Nkarta Inc

Previous wording

An investment in shares of our common stock involves a high degree of risk. You should carefully consider the following risk factors, as well as all of the other information contained in this Quarterly Report on Form 10-Q, before making an investment decision. The risks described below are not the only ones facing us. The occurrence of any of the following risks, or of additional risks and uncertainties not presently known to us or that we currently believe to be immaterial, could significantly harm our business, financial condition, results of operations and growth prospects. In such case, the trading price of shares of our common stock could decline, and you may lose part or all of your investment. This Quarterly Report on Form 10-Q also contains forward-looking statements and estimates that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of specific factors, including the risks and uncertainties described below. The risks relating to our business set forth in our Annual Report on Form 10-K for the year ended December 31, 2023 and filed with the Securities and Exchange Commission ("SEC") on March 21, 2024, are set forth below and are unchanged substantively as of the date of this Quarterly Report on Form 10-Q, except for those risks designated by an asterisk (*).

Current wording

An investment in shares of our common stock involves a high degree of risk. You should carefully consider the following risk factors, as well as all of the other information contained in this Quarterly Report on Form 10-Q, before making an investment decision. The risks described below are not the only ones facing us. The occurrence of any of the following risks, or of additional risks and uncertainties not presently known to us or that we currently believe to be immaterial, could significantly harm our business, financial condition, results of operations and growth prospects. In such case, the trading price of shares of our common stock could decline, and you may lose part or all of your investment. This Quarterly Report on Form 10-Q also contains forward-looking statements and estimates that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of specific factors, including the risks and uncertainties described below. The risks relating to our business set forth in our Annual Report on Form 10-K for the year ended December 31, 2023 and filed with the Securities and Exchange Commission ("SEC") on March 21, 2024, and in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 and filed with the SEC on May 9, 2024, are set forth below and are unchanged substantively as of the date of this Quarterly Report on Form 10-Q, except for those risks designated by an asterisk (*).

Previous wording

Since our inception in 2015, we have incurred significant operating losses. Our net losses were $29.5 million, $117.5 million and $113.8 million for the three months ended March 31, 2024 and the years ended December 31, 2023 and 2022, respectively. Our accumulated deficit was $465.0 million as of March 31, 2024. We expect to continue to incur increasing operating losses for the foreseeable future as we continue to develop our product candidates. In addition, we anticipate that our expenses will increase substantially if, and as, we:

Current wording

Since our inception in 2015, we have incurred significant operating losses. Our net losses were $54.5 million, $117.5 million and $113.8 million for the six months ended June 30, 2024 and the years ended December 31, 2023 and 2022, respectively. Our accumulated deficit was $489.9 million as of June 30, 2024. We expect to continue to incur increasing operating losses for the foreseeable future as we continue to develop our product candidates. In addition, we anticipate that our expenses will increase substantially if, and as, we:

Previous wording

We have financed our operations primarily through private placements of our preferred stock, proceeds from our previous collaboration with GlaxoSmithKline, proceeds from our initial public offering ("IPO") completed in July 2020, proceeds from our underwritten public offering of our common stock completed in April 2022 (the "Secondary Offering"), our "at the market" equity offering program (the "ATM Offering Program") and proceeds from our underwritten public offering of our common stock and pre-funded warrants completed in March 2024. We estimate that we used the proceeds of our IPO primarily to advance our product candidates through preclinical studies and clinical trial programs, the construction of our manufacturing facility, and for working capital and general corporate purposes. We intend to continue to use the proceeds from our Secondary Offering and ATM Offering Program to, among other uses, advance NKX019 further in clinical development. However, developing pharmaceutical products and conducting preclinical studies and clinical trials is expensive. Advancing NKX019 or any product candidate into pivotal trials will require us to raise additional capital. As of March 31, 2024, we had cash, cash equivalents, restricted cash, and investments of $450.0 million. Our research and development expenses increased from $90.9 million for the year ended December 31, 2022 to $96.8 million for the year ended December 31, 2023. We expect to continue to incur operating losses for the foreseeable future as we continue to develop our product candidates, which may increase, among other things, as we advance NKX019 in clinical development.

Current wording

We have financed our operations primarily through private placements of our preferred stock, proceeds from our previous collaboration with GlaxoSmithKline, proceeds from our initial public offering ("IPO") completed in July 2020, proceeds from our underwritten public offering of our common stock completed in April 2022 (the "Secondary Offering"), our "at the market" equity offering program (the "ATM Offering Program") and proceeds from our underwritten public offering of our common stock and pre-funded warrants completed in March 2024. We estimate that we used the proceeds of our IPO primarily to advance our product candidates through preclinical studies and clinical trial programs, the construction of our manufacturing facility, and for working capital and general corporate purposes. We intend to continue to use the proceeds from our Secondary Offering and ATM Offering Program to, among other uses, advance NKX019 further in clinical development. However, developing pharmaceutical products and conducting preclinical studies and clinical trials is expensive. Advancing NKX019 or any product candidate into pivotal trials will require us to raise additional capital. As of June 30, 2024, we had cash, cash equivalents, restricted cash, and investments of $426.7 million. Our research and development expenses increased from $90.9 million for the year ended December 31, 2022 to $96.8 million for the year ended December 31, 2023. We expect to continue to incur operating losses for the foreseeable future as we continue to develop our product candidates, which may increase, among other things, as we advance NKX019 in clinical development.

Previous wording

Our success depends on our ability to utilize our chimeric antigen receptor natural killer ("CAR NK") cell technology platform to generate product candidates, to obtain regulatory approval for product candidates derived from it, and to then commercialize our product candidates addressing one or more indications. A Phase 1 clinical trial to evaluate our lead CAR NK-cell product candidate, NKX019, in humans with certain hematological malignancies is ongoing, and we are initiating an additional Phase 1 clinical trial for NKX019 in patients with lupus nephritis ("LN"). Although NKX101 has also been in a Phase 1 clinical trial for certain hematologic malignancies, we have stopped enrolling new patients in that clinical trial. Although we may explore our options for implementing certain changes in that program, we cannot guarantee that we will pursue any further development of NKX101 in the near future or at all. All of our product candidates developed from our technology platform will require significant additional clinical and non-clinical development, review and approval by the FDA or other regulatory authorities in one or more jurisdictions, substantial investment, access to sufficient manufacturing capacity and significant marketing efforts before they can be successfully commercialized. If any of our product candidates encounter safety or efficacy problems, developmental delays or regulatory issues or other problems, such problems could impact the development plans for our other product candidates because all of our product candidates are based on the same core CAR NK-cell engineering technology.

Current wording

Our success depends on our ability to utilize our chimeric antigen receptor natural killer ("CAR NK") cell technology platform to generate product candidates, to obtain regulatory approval for product candidates derived from it, and to then commercialize our product candidates addressing one or more indications. A Phase 1 clinical trial to evaluate our lead CAR NK-cell product candidate, NKX019, in humans with certain hematological malignancies is ongoing, and we have initiated Ntrust-1, a multi-center, open-label, dose-escalation Phase 1 clinical trial to evaluate NKX019 in humans with lupus nephritis ("LN"). We also plan to initiate Ntrust-2, a multi-center, open-label, dose-escalation Phase 1 clinical trial that will evaluate the safety and clinical activity of NKX019 in humans with systemic sclerosis ("scleroderma"), idiopathic inflammatory myopathy ("myositis"), and ANCA-associated vasculitis ("AAV"). Although NKX101 has also been in a Phase 1 clinical trial for certain hematologic malignancies, we have stopped enrolling new patients in that clinical trial. Although we may explore our options for implementing certain changes in that program, we cannot guarantee that we will pursue any further development of NKX101 in the near future or at all. All of our product candidates developed from our technology platform will require significant additional clinical and non-clinical development, review and approval by the FDA or other regulatory authorities in one or more jurisdictions, substantial investment, access to sufficient manufacturing capacity and significant marketing efforts before they can be successfully commercialized. If any of our product candidates encounter safety or efficacy problems, developmental delays or regulatory issues or other problems, such problems could impact the development plans for our other product candidates because all of our product candidates are based on the same core CAR NK-cell engineering technology.

Previous wording

Prior clinical experience with NK-cell therapy has been predominantly based on cells from haplomatched donors, i.e., at least half of the major Human Leukocyte Antigen ("HLA") types matched between donor and recipient. Our Phase 1 clinical trials, however, are currently evaluating product candidates manufactured from completely unrelated donors (i.e. used "off-the-shelf"). There is a risk that our early clinical results from our Phase 1 clinical trials using off-the-shelf NKX019 and NKX101 may not be reflective of future clinical trial results which may require us to re-evaluate HLA matching. If it becomes apparent through future preclinical testing or clinical trials that such matching is required, the production of NKX019, NKX101, and our other product candidates as standardized, off-the-shelf products for all patients will not be achievable. Instead, we would need to establish an alternative approach for each of our product candidates to achieve coverage of the addressable patient population.

Current wording

Prior clinical experience with NK-cell therapy has been predominantly based on cells from haplomatched donors, i.e., at least half of the major Human Leukocyte Antigen ("HLA") types matched between donor and recipient. Our Phase 1 clinical trials, however, are currently evaluating product candidates manufactured from completely unrelated donors (i.e. used "off-the-shelf"). There is a risk that our early clinical results from our Phase 1 clinical trials using off-the-shelf NKX019 and NKX101 may not be reflective of future clinical trial results which may require us to re-evaluate HLA matching. If it becomes apparent through future preclinical testing or clinical trials that such matching is required, the production of NKX019 or our other product candidates as standardized, off-the-shelf products for all patients will not be achievable. Instead, we would need to establish an alternative approach for each of our product candidates to achieve coverage of the addressable patient population.

Previous wording

In addition, with respect to the development of NKX101 for the treatment of malignancies, tumors are sometimes able to evade detection by naturally occurring NK cells by shedding the NKG2D ligands found on malignant cells. While NKX101 has been engineered to resist this shedding mechanism, there can be no guarantee that tumor cells will not retain or regain the ability to shed NKG2D ligand completely despite the presence of NKX101, which would give such tumors a degree of resistance against NKX101. If we discover that tumors develop a resistance to NKX101 as a result of such NKG2D ligand shedding, we will need to reengineer NKX101 to counteract this effect, or we may need to change or abandon our development efforts for NKX101.

Current wording

In addition, with respect to the development of the deprioritized NKX101 program for the treatment of malignancies, tumors are sometimes able to evade detection by naturally occurring NK cells by shedding the NKG2D ligands found on malignant cells. While NKX101 has been engineered to resist this shedding mechanism, there can be no guarantee that tumor cells will not retain or regain the ability to shed NKG2D ligand completely despite the presence of NKX101, which would give such tumors a degree of resistance against NKX101. If, upon continued development we were to discover that tumors develop a resistance to NKX101 as a result of such NKG2D ligand shedding, we would need to reengineer NKX101 to counteract this effect, or we might decide to change, pause or abandon any future development efforts for NKX101.

Previous wording

delays in reaching agreement on acceptable terms with prospective clinical trial sites or CROs, the terms of which can be subject to extensive negotiation and may vary significantly among different trial sites and CROs;

Current wording

delays in reaching agreement on acceptable terms with prospective clinical trial sites or CROs, the terms of which can be subject to extensive negotiation and may vary significantly among different trial sites and CROs, including delays due to administrative hurdles, lack of significant prior experience with cell therapy for autoimmune disease, or competition between cell therapy companies for prospective clinical trial sites and investigators;

Previous wording

For example, following a recent interim evaluation of response data in our NKX101 clinical trial for the treatment of relapsed or refractory acute myeloid leukemia ("r/r AML") or higher risk myelodysplastic syndromes ("MDS"), we decided to prioritize our planned NKX019 Phase 1 trial for the treatment of LN and deprioritize our NKX101 program. Enrollment in our NKX101 clinical trial has been closed. We plan to evaluate the design of the clinical trial, dosing schedule, and manufacturing processes before pursuing any further development of NKX101, although we cannot guarantee that we will pursue any further development of NKX101 in the near future or at all.

Current wording

For example, following an interim evaluation of response data in our NKX101 clinical trial for the treatment of relapsed or refractory acute myeloid leukemia ("r/r AML") or higher risk myelodysplastic syndromes ("MDS"), we decided to prioritize our NKX019 program for the treatment of autoimmune disease and deprioritize our NKX101 program. Enrollment in our NKX101 clinical trial has been closed. We plan to evaluate the design of the clinical trial, dosing schedule, and manufacturing processes before pursuing any further development of NKX101, although we cannot guarantee that we will pursue any further development of NKX101 in the near future or at all.

Previous wording

We may, from time to time, such as for our planned NKX019 clinical trial for the treatment of LN, establish partnerships in relation to our clinical trials, receiving advisory services and other support from third parties. For example, we have partnered with Lupus Therapeutics, the clinical research affiliate of the Lupus Research Alliance, to accelerate development of NKX019 through select sites of the Lupus Clinical Investigators Network ("LuCIN"). Although we believe that these partnerships will enable us to accelerate the development of our product candidates and clinical trials, we cannot guarantee that such collaborations will be successful and, in the event they are not, we may lose our competitive advantage and/or incur additional costs.

Current wording

We may, from time to time, such as for our NKX019 clinical trial for the treatment of LN (Ntrust-1), establish partnerships in relation to our clinical trials, receiving advisory services and other support from third parties. For example, we have partnered with Lupus Therapeutics, the clinical research affiliate of the Lupus Research Alliance, to accelerate development of NKX019 through select sites of the Lupus Clinical Investigators Network ("LuCIN"). Although we believe that these partnerships will enable us to accelerate the development of our product candidates and clinical trials, we cannot guarantee that such collaborations will be successful and, in the event they are not, we may lose our competitive advantage and/or incur additional costs.

Previous wording

In October 2023, we announced that we had received clearance of an Investigational New Drug ("IND") application by the FDA to evaluate NKX019 for the treatment of LN. The planned multi-center, open label, dose escalation Phase 1 clinical trial will evaluate the safety and clinical activity of NKX019 in patients with refractory LN. In the planned LN clinical trial, Cy will be used as the LD prior to administration of NKX019. There are no cell therapies licensed to date in the United States or elsewhere to treat autoimmune diseases and we have no prior experience in developing treatments for autoimmune diseases. We cannot guarantee that our development of NKX019 for the treatment of LN will be successful. We may also choose to develop NKX019 for additional autoimmune or other indications, but we may not be able to advance NKX019 through the development process for any of these additional indications. Even if we receive regulatory approval to market NKX019 for the treatment of LN or any additional indications, NKX019 for any of these indications may not be successfully commercialized, widely accepted in the marketplace or more effective than other commercially available alternatives. If we are unable to successfully develop and commercialize NKX019 for LN or these additional autoimmune indications, our commercial opportunity will be limited, and our business, financial condition and growth prospects will be materially adversely affected.

Current wording

In October 2023, we announced that we had received clearance of an Investigational New Drug ("IND") application by the FDA to evaluate NKX019 for the treatment of LN, and in June 2024, we announced we had received clearance of an IND by the FDA to evaluate NKX019 for the treatment of scleroderma, myositis, and AAV. Ntrust-1 is our multi-center, open-label, dose-escalation Phase 1 clinical trial that will evaluate the safety and clinical activity of NKX019 in humans with refractory LN, and Ntrust-2 is our planned multi-center, open-label, dose-escalation Phase 1 clinical trial that will evaluate the safety and clinical activity of NKX019 in humans with scleroderma, myositis, and AAV. In both Ntrust-1 and Ntrust-2, Cy will be used as the LD prior to administration of NKX019. There are no cell therapies licensed to date in the United States or elsewhere to treat autoimmune diseases and we have no prior experience in developing treatments for autoimmune diseases. We cannot guarantee that our development of NKX019 for the treatment of LN, scleroderma, myositis, or AAV will be successful. We may also choose to develop NKX019 for additional autoimmune or other indications, but we may not be able to advance NKX019 through the development process for any of these additional indications. Even if we receive regulatory approval to market NKX019 for the treatment of LN, scleroderma, myositis, AAV, or any additional indications, NKX019 for any of these indications may not be successfully commercialized, widely accepted in the marketplace or more effective than other commercially available alternatives. If we are unable to successfully develop and commercialize NKX019 for LN, scleroderma, myositis, AAV, or these additional autoimmune indications, our commercial opportunity will be limited, and our business, financial condition and growth prospects will be materially adversely affected.

Previous wording

NKX101, our other clinical-stage product candidate, is also subject to the risks inherent in drug development. NKX101 has been studied in a Phase 1 clinical trial for the treatment of blood cancers including r/r AML or MDS. Following a recent interim evaluation of the clinical response data, we decided to deprioritize the clinical development of NKX101. Further enrollment in the trial has been closed. We do not plan to pursue any further development of NKX101 without first evaluating our options for the trial design, dosing regimen, and manufacturing process for the program. We cannot guarantee that we will pursue any further development of NKX101 in the near future or at all. Even if we do decide in the future to further develop NKX101 for the treatment of r/r AML or MDS, we may not be successful in doing so. If clinical development of NKX101 is restarted in the future and the Phase 1 or clinical trials of NKX101 for the treatment of AML or MDS encounter concerning safety signals, efficacy concerns, manufacturing problems, enrollment issues, development delays, regulatory issues, or other problems, our development plans for NKX101 could be significantly impaired, which could materially adversely affect our business, financial condition, results of operations and growth prospects.

Current wording

NKX101, our deprioritized clinical-stage product candidate, is also subject to the risks inherent in drug development. NKX101 has been studied in a Phase 1 clinical trial for the treatment of blood cancers including r/r AML or MDS. Following a recent interim evaluation of the clinical response data, we decided to deprioritize the clinical development of NKX101. Further enrollment in the trial has been closed. We do not plan to pursue any further development of NKX101 without first evaluating our options for the trial design, dosing regimen, and manufacturing process for the program. We cannot guarantee that we will pursue any further development of NKX101 in the near future or at all. Even if we do decide in the future to further develop NKX101 for the treatment of r/r AML or MDS, we may not be successful in doing so. If clinical development of NKX101 is restarted in the future and the Phase 1 or clinical trials of NKX101 for the treatment of AML or MDS encounter concerning safety signals, efficacy concerns, manufacturing problems, enrollment issues, development delays, regulatory issues, or other problems, our development plans for NKX101 could be significantly impaired, which could materially adversely affect our business, financial condition, results of operations and growth prospects.

Previous wording

We may also evaluate our product candidates in combination with one or more other cancer therapies that have not yet been approved for marketing by the FDA or similar regulatory authorities outside of the United States. If the FDA or similar regulatory authorities outside of the United States do not approve these other drugs or revoke their approval of, or if safety, efficacy, manufacturing, or supply issues arise with, the drugs we choose to evaluate in combination with any product candidate we develop, we may be unable to obtain approval of or market our product candidates.

Current wording

We may also evaluate our product candidates in combination with one or more other therapies that have not yet been approved for marketing by the FDA or similar regulatory authorities outside of the United States. If the FDA or similar regulatory authorities outside of the United States do not approve these other drugs or revoke their approval of, or if safety, efficacy, manufacturing, or supply issues arise with, the drugs we choose to evaluate in combination with any product candidate we develop, we may be unable to obtain approval of or market our product candidates.

Previous wording

Although we believe that our allogeneic CD19-targeting CAR NK-cell product candidate NKX019 may have disease-modifying potential in autoimmune disease, such as LN, the use of CD19-targeted CAR cell therapies, and, in particular, allogeneic CD19 CAR NK-cell therapies, represents a novel approach for the treatment of autoimmune disease, and is supported by limited clinical data. To date, no cell therapies have been approved by the FDA for the treatment of autoimmune disease. We cannot guarantee that our planned clinical trial for NKX019 in LN and any other future clinical development of NKX019 for the treatment of autoimmune diseases will be successful. Our belief that NKX019 may be effective as a treatment for autoimmune disease is based largely on our understanding of the mechanism behind the positive clinical data reported by certain academic groups for the use of a CD19 CAR T-cell therapy in a limited number of patients with autoimmune disease, as well as on our own in vitro studies showing that NKX019 can kill B-cells in peripheral blood mononuclear cells ("PBMCs") obtained from patients with autoimmune diseases and observations regarding the effect of NKX019 on B cells from our ongoing NKX019 Phase 1 clinical trial in patients with non-Hodgkin lymphoma ("NHL"). We have made certain assumptions regarding the mechanism of action responsible for the preliminary efficacy shown in the reported studies and how that mechanism of action and our own in vitro data and data from our NKX019 trial in NHL will translate to the response of patients with autoimmune diseases, such as LN, to NKX019, which may or may not be correct. We plan to use Cy alone as the LD in our planned and future NKX019 clinical trials for the treatment of autoimmune disease, but there is a risk that Cy alone will not be effective as LD prior to NKX019 in patients with autoimmune disease. We cannot know with any certainty whether NKX019 will be effective against LN, other forms of systemic lupus erythematosus ("SLE") or any other autoimmune disease, or whether NKX019 will be competitive as a treatment for such indications against CD19 CAR T-cell therapies. We also face competition from a large number of cell therapy companies with capabilities and expertise in oncology who are also advancing development programs in autoimmune diseases, which may impact our ability to successfully develop and commercialize NKX019. For further details about such reasons, see “—Enrollment and retention of patients in clinical trials is an expensive and time-consuming process and could be delayed, made more difficult or rendered impossible by multiple factors outside our control” and “—If we fail to compete effectively with academic institutions and other biopharmaceutical companies that develop similar or alternatives to cellular immunotherapy product candidates, our business will be materially adversely affected.” If NKX019 is shown to not be sufficiently effective against LN or other autoimmune disea…

Excerpt shortened here; the source contains the full paragraph.

Current wording

Although we believe that our allogeneic CD19-targeting CAR NK-cell product candidate NKX019 may have disease-modifying potential in autoimmune disease, such as LN, the use of CD19-targeted CAR cell therapies, and, in particular, allogeneic CD19 CAR NK-cell therapies, represents a novel approach for the treatment of autoimmune disease, and is supported by limited clinical data. To date, no cell therapies have been approved by the FDA for the treatment of autoimmune disease. We cannot guarantee that Ntrust-1, our clinical trial for NKX019 in LN, Ntrust-2, our planned clinical trial for NKX019 in scleroderma, myositis, and AAV, or any other future clinical development of NKX019 for the treatment of autoimmune diseases will be successful. Our belief that NKX019 may be effective as a treatment for autoimmune disease is based largely on our understanding of the mechanism behind the positive clinical data reported by certain academic groups for the use of a CD19 CAR T-cell therapy in a limited number of patients with autoimmune disease, as well as on our own in vitro studies showing that NKX019 can kill B-cells in peripheral blood mononuclear cells ("PBMCs") obtained from patients with autoimmune diseases and observations regarding the effect of NKX019 on B cells from our ongoing NKX019 Phase 1 clinical trial in patients with non-Hodgkin lymphoma ("NHL"). We have made certain assumptions regarding the mechanism of action responsible for the preliminary efficacy shown in the reported studies and how that mechanism of action and our own in vitro data and data from our NKX019 trial in NHL will translate to the response of patients with autoimmune diseases, such as LN, to NKX019, which may or may not be correct. We plan to use Cy alone as the LD in our current, planned and future NKX019 clinical trials for the treatment of autoimmune disease, but there is a risk that Cy alone will not be effective as LD prior to NKX019 in patients with autoimmune disease. We cannot know with any certainty whether NKX019 will be effective against LN, other forms of systemic lupus erythematosus ("SLE") or any other autoimmune disease, or whether NKX019 will be competitive as a treatment for such indications against CD19 CAR T-cell therapies. We also face competition from a large number of cell therapy companies who are also advancing development programs in autoimmune diseases, which may impact our ability to successfully develop and commercialize NKX019. For instance, competition among cell therapy companies for clinical trial sites, investigators, and/or patients for autoimmune clinical trials, may cause delays in the initiation of clinical trials sites and enrollment of patients in our clinical trials. For further details about such reasons, see “—Enrollment and retention of patients in clinical trials is an expensive and time-consuming process and could be delayed, made more difficult or rendered impossible by multiple factors outside our control” and “—If we fail to comp…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

We need to compete with many ongoing clinical trials and approved therapies to recruit patients into our clinical trials. Our clinical trials may also compete with other clinical trials of product candidates that are in a similar cellular immunotherapy area as our product candidates, and this competition could reduce the number and types of patients available to us, because some patients who might have opted to enroll in our trials may instead opt to enroll in a trial being conducted by one of our competitors. For example, due to the commercial availability of multiple therapeutic agents that target CD19 for the treatment of cancer, as well as others that are in various stages of development, we have had significant difficulty in our Phase 1 NKX019 clinical trial for the treatment of B-cell malignancies and may continue to have significant difficulty in our current or future NKX019 clinical trials for certain indications, including B-cell malignancies, enrolling subjects who have not previously been exposed to a CD19-directed cellular therapy. Additionally, for our ongoing NKX019 clinical trial for the treatment of cancer, our planned NKX019 clinical trial for the treatment of LN, and any future NKX019 clinical trials of ours for the treatment of other autoimmune diseases, the number of qualified clinical investigators is limited, so we may conduct some of our clinical trials at the same clinical trial sites that some of our competitors use, which will reduce the number of patients who are available for our clinical trials at such clinical trial site. A number of cell therapy companies have recently announced plans for clinical trials for the treatment of LN and/or other autoimmune diseases, which may increase competition in the future for investigators and/or patients for our planned NKX019 clinical trial for the treatment of LN and any other NKX019 clinical trials that we may initiate in the future for the treatment of other autoimmune diseases. Furthermore, we intend to use Cy as the LD prior to treatment with NKX019 in our planned NKX019 clinical trial for the treatment of LN. If this is ineffective or we decide to change the protocol to use a combination of Flu and Cy, as the LD, physicians may choose to refer patients to other clinical trials conducted by one of our competitors. If we are unable to enroll a sufficient number of patients in our clinical trials in a timely manner, our completion of clinical trials may be delayed or may not be achieved, which would prevent us from further developing or commercializing our product candidates in certain patient subpopulations or at all.

Current wording

We need to compete with many ongoing clinical trials and approved therapies to recruit patients into our clinical trials. Our clinical trials may also compete with other clinical trials of product candidates that are in a similar cellular immunotherapy area as our product candidates, and this competition could reduce the number and types of patients available to us, because some patients who might have opted to enroll in our trials may instead opt to enroll in a trial being conducted by one of our competitors. For example, due to the commercial availability of multiple therapeutic agents that target CD19 for the treatment of cancer, as well as others that are in various stages of development, we have had significant difficulty in our Phase 1 NKX019 clinical trial for the treatment of B-cell malignancies and may continue to have significant difficulty in our current or future NKX019 clinical trials for certain indications, including B-cell malignancies, enrolling subjects who have not previously been exposed to a CD19-directed cellular therapy. Additionally, for our ongoing NKX019 clinical trials for the treatment of cancer and LN, our planned NKX019 clinical trial for the treatment of additional autoimmune indications, and any future NKX019 clinical trials of ours for the treatment of other autoimmune diseases, the number of qualified clinical investigators is limited, so we may conduct some of our clinical trials at the same clinical trial sites that some of our competitors use, which will reduce the number of patients who are available for our clinical trials at such clinical trial site. A number of cell therapy companies have announced initiation of plans for clinical trials for the treatment of LN and/or other autoimmune diseases, which has resulted in and/or may increase competition in the future for investigators and/or patients for our NKX019 clinical trial for the treatment of LN, our planned NKX019 clinical trial for the treatment of additional autoimmune indications, and any other NKX019 clinical trials that we may initiate in the future for the treatment of other autoimmune diseases. Furthermore, we intend to use Cy as the LD prior to treatment with NKX019 in our NKX019 clinical trial for the treatment of LN and our planned NKX019 clinical trial for the treatment of additional autoimmune indications. If this is ineffective or we decide to change the protocol to use a combination of Flu and Cy, as the LD, physicians may choose to refer patients to other clinical trials conducted by one of our competitors. If we are unable to enroll a sufficient number of patients in our clinical trials in a timely manner, our completion of clinical trials may be delayed or may not be achieved, which would prevent us from further developing or commercializing our product candidates in certain patient subpopulations or at all.

Previous wording

In some instances, our product candidates may be evaluated in clinical trials conducted by certain clinical investigators who are our collaborators. We may have limited or no control over the design and administration of these investigator-sponsored trials and will have no control over the submission or approval of any IND or foreign equivalent required to conduct these trials. The investigator-sponsored trials could, depending on the actions of such third parties, jeopardize the validity of the clinical data generated, identify significant concerns with respect to our product candidates that could impact our findings or clinical trials, and adversely affect our ability to obtain marketing approval from the FDA or other applicable regulatory authorities. To the extent the results of any of these investigator-sponsored trials are inconsistent with, or different from, the results of our current or future company-sponsored trials or raise concerns regarding our product candidates, the FDA or a foreign regulatory authority may question the results of our company-sponsored trial or subject such results to greater scrutiny than it otherwise would. In these circumstances, the FDA or such foreign regulatory authorities may require us to obtain and submit additional clinical data, which could delay clinical development or marketing approval of our product candidates. In addition, while investigator-sponsored trials could be useful to inform our own clinical development efforts, there is no guarantee that we will be able to use the data from these trials to form the basis for regulatory approval of our product candidates.

Current wording

In some instances, our product candidates may be evaluated in ISTs conducted by certain clinical investigators who are our collaborators. In addition to supplying product candidate for such trials, we may also provide financial support. In July 2024, we announced that researchers at Columbia University Irving Medical Center (“CUIMC”) initiated an IST of NKX019 in patients with SLE. Although ISTs may provide valuable insights, they also pose regulatory and operational challenges that could impact our ability to bring our product candidates to market. We have limited or no control over the design, administration and timing of the ISTs and will have no control over the submission or approval of any IND or foreign equivalent required to conduct these trials. We rely on the investigators and physicians to ensure their compliance with clinical and regulatory requirements when using our product candidates for these trials. Their failure to comply could expose us to liability. The IST could, depending on the actions of the investigators and other third parties involved in the ISTs, jeopardize the validity of the clinical data generated, identify significant concerns with respect to our product candidates that could impact our findings or clinical trials, and adversely affect our ability to obtain marketing approval from the FDA or other applicable regulatory authorities. To the extent the results of any of these ISTs are inconsistent with, or different from, the results of our current or future company-sponsored trials or raise concerns regarding our product candidates, the FDA or a foreign regulatory authority may question the results of our company-sponsored trials or subject such results to greater scrutiny than it otherwise would. In these circumstances, the FDA or such foreign regulatory authorities may require us to obtain and submit additional clinical data, which could delay clinical development or marketing approval of our product candidates. In addition, while ISTs could be useful to inform our own clinical development efforts or provide other valuable insights, there is no guarantee that we will be able to use the data from these trials to form the basis for regulatory approval of our product candidates. Moreover, the patient population in such trials is at risk for serious adverse events. If these events are attributed to our product candidates, it could negatively impact their safety profile, leading to delays or failure in obtaining regulatory approval or successfully commercializing our drug candidates. Additionally, our supply capabilities may limit patient enrollment in these trials. We may need to restructure or pause supply to enroll sufficient patients in our company sponsored trials, potentially leading to adverse publicity or other disruptions.

Previous wording

delays or difficulties in enrolling patients in our clinical trials, including our ongoing NKX019 clinical trial for cancer and planned NKX019 clinical trial for LN;

Current wording

delays or difficulties in enrolling patients in our clinical trials, including our ongoing NKX019 clinical trials for cancer and LN and planned NKX019 clinical trial for scleroderma, myositis, and AAV;

Previous wording

As of March 31, 2024, we had 150 full-time employees. In October 2023, we announced a reduction in headcount of 18 positions, as well as a cap on future headcount growth. As part of these measures we also reallocated existing headcount among our functions. However, in the future, our operation may require us to expand our managerial, operational, clinical, quality, human resources, legal, manufacturing, supply chain, finance, commercial and/or other resources in order to manage our clinical trials, continue our development activities and eventually commercialize our product candidates. Our management and personnel, systems and facilities currently in place may not be adequate to support this future growth. In addition, competition for qualified personnel needed to support this future growth is intense and it may be difficult for us to attract and retain quality personnel generally, and as a result of any impact the reduction in force may have on potential employees’ perception of our company and culture. Our need to effectively execute our growth strategy requires that we:

Current wording

As of June 30, 2024, we had 150 full-time employees. Our operation may require us to expand our managerial, operational, clinical, quality, human resources, legal, manufacturing, supply chain, finance, commercial and/or other resources in order to manage our clinical trials, continue our development activities and eventually commercialize our product candidates. Our management and personnel, systems and facilities currently in place may not be adequate to support this future growth. In addition, competition for qualified personnel needed to support this future growth is intense and it may be difficult for us to attract and retain quality personnel generally, and as a result of any impact the reduction in force may have on potential employees’ perception of our company and culture. Our need to effectively execute our growth strategy requires that we:

Previous wording

complying with regulations regarding evolving donor infectious disease testing, traceability, manufacturing, release of product candidates and other requirements from regulatory authorities outside the United States;

Current wording

complying with regulations regarding evolving donor infectious disease testing, traceability, manufacturing, release of product candidates and other requirements from regulatory authorities at the state or federal level or outside the United States;

Previous wording

As of May 6, 2024, our directors and executive officers, and entities affiliated with them, as well as holders of more than 5% of our outstanding shares of common stock, in the aggregate beneficially own 70% of our common stock (based on 70,467,620 shares of our common stock outstanding and 3,000,031 shares that could be issued upon the exercise of pre-funded warrants). These stockholders, acting together, are able to control or significantly influence all matters requiring stockholder approval, including the election and removal of directors and approval of any merger, consolidation or sale of all or substantially all of our assets.

Current wording

As of August 9, 2024, our directors and executive officers, and entities affiliated with them, as well as holders of more than 5% of our outstanding shares of common stock, in the aggregate beneficially own 58% of our common stock (based on 70,558,754 shares of our common stock outstanding and 3,000,031 shares that could be issued upon the exercise of pre-funded warrants). These stockholders, acting together, are able to control or significantly influence all matters requiring stockholder approval, including the election and removal of directors and approval of any merger, consolidation or sale of all or substantially all of our assets.

Previous wording

Sales of a substantial number of shares of our common stock in the public market, or the perception in the market that the holders of a large number of stockholders intend to sell shares of our common stock, could reduce the market price of our common stock. As of May 6, 2024, we had 73,467,651 shares of common stock outstanding.

Current wording

Sales of a substantial number of shares of our common stock in the public market, or the perception in the market that the holders of a large number of stockholders intend to sell shares of our common stock, could reduce the market price of our common stock. As of August 9, 2024, we had 73,558,785 shares of common stock outstanding (including pre-funded warrants).

Previous wording

Our internal computer systems, cloud-based computing services and those of our current and future collaborators, third party service providers, and other contractors or consultants (collectively, our "information systems") are vulnerable to damage or interruption from computer viruses, ransomware, malware, data corruption, cyber-based attacks, phishing attacks, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. While we have taken steps to protect the security of our information systems and the data maintained in those systems, we have, from time to time, experienced cyber incidents of varying degrees, although none of these cyber incidents have had a material adverse impact on our business, financial condition or results of operations. Our business is becoming increasingly dependent upon these information systems, including as a result of remote working policies following the COVID-19 pandemic. It is possible that in the future our safety and security measures will not prevent the improper functioning or damaging of our systems, or the improper access or disclosure of personally identifiable information, in particular as cyber-based attacks become increasingly sophisticated, and any such event could materially and adversely impact our business, financial condition or results of operations. If a significant system failure, accident, security breach or other cyber incident were to occur and cause interruptions in our operations, it could result in a disruption of our development programs and our business operations, whether due to a loss of our trade secrets or other proprietary information, the disclosure of protected personally identifiable patient information or other similar disruptions. For example, the loss of clinical trial data from completed or future clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. In addition, our software systems include cloud-based applications that are hosted by third-party service providers with security and information technology systems subject to similar risks. To the extent that any disruption, security breach or other cyber incident were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability, our competitive position could be harmed and the further development and commercialization of our product candidates could be delayed, any of which could materially adversely affect our business, financial condition, results of operations and growth prospects.

Current wording

Our internal computer systems, cloud-based computing services and those of our current and future collaborators, third party service providers, and other contractors or consultants (collectively, our "information systems") are vulnerable to damage or interruption from computer viruses, ransomware, malware, data corruption, cyber-based attacks, phishing attacks, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. These computer systems may also experience disruptions or outages due to internal or third-party mistakes or technical errors, including due to software updates. Such information system disruptions, even if inadvertent, may limit or disable our access to our systems or access by our collaborators, third party service providers, or other contractors or consultants to their systems, which could disrupt our business. While we have taken steps to protect our information systems and the data maintained in those systems, we have, from time to time, experienced cyber incidents of varying degrees, although none of these cyber incidents have had a material adverse impact on our business, financial condition or results of operations. Our business is becoming increasingly dependent upon these information systems, including as a result of remote working policies following the COVID-19 pandemic. It is possible that in the future our safety and security measures will not prevent the improper functioning or damaging of our systems, or the improper access or disclosure of personally identifiable information, in particular as cyber-based attacks become increasingly sophisticated, and any such event could materially and adversely impact our business, financial condition or results of operations. If a significant system disruption, failure, accident, security breach or other cyber incident were to occur and cause interruptions in our operations, it could result in a disruption of our development programs and our business operations, whether due to a loss of our trade secrets or other proprietary information, the disclosure of protected personally identifiable patient information or other similar disruptions. For example, the loss of clinical trial data from completed or future clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. In addition, our software systems include cloud-based applications that are hosted by third-party service providers with security and information technology systems subject to similar risks. To the extent that any disruption, security breach or other cyber incident were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability, our competitive position could be harmed and the further development and commercialization of our product candidates could be delayed, any of which could materially ad…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

During the quarter ended March 31, 2024, none of our directors or officers adopted, modified orterminated a "Rule 10b5-1 trading arrangement" or a "non-rule 10b5-1 trading arrangement," as each item is defined in Item 408(a) of Regulation S-K, except as described below.

Current wording

During the quarter ended June 30, 2024, none of our directors or officers adopted, modified orterminated a "Rule 10b5-1 trading arrangement" or a "non-rule 10b5-1 trading arrangement," as each item is defined in Item 408(a) of Regulation S-K.