MACROGENICS INC

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International trade policies, including tariffs, sanctions and trade barriers may adversely affect the Company’s business, financial condition, results of operations and prospects.

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The Company operates in a global economy, which includes utilizing third-party suppliers in several countries outside the United States. There is inherent risk, based on the complex relationships among the U.S. and the countries in which the Company conducts its business, that political, diplomatic, and national security factors can lead to global trade restrictions and changes in trade policies and export regulations that may adversely affect our business and operations. The current international trade and regulatory environment is subject to significant ongoing uncertainty. The U.S. government has recently announced substantial new tariffs affecting a wide range of products and jurisdictions and has indicated an intention to continue developing new trade policies, including with respect to the pharmaceutical industry. In response, certain foreign governments have announced or implemented retaliatory tariffs and other protectionist measures. These developments have created a dynamic and unpredictable trade landscape, which may adversely impact the Company’s business, results of operations, financial condition and prospects.

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The Company currently relies, and expects to continue to rely, on third parties for a portion of the manufacture of the Company’s product candidates for clinical testing, as well as for manufacture of certain products that the Company may commercialize, if approved. Currently, several of the Company’s suppliers are located outside of the United States. The Company also relies on specialized laboratory equipment, supplies, materials, and precursor compounds, all or part of which the Company believes may be ultimately sourced from multiple countries outside the United States, to advance its research and development efforts.

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Current or future tariffs will result in increased research and development expenses, including with respect to increased costs associated with APIs, raw materials, laboratory equipment and research materials and components. In addition, such tariffs will increase the Company’s supply chain complexity and could also potentially disrupt its existing supply chain. Trade restrictions affecting the import of materials necessary for clinical trials could result in delays to the Company’s development timelines. Increased development costs and extended development timelines could place the Company at a competitive disadvantage compared to companies operating in regions with more favorable trade relationships and could reduce investor confidence, negatively impacting the Company’s ability to secure additional financing on favorable terms or at all. In addition, as the Company advances toward commercialization in the future, tariffs and trade restrictions could hinder the Company’s ability to establish cost-effective production capabilities, negatively impacting its growth prospects.

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The complexity of announced or future tariffs may also increase the risk that the Company or its customers or suppliers may be subject to civil or criminal enforcement actions in the United States or foreign jurisdictions related to compliance with trade regulations. Foreign governments may also adopt non-tariff measures, such as procurement preferences or informal disincentives to engage with, purchase from or invest in U.S. entities, which may limit the Company’s ability to compete internationally and attract non-U.S. investment, employees, customers and suppliers. Foreign governments may also take other retaliatory actions against U.S. entities, such as decreased intellectual property protection, increased enforcement actions, or delays in regulatory approvals, which may result in heightened international legal and operational risks. In addition, the United States and other governments have imposed and may continue to impose additional sanctions, such as trade restrictions or trade barriers, which could restrict the Company from doing business directly or indirectly in or with certain countries or parties and may impose additional costs and complexity to the Company’s business.

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Trade disputes, tariffs, restrictions and other political tensions between the United States and other countries may also exacerbate unfavorable macroeconomic conditions including inflationary pressures, foreign exchange volatility, financial market instability, and economic recessions or downturns. The ultimate impact of current or future tariffs and trade restrictions remains uncertain and could materially and adversely affect the Company’s business, financial condition, and prospects. While the Company actively monitors these risks, any prolonged economic downturn, escalation in trade tensions, or deterioration in international perception of U.S.-based companies could materially and adversely affect the Company’s business, ability to access the capital markets or other financing sources, results of operations, financial condition and prospects. In addition, tariffs and other trade developments have and may continue to heighten the risks related to the other risk factors.