual Report on Form 10-K had, or are expected to have, a material impact on the company's consolidated financial position, results of operations, or cash flows[34] 3. Fair Value of Financial Instruments Financial instruments are measured at fair value using a three-level hierarchy, with no transfers between levels occurring during the reported periods - Fair value measurements are classified into Level 1 (unadjusted quoted prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (unobservable inputs)[35][37] | Asset Type | Total (in thousands) | Level 1 (in thousands) | Level 2 (in thousands) | | :-------------------------- | :------------------- | :--------------------- | :--------------------- | | Money market funds | $51,137 | $51,137 | $— | | U.S. Treasury securities | $26,038 | $26,038 | $— | | Government-sponsored enterprises | $83,695 | $— | $83,695 | | Corporate debt securities | $56,801 | $— | $56,801 | | Total | $217,671 | $77,175 | $140,496 | | Asset Type | Total (in thousands) | Level 1 (in thousands) | Level 2 (in thousands) | | :-------------------------- | :------------------- | :--------------------- | :--------------------- | | Money market funds | $41,564 | $41,564 | $— | | Government-sponsored enterprises | $32,811 | $— | $32,811 | | Corporate debt securities | $17,626 | $— | $17,626 | | Total | $92,001 | $41,564 | $50,437 | 4. Marketable Securities Summarizes marketable debt securities, all available-for-sale with maturities under one year, noting insignificant unrealized losses primarily due to interest rate changes | Security Type | Amortized Cost (in thousands) | Gross Unrealized Gains (in thousands) | Gross Unrealized Losses (in thousands) | Fair Value (in thousands) | | :-------------------------- | :---------------------------- | :------------------------------------ | :------------------------------------- | :------------------------ | | U.S. Treasury securities | $26,050 | $— | $(12) | $26,038 | | Government-sponsored enterprises | $83,671 | $40 | $(16) | $83,695 | | Corporate debt securities | $56,847 | $— | $(46) | $56,801 | | Total | $166,568 | $40 | $(74) | $166,534 | | Security Type | Amortized Cost (in thousands) | Gross Unrealized Gains (in thousands) | Gross Unrealized Losses (in thousands) | Fair Value (in thousands) | | :-------------------------- | :---------------------------- | :------------------------------------ | :------------------------------------- | :------------------------ | | Government-sponsored enterprises | $32,812 | $5 | $(7) | $32,810 | | Corporate debt securities | $12,655 | $1 | $(4) | $12,652 | | Total | $45,467 | $6 | $(11) | $45,462 | - All marketable debt securities had contractual maturities of less than one year. Unrealized losses were not significant and primarily due to changes in interest rates, not increased credit risks[38] 5. Inventory, Net Inventory, exclusively for MARGENZA manufacturing, is capitalized after FDA approval and reported net of a $4.9 million reserve for unsaleable inventory - All of the company's inventory relates to the manufacturing of MARGENZA[39] | Category | September 30, 2023 (in thousands) | December 31, 2022 (in thousands) | | :--------------- | :-------------------------------- | :--------------------------------- | | Work in process | $— | $409 | | Finished goods | $1,066 | $1,042 | | Total inventory, net | $1,066 | $1,451 | - The inventory balance is net of a $4.9 million reserve for unsaleable inventory[39] 6. Royalty Monetization Arrangement MacroGenics sold TZIELD royalty interest for $100.0 million, later recognizing a $100.9 million gain from a Tripartite Agreement and a $50.0 million milestone - In March 2023, the company sold its single-digit royalty interest on global net sales of TZIELD to DRI Healthcare Acquisitions LP for $100.0 million[40][41] - A Tripartite Agreement in April 2023 eliminated the company's obligation to deliver royalty payments to DRI, resulting in a $100.9 million gain on royalty monetization[43] - An additional $50.0 million milestone was achieved in July 2023, and the Royalty Purchase Agreement was terminated in September 2023, with the remaining $50.0 million Sales Milestone Payment incorporated into the Provention APA[44] 7. Stockholders' Equity Terminated previous ATM offering, initiated a new one for up to $100.0 million, selling 95,000 shares for $0.6 million net proceeds in 9M 2023 - The company terminated its previous ATM Offering and entered into a new sales agreement in March 2023 to sell up to $100.0 million of common stock through an ATM Offering[47] - During the nine months ended September 30, 2023, 95,000 shares of common stock were sold at a weighted average price of $6.60, resulting in approximately $0.6 million in net proceeds[47] 8. Revenue Details revenue recognition from collaborative agreements, manufacturing services, and government contracts, outlining terms and revenue for major agreements Collaborative and Other Agreements Engages in collaborations for product development, generating revenue from upfront payments, milestones, and royalties, including agreements with Incyte, Gilead, Zai Lab, and Provention - Incyte License Agreement: FDA approved ZYNYZ (retifanlimab-dlwr) in March 2023, leading to a $15.0 million milestone payment recognized in 9M 2023. The company is eligible for up to $320.0 million in development/regulatory milestones and $330.0 million in commercial milestones, plus tiered royalties of 15% to 24%[48][49][52] - Gilead Agreement: Received a $60.0 million upfront payment in October 2022. Gilead nominated the first of two research programs in September 2023, with a $15.7 million nomination fee received in October 2023. The company is eligible for up to $1.7 billion in target nomination, option fees, and milestones[55][62] - Provention APA: Received all four $15.0 million milestone payments (total $60.0 million) for TZIELD's first approval prior to June 30, 2023. Recognized $5.5 million related to other consideration and $0.3 million in royalty revenue in 9M 2023. The remaining $50.0 million Sales Milestone Payment from the Royalty Purchase Agreement was incorporated into the Provention APA in September 2023[76][79][80] Manufacturing Services Agreement (Incyte) Has a Manufacturing and Clinical Supply Agreement with Incyte for bulk drug substance, with revenue recognized over time on a straight-line basis - The company has an agreement with Incyte to provide manufacturing services for bulk drug substance, including a $10.0 million upfront payment and annual fixed payments totaling $19.5 million (after amendment)[86][87] | Period | Revenue Recognized (in millions) | | :-------------------------- | :----------------------------- | | 3 Months Ended Sep 30, 2023 | $4.5 | | 3 Months Ended Sep 30, 2022 | $1.1 | | 9 Months Ended Sep 30, 2023 | $9.6 | | 9 Months Ended Sep 30, 2022 | $5.1 | - As of September 30, 2023, $7.0 million in revenue was deferred under this agreement[88] Government Agreement (NIAID Contract) Holds a NIAID contract to develop DART molecules for HIV, with a total funded value of $25.1 million and a performance period ending September 2024 - The NIAID Contract has a total funded value of $25.1 million as of September 30, 2023, with a performance period ending in September 2024[90] | Period | Revenue Recognized (in millions) | | :-------------------------- | :----------------------------- | | 3 Months Ended Sep 30, 2023 | $0.3 | | 3 Months Ended Sep 30, 2022 | $0.5 | | 9 Months Ended Sep 30, 2023 | $1.1 | | 9 Months Ended Sep 30, 2022 | $1.5 | - This contract is outside the scope of ASC 606, as NIAID does not receive goods or services from the company under this contract[89] 9. Stock-Based Compensation Details stock-based compensation plans, including ESPP and Employee Stock Incentive Plans, providing expense figures and activity summaries for options and RSUs | Category | 3 Months Ended Sep 30, 2023 (in thousands) | 3 Months Ended Sep 30, 2022 (in thousands) | 9 Months Ended Sep 30, 2023 (in thousands) | 9 Months Ended Sep 30, 2022 (in thousands) | | :-------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | | Research and development | $2,335 | $2,571 | $6,996 | $7,621 | | Selling, general and administrative | $2,455 | $2,552 | $7,018 | $8,076 | | Total stock-based compensation expense | $4,790 | $5,123 | $14,014 | $15,697 | - The 2023 Equity Incentive Plan was approved in May 2023, allowing for the issuance of up to 4,850,000 shares[95] | Metric | Shares | Weighted-Average Exercise Price | | :-------------------------- | :----------- | :------------------------------ | | Outstanding, Dec 31, 2022 | 10,098,929 | $18.58 | | Granted | 3,267,727 | $4.91 | | Exercised | (26,146) | $3.34 | | Forfeited | (293,161) | $9.78 | | Expired | (367,054) | $19.77 | | Outstanding, Sep 30, 2023 | 12,680,295 | $15.26 | - Total unrecognized compensation expense related to unvested stock options was approximately $22.6 million as of September 30, 2023, expected to be recognized over approximately 1.3 years[98] 10. In-licensing arrangement Entered a license agreement with Synaffix B.V. for ADC development, amended to seven targets, with potential milestone payments up to $2.8 billion and low-single digit royalties - The company entered into a non-exclusive license agreement with Synaffix B.V. in January 2022 to develop, manufacture, and commercialize up to three antibody-drug conjugate targets, which was amended in March 2023 to add four additional targets, totaling seven[100] - Assuming successful development and commercialization of all seven targets, the company could be obligated to pay up to $2.8 billion for development, regulatory, and sales milestones, plus tiered royalties in the low-single digit percentages on net sales[100] - The company incurred $1.7 million and $1.0 million in expense under this agreement during the nine months ended September 30, 2023, and 2022, respectively, recorded as research and development expense[101] 11. Net Income (Loss) Per Share Details basic and diluted net income (loss) per share calculation, noting dilutive effects from stock options and RSUs in 2023 and anti-dilutive effects in prior net loss periods | Metric | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income (loss) | $17,554 | $(24,813) | $37,014 | $(132,560) | | Weighted average shares outstanding, basic | 61,980,680 | 61,459,831 | 61,890,824 | 61,390,143 | | Effect of dilutive securities | 263,922 | — | 199,519 | — | | Weighted average shares outstanding, diluted | 62,244,602 | 61,459,831 | 62,090,343 | 61,390,143 | | Net income (loss) per share, basic | $0.28 | $(0.40) | $0.60 | $(2.16) | | Net income (loss) per share, diluted | $0.28 | $(0.40) | $0.60 | $(2.16) | - For the three and nine months ended September 30, 2023, stock options and RSUs were dilutive. For the same periods in 2022, they were anti-dilutive due to net losses[102][103] ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Provides management's perspective on financial condition and results, covering business overview, macroeconomic impacts, collaborations, accounting estimates, and liquidity Overview MacroGenics, a biopharmaceutical company with three FDA-approved cancer therapeutics, has an accumulated deficit of $1.1 billion and expects current resources to fund operations into 2026 - MacroGenics is a biopharmaceutical company focused on developing, manufacturing, and commercializing innovative antibody-based therapeutics for the treatment of cancer[106] - The company had an accumulated deficit of $1.1 billion through September 30, 2023, which is expected to increase due to ongoing research and development expenses[107] - Cash, cash equivalents, and marketable securities as of September 30, 2023, combined with anticipated collaboration payments, product revenue, contract manufacturing revenue, and royalties, are expected to fund operations into 2026[106] Macroeconomic Conditions Global macroeconomic volatility from financial issues, inflation, and geopolitical upheaval could adversely affect the company's business, operations, or financial condition - The global economy, credit markets, and financial markets are experiencing significant volatility due to adverse events involving financial institutions, inflation, rising interest rates, and geopolitical upheaval[108] - These macroeconomic conditions could create supply chain disruptions, inventory disruptions, and fluctuations in economic growth, potentially adversely affecting the company's business, results of operations, or financial condition[108] Collaborations Balances internal product development with strategic collaborations providing non-dilutive funding, milestones, and royalties, including agreements with Incyte, Gilead, Zai Lab, and Provention - Incyte: Received $150.0 million upfront and $115.0 million in milestones through September 30, 2023, including $15.0 million for ZYNYZ FDA approval. Eligible for additional $320.0 million in development/regulatory milestones and $330.0 million in commercial milestones, plus tiered royalties (15-24%)[111] - Gilead: Received a $60.0 million upfront payment. Eligible for up to $1.7 billion in target nomination, option fees, and milestones. Gilead nominated the first of two research programs in September 2023, with a $15.7 million nomination fee received in October 2023[111] - Provention: Received $60.0 million in milestone payments for TZIELD FDA approval (split into four $15 million payments, all received by June 30, 2023). Sold single-digit royalty interest in TZIELD for $100.0 million in March 2023, retaining other economic interests and a $50.0 million milestone received in September 2023[112] Critical Accounting Estimates Critical accounting estimates include future royalty liability and interest expense, amortized using the effective interest method based on periodically reassessed royalty payment estimates - The liability related to future royalties is presented net of unamortized issuance costs and amortized using the effective interest rate method over the life of the arrangement[115] - The effective interest rate and related non-cash interest expense are adjusted prospectively if estimates of future royalty payments or their estimated timing materially differ from previous estimates[115] Results of Operations Compares revenues, costs, and expenses for the three and nine months ended September 30, 2023, versus 2022, highlighting key drivers of financial performance changes Revenue Total revenue significantly decreased for both 3M and 9M ended September 30, 2023, mainly due to lower collaborative agreements, partially offset by manufacturing and product sales | Period | 2023 (in millions) | 2022 (in millions) | Change (in millions) | % Change | | :-------------------------- | :----------------- | :----------------- | :------------------- | :------- | | 3 Months Ended Sep 30 | $10.4 | $41.7 | $(31.3) | (76%) | | 9 Months Ended Sep 30 | $48.0 | $78.8 | $(30.8) | (39%) | - The decrease in revenue for the three months was primarily due to a $30.0 million decrease in Incyte License Agreement milestone payments, a $3.8 million decrease from the I-Mab License Agreement, and a $1.8 million decrease from the 2021 Zai Lab Agreement, partially offset by a $3.3 million increase in Incyte Manufacturing revenue[118] - The decrease in revenue for the nine months was primarily due to decreases from the 2021 Zai Lab Agreement ($16.8M), Incyte License Agreement ($15.0M), 2018 Zai Lab Agreement ($4.9M), I-Mab License Agreement ($4.5M), and I-Mab Clinical Supply Agreement ($1.4M). These were partially offset by increases from the Provention APA ($5.5M), Incyte Manufacturing ($4.5M), Gilead Agreement ($1.1M), and Incyte Clinical Supply Agreement ($1.1M)[119] Cost of Product Sales Cost of product sales includes product royalties and fill finish costs, with gross margin favorably impacted by selling drug product previously expensed as R&D - Cost of product sales primarily consists of product royalties and fill finish costs[120] - Gross margin has been favorably impacted by the sale of drug product that was previously charged to research and development expense prior to FDA approval of MARGENZA[122] Cost of Manufacturing Services Costs of manufacturing services for Incyte bulk drug substance are expected to fluctuate based on the agreed-upon manufacturing schedule - Cost of manufacturing services consists of costs to produce Incyte bulk drug substance under the Incyte Manufacturing and Clinical Supply Agreement[123] - These costs are expected to vary from period to period based on the agreed-upon manufacturing schedule[123] Research and Development Expense Total R&D expense decreased by $18.1 million (38%) for 3M and $42.2 million (26%) for 9M ended September 30, 2023, primarily due to reduced program costs | Period | 2023 (in millions) | 2022 (in millions) | Change (in millions) | % Change | | :-------------------------- | :----------------- | :----------------- | :------------------- | :------- | | 3 Months Ended Sep 30 | $30.1 | $48.2 | $(18.1) | (38%) | | 9 Months Ended Sep 30 | $119.2 | $161.4 | $(42.2) | (26%) | - The decrease in R&D expense for the three months was primarily due to decreased development and clinical trial costs related to margetuximab, enoblituzumab, vobramitamab duocarmazine, flotetuzumab, tebotelimab, and other programs[125] - The decrease for the nine months was primarily due to decreased costs for enoblituzumab, margetuximab, vobra duo manufacturing, flotetuzumab, next-generation T-cell engagers, tebotelimab, and other programs, partially offset by increased costs for preclinical ADC product candidates and lorigerlimab[126] Selling, General and Administrative Expense Selling, general and administrative expenses decreased by $3.0 million for 3M and $5.6 million for 9M ended September 30, 2023, mainly due to reduced MARGENZA selling expenses - Selling, general and administrative expenses decreased by $3.0 million for the three months ended September 30, 2023, compared to the prior year[127] - Selling, general and administrative expenses decreased by $5.6 million for the nine months ended September 30, 2023, compared to the prior year[127] - The primary reason for the decrease was reduced MARGENZA-related selling expenses[127] Gain on Royalty Monetization Arrangement Recognized a $100.9 million gain in April 2023 from the Tripartite Agreement and an additional $50.0 million gain in July 2023 from a milestone achievement - A $100.9 million gain on royalty monetization arrangement was recognized in April 2023 due to the Tripartite Agreement, which modified the liability related to future royalties[128] - An additional $50.0 million gain was recognized in July 2023 upon Sanofi reporting achievement of a primary endpoint milestone event[128] Liquidity and Capital Resources Cash and cash equivalents decreased by $19.0 million in 9M 2023, with operating and investing activities using cash, while financing provided $150.1 million | Activity | 9 Months Ended Sep 30, 2023 (in millions) | 9 Months Ended Sep 30, 2022 (in millions) | | :-------------------------- | :---------------------------------------- | :---------------------------------------- | | Operating activities | $(50.2) | $(116.3) | | Investing activities | $(118.9) | $76.5 | | Financing activities | $150.1 | $0.3 | | Net change in cash and cash equivalents | $(19.0) | $(39.5) | - Net cash used in operating activities decreased to $50.2 million for the nine months ended September 30, 2023, benefiting from $15.0 million in milestones from Incyte[131] - Net cash provided by financing activities significantly increased to $150.1 million for the nine months ended September 30, 2023, primarily due to $149.7 million in net cash proceeds from the Royalty Purchase Agreement with DRI[133] - The company anticipates that its cash, cash equivalents, and marketable securities as of September 30, 2023, combined with anticipated collaboration payments, product revenue, contract manufacturing revenue, and royalties, should enable it to fund operations into 2026[135] ITEM 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, MacroGenics is not required to provide market risk disclosures in this Form 10-Q - The company is not required to provide quantitative and qualitative disclosures about market risk in this Form 10-Q because it is considered a smaller reporting company under SEC rules[137] ITEM 4. Controls and Procedures Management concluded disclosure controls and procedures were effective as of September 30, 2023, with no material changes in internal control over financial reporting - Management concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level as of September 30, 2023[138] - There were no material changes in internal control over financial reporting during the three months ended September 30, 2023[139] PART II. OTHER INFORMATION Item 1. Legal Proceedings Involved in various legal and regulatory proceedings, the company does not anticipate a material adverse effect on its business or financial condition - The company is involved in various legal or regulatory proceedings, claims, or class actions related to alleged patent infringements, other intellectual property rights, and other matters incidental to its business[140] - The company does not currently expect such legal proceedings to have a material adverse effect on its business, financial condition, or results of operations[140] Item 1A. Risk Factors Business is subject to various risks that could adversely affect financial condition and stock price, with no material changes to 2022 Form 10-K risk factors - The company's business is subject to risks and events that could adversely affect its financial condition, results of operations, and trading price of its securities[141] - There have been no material changes in the risk factors described in "Item 1A. Risk Factors" of the Annual Report on Form 10-K for the year ended December 31, 2022[141] Item 6. Exhibits Lists exhibits filed with Form 10-Q, including an amendment to the Asset Purchase Agreement, Rule 13a-14(a) and Section 1350 certifications, and XBRL data - Exhibits include Amendment No. 2 to the Asset Purchase Agreement, Rule 13a-14(a) Certifications, Section 1350 Certifications, and XBRL Instance, Schema, Calculation, Definition, Labels, and Presentation Linkbase Documents[142] Signatures Contains required signatures from the registrant's authorized officers, certifying the filing of the report - The report is signed by Scott Koenig, M.D., Ph.D., President and Chief Executive Officer, and James Karrels, Senior Vice President and Chief Financial Officer, on November 6, 2023[144][145]