Poseida Therapeutics(PSTX) - 2023 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) The company presents its unaudited condensed consolidated financial statements and accompanying notes for the period Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2023 | December 31, 2022 | | :--------------------------------- | :-------------- | :---------------- | | Cash and cash equivalents | $49,911 | $81,378 | | Short-term investments | $164,695 | $201,115 | | Total current assets | $230,195 | $298,563 | | Total assets | $281,215 | $351,837 | | Total current liabilities | $49,888 | $53,885 | | Total liabilities | $145,914 | $164,242 | | Total stockholders' equity | $135,301 | $187,595 | | Accumulated deficit | $(537,164) | $(470,861) | Condensed Consolidated Statements of Operations and Comprehensive Loss Three Months Ended June 30 (in thousands) | Metric | 2023 | 2022 | | :--------------------------------- | :--- | :--- | | Collaboration revenue | $20,013 | $2,700 | | Research and development | $39,192 | $35,008 | | General and administrative | $8,676 | $9,237 | | Loss from operations | $(27,855) | $(41,545) | | Net loss | $(27,456) | $(43,036) | | Net loss per share, basic and diluted | $(0.32) | $(0.69) | Six Months Ended June 30 (in thousands) | Metric | 2023 | 2022 | | :--------------------------------- | :--- | :--- | | Collaboration revenue | $30,356 | $4,135 | | Research and development | $77,244 | $83,858 | | General and administrative | $20,483 | $18,782 | | Loss from operations | $(67,371) | $(98,505) | | Net loss | $(66,303) | $(101,093) | | Net loss per share, basic and diluted | $(0.77) | $(1.61) | Condensed Consolidated Statements of Changes in Stockholders' Equity Changes in Stockholders' Equity (Six Months Ended June 30, 2023, in thousands) | Item | Amount | | :-------------------------------------------------- | :----- | | Balance at January 1, 2023 | $187,595 | | Issuance of common stock under employee stock compensation plans | $258 | | Issuance of common stock through ATM offering, net of issuance cost | $928 | | Stock-based compensation expense | $7,480 | | Unrealized gain on available-for-sale investments | $151 | | Net loss (Q1 2023) | $(38,847) | | Issuance of common stock under employee stock compensation plans (Q2 2023) | $0 | | Stock-based compensation expense (Q2 2023) | $5,474 | | Unrealized loss on available-for-sale investments (Q2 2023) | $(282) | | Net loss (Q2 2023) | $(27,456) | | Balance at June 30, 2023 | $135,301 | Condensed Consolidated Statements of Cash Flows Six Months Ended June 30 (in thousands) | Metric | 2023 | 2022 | | :--------------------------------- | :--- | :--- | | Net cash used in operating activities | $(71,311) | $(91,053) | | Net cash provided by (used in) investing activities | $38,658 | $(81,572) | | Net cash provided by financing activities | $1,186 | $29,263 | | Net decrease in cash and cash equivalents | $(31,467) | $(143,362) | | Cash and cash equivalents at end of period | $49,911 | $62,963 | Notes to Condensed Consolidated Financial Statements Note 1. Nature of Business and Basis of Presentation - Poseida Therapeutics, Inc is a clinical-stage cell and gene therapy company focused on advancing treatments for cancer and rare diseases using proprietary platforms including non-viral piggyBac DNA Delivery System, Cas-CLOVER Site-specific Gene Editing System, and nanoparticle/AAV-based gene delivery technologies[27] - The company incurred a net loss of $66.3 million and negative cash flows from operations of $71.3 million for the six months ended June 30, 2023, with an accumulated deficit of $537.2 million as of June 30, 2023[29] - Cash, cash equivalents, and short-term investments totaling $214.6 million as of June 30, 2023, are expected to fund operations for at least the next twelve months, but additional long-term financing will be required[30] Note 2. Summary of Significant Accounting Policies - Revenue is primarily generated from collaboration and license agreements and recognized following a five-step model under ASC 606 when customers obtain control of promised goods or services[42][43][44] - The company accounts for leases in accordance with ASC 842, recognizing operating lease right-of-use assets and liabilities, discounted using the incremental borrowing rate[37][38][39] - As an emerging growth company, Poseida has elected to use the extended transition period for complying with new or revised accounting standards under the JOBS Act[48] Note 3. Composition of Certain Balance Sheet Components Property and Equipment, Net (in thousands) | Category | June 30, 2023 | December 31, 2022 | | :-------------------------- | :-------------- | :---------------- | | Laboratory equipment | $20,433 | $18,551 | | Leasehold improvements | $14,103 | $14,006 | | Computer equipment and software | $1,577 | $1,504 | | Furniture, fixtures and other | $1,093 | $1,001 | | Total property and equipment | $37,206 | $35,062 | | Less: Accumulated depreciation and amortization | $(16,195) | $(13,476) | | Total property and equipment, net | $21,011 | $21,586 | Accrued Expenses and Other Liabilities (in thousands) | Category | June 30, 2023 | December 31, 2022 | | :-------------------------- | :-------------- | :---------------- | | Contract research services | $10,622 | $10,908 | | Payroll and related expense | $6,858 | $11,271 | | Other | $4,215 | $3,889 | | Total accrued expenses and other liabilities | $21,695 | $26,068 | Note 4. Financial Instruments Available-for-Sale Securities (in thousands) | Category | Amortized Cost/Cost (June 30, 2023) | Fair Value (June 30, 2023) | Amortized Cost/Cost (Dec 31, 2022) | Fair Value (Dec 31, 2022) | | :--------------------------------------- | :-------------------------------- | :------------------------- | :-------------------------------- | :------------------------- | | Money market fund | $39,483 | $39,483 | $57,799 | $57,799 | | U.S. government agency securities and treasuries | $165,088 | $164,808 | $206,520 | $206,371 | | Total | $204,571 | $204,291 | $264,319 | $264,170 | - No available-for-sale debt securities held as of June 30, 2023, and December 31, 2022, had remaining maturities greater than one year and no material unrealized loss positions or impairments were recognized[54][55] Note 5. Fair Value Measurement Fair Value Hierarchy (in thousands) | Category | Level 1 (June 30, 2023) | Level 2 (June 30, 2023) | Level 3 (June 30, 2023) | Level 1 (Dec 31, 2022) | Level 2 (Dec 31, 2022) | Level 3 (Dec 31, 2022) | | :--------------------------------------- | :---------------------- | :---------------------- | :---------------------- | :--------------------- | :--------------------- | :--------------------- | | Money market funds and U.S. government agency treasuries | $39,596 | $0 | $0 | $63,055 | $0 | $0 | | U.S. government agency securities and treasuries | $164,695 | $0 | $0 | $201,115 | $0 | $0 | | Total | $204,291 | $0 | $0 | $264,170 | $0 | $0 | - Money market funds and U.S. treasury securities are classified as Level 1 assets, valued based on quoted market prices in active markets[57] Note 6. Collaboration and License Agreements - The Roche Collaboration Agreement became effective in September 2022, granting Roche exclusive worldwide licenses for certain allogeneic CAR-T cell therapy programs (Tier 1 and Tier 2) and collaboration programs[59][67] - Under the Roche agreement, Poseida received an upfront payment of $110.0 million and is eligible for up to $6.0 billion in aggregate payments, including research funding, fees, and development, regulatory, and net sales milestones[64][68] - The Takeda Collaboration Agreement was terminated effective July 30, 2023, resulting in the recognition of $8.9 million of previously deferred revenue during the six months ended June 30, 2023, and Poseida regaining full rights to previously licensed programs[72][75] Deferred Revenue Reconciliation (in thousands) | Item | Roche Collaboration Agreement | Takeda Collaboration Agreement | Total | | :--------------------------------- | :---------------------------- | :----------------------------- | :------ | | Balance as of December 31, 2022 | $31,749 | $9,307 | $41,056 | | Amounts received/invoiced | $13,584 | $4,410 | $17,994 | | Revenue recognized | $(16,639) | $(13,717) | $(30,356) | | Balance as of June 30, 2023 | $28,694 | $0 | $28,694 | Note 7. California Institute of Regenerative Medicine Award - Poseida received a $4.0 million award from the California Institute of Regenerative Medicine (CIRM) in September 2018 to support preclinical studies for its P-PSMA-101 program[78] - The award is presented as a deferred CIRM grant liability, with the company having the option to convert it to a loan or share potential future revenues, with repayment amounts varying based on the election[77][78] Note 8. Term Debt - Poseida has $60.0 million outstanding under a 2022 Loan Agreement with Oxford Finance LLC, maturing on February 1, 2027[80][82] - The interest rate is variable, transitioning from 30-day USD LIBOR + 7.83% (13.02% as of June 30, 2023) to a SOFR-based rate effective July 1, 2023[82][173] - The loan is secured by a first priority security interest in substantially all of the company's current and future assets, excluding intellectual property, and Poseida was in compliance with all covenants as of June 30, 2023[84] Note 9. Stockholders' Equity - As of June 30, 2023, Poseida had 86,878,341 shares of common stock outstanding, with 250,000,000 common shares and 10,000,000 preferred shares authorized[18][85] - The company has warrants outstanding to purchase 121,122 shares of common stock as of June 30, 2023[86][108] - Capital was raised through a public offering in August 2022 ($75.3 million net proceeds) and an 'at the market' offering program, which generated approximately $0.9 million net proceeds from 119,000 shares during the six months ended June 30, 2023[87][88] Note 10. Stock-Based Compensation Stock Option Activity (Six Months Ended June 30, 2023) | Metric | Value | | :--------------------------------------- | :------------ | | Balance at January 1, 2023 | 11,861,881 shares | | Granted | 3,980,949 shares | | Exercised | (29,908) shares | | Forfeited/Cancelled | (208,640) shares | | Balance at June 30, 2023 | 15,604,282 shares | | Weighted-average exercise price (June 30, 2023) | $6.90 | | Unrecognized compensation cost | $32.9 million | | Weighted-average recognition period | 2.7 years | Restricted Stock Unit (RSU) Activity (Six Months Ended June 30, 2023) | Metric | Value | | :--------------------------------------- | :------------ | | Balance at January 1, 2023 | 2,614,402 shares | | Granted | 2,894,592 shares | | Vested | (613,896) shares | | Forfeited/Cancelled | (85,846) shares | | Balance at June 30, 2023 | 4,809,252 shares | | Weighted average grant date fair value (June 30, 2023) | $4.36 | | Unrecognized compensation cost | $18.6 million | | Weighted-average recognition period | 3.3 years | Total Stock-Based Compensation Expense (in thousands) | Category | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Research and development | $3,412 | $2,646 | $6,161 | $5,074 | | General and administrative | $2,062 | $2,588 | $6,793 | $5,027 | | Total | $5,474 | $5,234 | $12,954 | $10,101 | Note 11. Commitments and Contingencies - Poseida has operating leases for manufacturing, laboratory, and office space in San Diego, with a total lease liability balance of $28.679 million as of June 30, 2023, and a weighted-average remaining lease term of 6.1 years[99][101][102] - The company provides indemnification to various parties, including directors and executive officers, with maximum potential amounts often unlimited, but has not incurred any material costs to date[103] - There are no currently pending lawsuits, threats of litigation, or asserted claims that could have a material adverse effect on the company's results of operations or financial condition[104] Note 12. Net Loss Per Share - Basic and diluted net loss per share are the same for all periods presented due to the anti-dilutive effect of potential common shares, including outstanding stock options, RSUs, warrants, and ESPP shares[106][108] Anti-Dilutive Securities Excluded from EPS (Six Months Ended June 30) | Category | 2023 | 2022 | | :--------------------------------------- | :--------- | :--------- | | Outstanding stock options and RSUs | 20,413,534 | 14,853,494 | | Warrants to purchase common stock | 121,122 | 121,122 | | ESPP Shares | 190,132 | 41,137 | | Total potential common shares excluded | 20,724,788 | 15,015,753 | Note 13. Subsequent Event - On August 4, 2023, Poseida entered into a private placement with Astellas US, LLC, selling 8,333,333 shares of common stock at $3.00 per share, generating approximately $25.0 million in gross proceeds[109] - Astellas also received certain strategic rights, including an exclusive negotiation and first refusal right to license P-MUC1C-ALLO1, for which Astellas paid a one-time fee of $25.0 million[111][112] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial results, operational trends, liquidity, and the impact of collaboration agreements Overview - Poseida Therapeutics is a clinical-stage cell and gene therapy company focused on cancer and rare diseases, leveraging proprietary non-viral piggyBac DNA Delivery System, Cas-CLOVER Site-specific Gene Editing System, and nanoparticle/AAV-based gene delivery technologies[115][116] - The company's pipeline includes allogeneic CAR-T product candidates like P-MUC1C-ALLO1 (solid tumors), P-BCMA-ALLO1 (multiple myeloma, partnered with Roche), and P-CD19CD20-ALLO1 (B-cell hematological, partnered with Roche), as well as gene therapy candidates such as P-OTC-101 (OTCD), P-FVIII-101 (Hemophilia A), and P-PAH-101 (PKU)[119][121][122] - Expenses and losses are expected to increase substantially as product candidates advance through development and seek regulatory approvals, with some offset from collaboration reimbursements[121] Collaboration Agreements - The Roche Collaboration Agreement, effective September 2022, includes an upfront payment of $110.0 million and potential aggregate payments up to $6.0 billion for various CAR-T cell therapy programs, with Roche responsible for a majority of future development costs for Tier 1 programs (P-BCMA-ALLO1, P-CD19CD20-ALLO1)[124][125][127] - The Takeda Collaboration Agreement was terminated effective July 30, 2023, leading to the recognition of $8.9 million in previously deferred revenue during the six months ended June 30, 2023, and Poseida regaining full rights to programs like P-FVIII-101 and P-PAH-101[132][134] In-License Agreements - Poseida holds in-licenses for key technologies and product candidates, including TeneoBio agreements for heavy-chain-only binders used in P-BCMA-ALLO1, P-CD19CD20-ALLO1, and P-PSMA-ALLO1[136] - The company also licenses a MUC1-C targeting antibody from Xyone Therapeutics for P-MUC1C-ALLO1 and intellectual property for its Cas-CLOVER gene editing technology from HMGU, used in multiple allogeneic programs[136][137] CIRM Grant Funding - Poseida received a $4.0 million award from the California Institute of Regenerative Medicine (CIRM) in 2018 to support preclinical studies for its P-PSMA-101 program, with proceeds recorded as a liability[138] Components of Our Results of Operations - Collaboration revenue is recognized from collaboration and license agreements, while research and development expenses include both external costs (preclinical/clinical development, manufacturing, licensing) and internal costs (personnel, facilities)[139][140][141] - General and administrative expenses cover executive, finance, and administrative personnel, facility costs, and professional fees, while interest expense relates to term debt, and other income (expense) primarily consists of interest income from investments[146][147][148] - Research and development costs are expensed as incurred, with external costs tracked by program stage and internal costs deployed across multiple programs[142][143] Results of Operations Comparison of the Three Months Ended June 30, 2023 and 2022 - Collaboration revenue increased by $17.3 million to $20.0 million for the three months ended June 30, 2023, primarily due to revenue recognized from the Roche Collaboration Agreement ($8.9 million) and previously deferred revenue from the Takeda Collaboration Agreement termination ($8.9 million)[150] - Research and development expenses increased by $4.2 million to $39.2 million, driven by higher personnel expenses ($3.4 million) and preclinical stage programs ($3.1 million), partially offset by a $2.8 million decrease in clinical stage programs due to the wind-down of autologous programs[151] - Net loss decreased by $15.6 million to $(27.5) million, reflecting increased revenue and higher other income, net, primarily from interest income[149][154] Comparison of the Six Months Ended June 30, 2023 and 2022 - Collaboration revenue increased by $26.2 million to $30.4 million for the six months ended June 30, 2023, primarily due to the Roche Collaboration Agreement ($16.6 million) and the Takeda Collaboration Agreement termination ($8.9 million)[158] - Research and development expenses decreased by $6.6 million to $77.2 million, mainly due to a $21.4 million decrease in clinical stage programs (wind-down of autologous programs), partially offset by increases in preclinical programs ($7.1 million) and personnel expenses ($6.5 million)[160] - Net loss decreased by $34.8 million to $(66.3) million, driven by increased collaboration revenue and a $5.2 million increase in other income, net, from higher interest rates and investment balances[157][163] Liquidity and Capital Resources - Poseida has incurred significant operating losses and negative cash flows since inception, with an accumulated deficit of $537.2 million as of June 30, 2023[164] - The company expects its cash, cash equivalents, and short-term investments of $214.6 million as of June 30, 2023, to fund operations for at least the next twelve months, but substantial additional financing will be required for long-term development and commercialization[168][169] - Net cash used in operating activities was $(71.3) million for the six months ended June 30, 2023, an improvement from $(91.1) million in the prior year, while investing activities provided $38.7 million, a significant shift from using $81.6 million in 2022[175][176][178] Contractual Obligations and Commitments - Poseida enters into cancelable contracts with third parties for preclinical research, clinical trials, and manufacturing services, with payments due for services provided or noncancelable obligations upon cancellation[183][185] - The company has contingent milestone and royalty payment obligations under license agreements, which are recorded when estimable and probable, and no significant changes to these obligations occurred during the six months ended June 30, 2023[186][187] Critical Accounting Policies and Significant Judgments and Estimates - Management's financial statements rely on estimates and judgments, particularly for revenue recognition, preclinical and clinical study accruals, and stock-based compensation costs[188] - No significant changes to the critical accounting policies and estimates were disclosed during the six months ended June 30, 2023[189] JOBS Act - Poseida is an 'emerging growth company' under the JOBS Act, allowing it to utilize reduced reporting requirements, including delayed adoption of new accounting standards and exemptions from certain auditor attestation requirements[190][429] - This status will continue until the earliest of exceeding $1.235 billion in annual revenue, qualifying as a 'large accelerated filer,' issuing over $1.0 billion in non-convertible debt, or December 31, 2025[191][430] Recent Accounting Pronouncements - The company adopted ASU 2016-13 (Credit Losses) on January 1, 2023, with no impact on its condensed consolidated financial statements[50] - Poseida is currently evaluating the impact of ASU 2020-04 and ASU 2021-01 (Reference Rate Reform), which defer temporary accounting rules until December 31, 2024[51] Item 3. Quantitative and Qualitative Disclosures about Market Risk The company's primary market risk exposure is to interest rate fluctuations - Poseida is exposed to interest rate risk due to its $60.0 million variable-rate term debt and interest-bearing cash and investments ($214.6 million as of June 30, 2023), but a hypothetical 10% change in interest rates would not have a material impact on its financial statements[194][195] - Foreign currency exchange risk and the effects of inflation have not been material to the company's consolidated financial statements to date[196][197] Item 4. Controls and Procedures Disclosure controls and procedures were effective with no material changes in internal control over financial reporting - Management, including the Principal Executive Officer and Principal Financial Officer, concluded that the company's disclosure controls and procedures were effective as of June 30, 2023[199] - There have been no changes in internal control over financial reporting during the quarter ended June 30, 2023, that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting[200] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is not currently involved in any material legal proceedings - Poseida is not currently a party to any material legal proceedings[201] - Litigation, regardless of outcome, could have an adverse impact on the company due to defense and settlement costs, diversion of management resources, and reputational harm[201] Item 1A. Risk Factors The company faces significant risks related to its early stage of development, funding needs, and regulatory hurdles Summary of Risks Associated with Our Business - Poseida is a clinical-stage cell and gene therapy company with a limited operating history, incurring net losses since inception and anticipating continued significant losses without product sales revenue[204][206] - The company requires substantial additional funding to complete product development and commercialization, with the risk of delays or program elimination if capital is not raised when needed[204][208] - Product candidates are in early development stages and based on novel technologies, making the timing, results, and costs of development and regulatory approval difficult to predict[204][215][218] Risks Related to Our Limited Operating History, Financial Position and Capital Requirements - Poseida has a limited operating history, has incurred net losses since inception ($66.3 million for six months ended June 30, 2023), and expects to continue incurring significant losses, with an accumulated deficit of $537.2 million as of June 30, 2023[206] - Current cash, cash equivalents, and short-term investments ($214.6 million as of June 30, 2023) are expected to fund operations for at least the next 12 months, but substantial additional capital is required to complete development and commercialization of product candidates[209][210] - The company's loan agreement with Oxford Finance LLC ($60.0 million outstanding) contains restrictive covenants that could limit operational flexibility or lead to default, potentially harming the business[213][214] Risks Related to the Discovery, Development and Regulatory Approval of Our Product Candidates - Poseida's product candidates are in early development stages, and the company has limited experience conducting clinical trials, making the successful completion of development and commercialization uncertain[215][216][217] - The novel nature of CAR-T and gene editing technologies makes it difficult to predict the timing, results, and costs of development and regulatory approval, with potential for unforeseen safety or efficacy issues[218][219][220] - Serious adverse events or undesirable side effects may emerge during clinical trials, potentially leading to program discontinuation, regulatory refusal, or limitations on product use, as seen with past clinical holds[225][226] - Clinical trials are lengthy, expensive, and uncertain, with risks of delays due to regulatory disagreements, patient enrollment issues, manufacturing problems, or unexpected safety concerns[228][233][234] - Orphan drug and Regenerative Medicine Advanced Therapy (RMAT) designations, while beneficial, do not guarantee faster development, regulatory review, or approval, nor do they increase the likelihood of marketing approval[238][240][241] Risks Related to Manufacturing, Commercialization and Reliance on Third Parties - Poseida relies heavily on third parties (CROs, CMOs) for clinical trials, research, and manufacturing, which introduces risks of inadequate resources, missed deadlines, non-compliance with regulations (GCP, cGMP), and supply chain disruptions[259][262][264] - Operating its pilot manufacturing facility for CAR-T product candidates carries risks, including the potential for insufficient quantities, quality issues, and delays if operations fail[263] - Commercial success of approved products is uncertain due to potential lack of market acceptance by physicians and patients, unfavorable pricing regulations, and inadequate third-party coverage and reimbursement policies[271][272][274] - The company lacks internal sales and marketing capabilities, and building or outsourcing these functions is expensive, time-consuming, and risky, potentially hindering successful commercialization[286][289][290] - Approved biologic products may face biosimilar competition sooner than anticipated, leading to significant pricing pressure and limited commercial opportunity[280][282] Risks Related to Our In-Licenses and Other Strategic Agreements - Poseida's business relies on in-license agreements for key technologies and product candidates; breaching obligations under these agreements could lead to damages, loss of license rights, or adverse financial impacts[292][293] - Collaborations, such as with Roche, may not be successful, and the company has limited control over collaborators' resource allocation, strategic decisions, or development efforts, as demonstrated by the termination of the Takeda Collaboration Agreement[298][299] - The company may not realize the benefits of acquisitions, in-licenses, or strategic alliances due to operational and financial risks, including unknown liabilities, business disruption, and integration difficulties[303][304] - Future collaborations may be difficult to form on favorable terms, potentially forcing the company to curtail development, delay commercialization, or increase expenditures[305][306] Risks Related to Our Industry and Business Operations - Poseida is highly dependent on attracting and retaining qualified managerial, scientific, and medical personnel, and the loss of key employees could harm its business[310][312] - The company faces substantial competition in the biotechnology and pharmaceutical industries, with competitors potentially developing safer, more effective, or cheaper products more quickly[313][314][315] - The use of product candidates in clinical trials and future sales exposes the company to product liability claims, which could result in substantial liability, costs, and reputational harm[318][319][321] - Changes in healthcare laws and regulations, including the Affordable Care Act and the Inflation Reduction Act, could impact product pricing, reimbursement, and market access, adversely affecting the business[328][329][330][333][335] - The company is subject to fraud and abuse, transparency, and other healthcare laws; non-compliance could lead to significant civil, criminal, and administrative penalties[337][338][341] - Unfavorable and unstable market and economic conditions, including geopolitical developments and inflation, may have serious adverse consequences on the business, financial condition, and stock price[419][420][421] Risks Related to Our Intellectual Property - Poseida's success depends on obtaining and maintaining sufficient patent protection for its platform technologies and product candidates, which is expensive, time-consuming, and uncertain, with risks that pending applications may not issue or issued patents may be challenged[342][343][348] - The company faces risks of being sued for infringing third parties' intellectual property rights, which could lead to costly litigation, diversion of resources, injunctions, or monetary damages[349][350][351] - Failure to comply with obligations in in-license agreements could result in the loss of critical license rights, adversely affecting the business[354] - Reliance on trade secrets and proprietary know-how carries risks of disclosure or misappropriation, which could harm the company's competitive position[378][379] - Patent terms may be inadequate to protect competitive position due to long development and regulatory review periods, potentially leading to earlier biosimilar or generic competition[384] Risks Related to Our Common Stock - The market price of Poseida's common stock has been and may continue to be highly volatile, influenced by factors such as operating performance, clinical trial results, regulatory developments, and overall market conditions[389] - Principal stockholders and management own a significant percentage of voting stock (approximately 52% as of March 15, 2023), enabling them to exert significant control over matters subject to stockholder approval[390] - Future sales and issuances of common stock or rights to purchase common stock, including under equity incentive plans, could result in substantial dilution of existing stockholders' ownership[422][423] - Delaware law and provisions in the company's organizational documents could make a merger, tender offer, or proxy contest difficult, potentially depressing the trading price of its common stock[432][433][434] General Risk Factors - As a public company, Poseida incurs significantly increased costs and requires substantial management time for compliance initiatives, including those related to the Sarbanes-Oxley Act[394] - The company is exposed to risks of fraud or other misconduct by employees, principal investigators, consultants, and commercial partners, which could lead to regulatory sanctions and reputational harm[395][397] - Poseida is highly dependent on information technology systems and data, making it vulnerable to cyberattacks, security incidents, and data breaches, which could disrupt operations, lead to regulatory actions, and cause financial and reputational damage[398][399][400][401][402][403] - The company is subject to stringent and evolving U.S. and foreign data privacy and security laws (e.g., HIPAA, CCPA, GDPR); non-compliance could result in government enforcement actions, private litigation, fines, and business disruptions[406][407][409][410][411][415] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities or use of proceeds were reported during the period Item 3. Defaults Upon Senior Securities No defaults upon senior securities occurred during the reporting period Item 4. Mine Safety Disclosures Mine safety disclosures are not applicable to the company Item 5. Other Information No other information was required to be disclosed Item 6. Exhibits This section lists all exhibits filed as part of the Form 10-Q Signatures The report is certified by the company's CEO and CFO - The report was signed by Mark J. Gergen, Chief Executive Officer, and Johanna M. Mylet, Chief Financial Officer, on August 8, 2023[450]