Latest 10-Q filed 11/12/2025 · Compared against 8/12/2025
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ITEM 1A. RISK FACTORS
We operate in a rapidly changing environment that involves a number of risks that could materially affect our business, financial condition or future results, some of which are beyond our control. The occurrence of any of these risks could harm our business, financial condition, results of operations and/or growth prospects or cause our actual results to differ materially from those contained in forward-looking statements we have made in this report and those we may make from time to time. In evaluating us and our business, you should carefully consider the following risks, the information included in this Quarterly Report on Form 10-Q and in other documents we file with the SEC and the risk factors previously disclosed in Part I. Item 1A, Risk Factors of our 2024 Annual Report.
Our recurring losses from operations raise substantial doubt regarding our ability to continue as a going concern.
We have incurred significant losses since our inception and have never generated revenue or profit from product sales, and it is possible we will never generate revenue or profit from product sales. As of JuneSeptember 30, 2025, we had cash and , cash equivalents and marketable securities of $27.518.7 million. Based on our current operating plans, and the upfront payments we have received and are entitled to receive from IMSCP, we believe we will have sufficient funds to meet our obligations into the seconthird quarter of 2026. However, we will need to raise substantial additional capital to fund our future operations. There can be no assurance that we will be able to obtain additional funding, including through a combination of equity offerings, collaborations, and other strategic alliances, or other sources on acceptable terms, if at all. To the extent that we raise additional capital through future equity offerings, the ownership interest of common stockholders will be diluted, which dilution may be significant. We cannot guarantee that we will be able to obtain any or sufficient additional funding or that such funding, if available, will be obtainable on terms satisfactory to us. In the event that we are unable to obtain any or sufficient additional funding, there can be no assurance that we will be able to continue as a going concern, and we will be forced to delay, reduce or discontinue our product development programs or consider other various strategic alternatives.
Moreover, these factors raise substantial doubt about our ability to continue as a going concern. Substantial doubt about our ability to continue as a going concern may materially and adversely affect the price per share of our common stock, and it may be more difficult for us to obtain financing. If existing or potential collaborators decline to do business with us or potential investors decline to participate in any future financings due to such concerns, our ability to increase our cash position may be limited. The perception that we may not be able to continue as a going concern may cause others to choose not to deal with us due to concerns about our ability to meet our contractual obligations.
Changes in and uncertainty surrounding U.S. trade policy could have a material adverse impact on our business, financial condition and results of operations.
This past spring, the Trump Administration initiated a series of tariff-related actions against U.S. trading partners. On April 2, 2025, the President issued an Executive Order announcing a baseline reciprocal tariff of 10% on all U.S. trading partners effective April 5, 2025, and higher individualized reciprocal tariffs on 57 countries (with certain product exemptions for pharmaceutical-related products, among others). Previously, the administration had imposed a 25% tariff on Canada and Mexico for goods not covered by the United States-Mexico-Canada Agreement, or USMCA, and tariffs equaling 20% on China. In response, several countries threatened retaliatory measures, including Canada and China, which then imposed retaliatory tariffs. Prior to when the country-specific reciprocal tariffs were scheduled to take effect, the administration delayed the effective date of such tariffs for all countries except China to August 1, 2025. Later, the U.S. and China reached a framework agreement that ultimately resulted in the suspension of the higher reciprocal tariffs on China until August 12November 11, 2025. Seince the April announcement, several countries including, among others, the European Union, Japan a, South Korea and the United Kingdom, hamong others, have reached deals with the U.S. that include reduced tariff rates to varying levels and other measures. TOn July 31, 2025, the administration has not definitively indicated tPresident issued an executive order detailing new reciprocal tariff rates for individual countries that took effect on August 7, 2025. The effective dnew reciprocal rates, which are consistent with the rate for s reflected in thes trade deals. As of Ju already announced, range from 10% to 41%. The new rates do not apply 31, 2025, to Canada, China, Mexico and a few othe r countries. For China, the 10% baseline reciprocal tariff announced in April on all countries reremains in effect, in addition to the oa minimum of an additional 20%. Regarding Canada and Mexico, ther tariffs on China (which were a minimum of an add rate remains 25% for goods that are not covered by the USMCA for Mexico and, effective August 1, 2025, was increased to 35% on imports from Canada that are not covered by the USMCA. Sustained uncertainty about, or the further escalation of, trade and politioncal 20% as of July 15, 2025)tensions between the U.S. and China could result in
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a and Canada and Mexico (which were 25% as of Judisadvantageous research and manufacturing environment in China, particularly for U.S. based companies, including retaliatory restrictions that hinder or potentially inhibit our ability to rely 15, 2025 for goodon CMOs and other service providers that are notoperate in China. Certain covered by thuntries have reached agreements with the USMCA)..S. that cap pharmaceutical tariffs at 15%. These include the European Union, Japan, South Korea and the United Kingdom.
Separately, oin April 16, 2025, the U.S. Department of Commerce announcinitiated an investigation under Section 232 of the Trade Expansion Act of 1962 into the importact on U.S. national security of the imports of pharmaceuticals and pharmaceutical ingredients, including finished drug products, medical countermeasures, critical inputs such as active pharmaceutical ingredients, and key starting materials, and derivative products of those items. The investigatiOn September 25, 2025, via a post on will examineTruth Social, the President announced the impact of these at, beginning October 1, 2025, all branded or patented drugs imports on ed in the U.S. national security
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culminwould face ating in a decision by 100% tariff. At the same time, the President whether to take action to remedy any identified threats, including by imposindicated that these tariffs could be avoided by building pharmaceutical manufacturing additional tariffs.facilities in the U.S. The statute provreafter, the Presides thatnt delayed the Commerce Department report must be compleOctober 1st effective date of the tariffs on branded or patented within 270 days of initiation of pharmaceutical products announcing that the investigadministration and that the President must decide whethhad now begun preparing tariffs on manufacturers that dont build in the U.S. or enter into act within 90 days of receivi most-favored-nation (MFN) drug pricing the report. agreement with the Trump Administration.
As a result of changes in tariffs that have been announced and/or implemented, and the underlying uncertainty currently surrounding international trade, we could experience a negative impact to our costs of materials and production processes, and supply chain disruptions and delays as a result of any new tariff policies or trade restrictions. If we are unable to obtain necessary raw materials or product components in sufficient quantity and in a timely manner due to disruptions in the global supply chain caused by macroeconomic events and conditions, the development, testing and clinical trials of our product candidates may be delayed or infeasible, and regulatory approval or commercial launch of any resulting product may be delayed or not obtained, which could significantly harm our business. We cannot yet predict the effect of the recently imposed U.S. tariffs on imports, or the extent to which other countries will impose quotas, duties, tariffs, taxes or other similar restrictions upon imports or exports in the future, nor can we predict future trade policy or the terms of any renegotiated trade agreements and their impact on our business.
Changes in tax laws or in their implementation or interpretation could adversely affect our business and financial condition.
Income, sales, use or other tax laws, statutes, rules, or regulations could be enacted or amended at any time, which could affect our business or financial condition, including causing potentially adverse impacts to our effective tax rate, tax liabilities, and cash tax obligations. For example, the Inflation Reduction Act, or IRA, was signed into law in August 2022, and the One Big Beautiful Bill Act, or OBBBA, was signed into law in July 2025. The IRA introduced new tax provisions, including a one percent excise tax imposed on certain stock repurchases by publicly traded companies. The one percent excise tax generally applies to any acquisition of stock by the publicly traded company (or certain of its affiliates) from a stockholder of the company in exchange for money or other property (other than stock of the company itself), subject to a de minimis exception. Thus, the excise tax could apply to certain transactions that are not traditional stock repurchases. The OBBBA contains numerous tax provisions that we are currently in the process of evaluating, and which may significantly affect our business or financial condition. The recent changes under the OBBBA include tax rate extensions and changes to the business interest deduction limitation, the expensing of domestic research and development expenditures (in contrast to the continued capitalization and amortization of foreign research and development expenditures), the bonus depreciation deduction rules, and the international tax framework. Regulatory guidance under the IRA, the OBBBA, and other tax-related legislation is and continues to be forthcoming, and such guidance could ultimately increase or lessen the impact of these laws on our business and financial condition. In addition, it is uncertain if and to what extent various states will conform to changes to federal tax legislation.
If we fail to comply with the continued listing requirements of Nasdaq, our common stock may be delisted and the price of our common stock and our ability to access the capital markets could be negatively impacted.
We are required to comply with the continued listing requirements of the Nasdaq Stock Market LLC, or Nasdaq, including, among other things, maintaining a minimum closing bid price of at least $1.00 per share, or the Minimum Bid Requirement, or shares of our common stock may be subject to delisting, which would have a material adverse effect on our business.
On May 12, 2025, we received a deficiency letter, or the Notice, from the Listing Qualifications Department, or the Staff, of Nasdaq indicating that we failed to comply with the Minimum Bid Requirement.
The Notice hasd no immediate effect on the listing of our common stock. In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we haved an initial period of 180 calendar days (which expiresd on November 10, 2025) to regain compliance with the Minimum Bid Requirement.
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To regain compliance, the closing bid price of our common stock must be at least $1.00 per share for a minimum of 10 consecutive business days during thishereafter, on November 11, 2025, we received a written notice from the Staff granting us an additional 180 calendar day period, at which time the Staff will provide written notification to us that we comply with the Minimum Bid Requirement, unless compliance period (until May 11, 2026), or the Staff exercises its discretion to extend this ten-day pecond Compliance Period pursuant to Nasdaq Listing Rule 5810(c)(3)(H).
If we do not , to regain compliance with the Minimum Bid Requirement during th.
We initial 180 caltendar day period, we may be eligible for an additional 180 calendar day complian to actively monitor the closing bid price period. To qualify, we will be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market,of our common stock and will evaluate available options to regain compliance with the exception of the Minimum Bid Requirement, and will need to provide written notice to the Staff of our intention to cure the deficiency. If at any time during the additional cSecond Compliance pPeriod by effectthe closing a reverse bid price of our common stock split, if necessary.
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Howis at least $1.00 per sharever, if we do not regain compliance with the Mini for a minimum Bid Requirement by November 10, 2025 and it appears to tof 10 consecutive business days, the Staff that we wwill not be able to regain compliance provide us with the Minimum Bid Requirement during the addiwritten confirmational of compliance period, or that we are otherwise not eligible for an additional compliance period at that time,and the matter will be closed, unless the Staff will provide notice that our common stock will become subject to delisting. Upon receipt of such notice, underexercises its discretion to extend this 10-day period pursuant to Nasdaq rListing Rules, we may appeal the Staffs delisting determination 5810(c)(3)(H). We have provided written notice to a Hearings Panel, or the Panel. However, if we do appealNasdaq of our intention to cure the delisting determination by ficiency during the Staff to the Panel, there can be no assurance that such appeal would be succecond Compliance Period by effecting a reverse stock split, if necessful, or thatary. If we will be able fail to regain compliance with the Minimum Bid Requirement or maintain compliance with the other listi, by effecting requirements.
We intend to actively monita reverse stock split or othe closing bid price of orwise, our common stock and will evaluate available options to regain compliance with the Minimum Bid Requirement. However, there can be no assurance that we will be able to regain compliance with the Minimum Bid Requirementmay be delisted. This potential delisting, and any other potential delisting, of our common stock could have a material adverse effect on the market for, and liquidity and price of, our common stock and would adversely affect our ability to raise capital on terms acceptable to us, or at all. Delisting from Nasdaq could also have other negative results, including, without limitation, the potential loss of confidence by investors, customers and employees and fewer business development opportunities. Any delisting of our common stock from Nasdaq would also make it more difficult for our stockholders to sell their shares of our common stock in the public market.