Decoy Therapeutics Inc.

Our business is subject to numerous risks and uncertainties, including those discussed at length in the section titled “Risk Factors.” These risks include, among others, the following:

Risks Related to our Business

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Our common stock may be subject to delisting from Nasdaq.

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Our financial condition raises substantial doubt regarding our ability to continue as a going concern.

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We have never generated revenue from product sales, and all of our potential product candidates are currently in the preclinical stage, and we may continue to incur significant losses for the foreseeable future and never generate revenue from product sales.

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Because we have yet to generate revenue from product sales on which to evaluate our potential for future success and to determine if we will be able to execute our business plan, it is difficult to evaluate our prospects and the likelihood of success or failure of our business.

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Because early-stage drug development requires major capital investment, as we continue to incur operating losses, we will need to raise additional capital or form strategic partnerships to support our research and development activities in the future.

Risks Related to the Discovery, Development and Commercialization of Potential Product Candidates

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If any strategic alliances on which we depend are unsuccessful or are terminated, we may be unable to develop or commercialize certain potential product candidates and we may be unable to generate revenues from our development programs.

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Since we expect to rely on third parties to conduct, supervise and monitor any future clinical trials, if those third parties fail to perform in a satisfactory manner and one that meets applicable regulatory, scientific and safety requirements, it may materially harm our business.

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Because the approach we are taking to discover and develop drugs is novel, including the use of artificial intelligence, it may never lead to marketable products, and we are subject to unique risks related to evolving AI regulations in the U.S. and internationally, third-party technology dependencies, intellectual property concerns, and cybersecurity threats associated with our use of AI technology.

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Even if FDA grants breakthrough therapy designation for one or more of our potential product candidates, the designation may not lead to a faster development or regulatory review or approval process, and it does not increase the likelihood that our potential product candidates will receive marketing approval, and FDA may rescind the designation if it determines the product candidate no longer meets the qualifying criteria for breakthrough therapy.

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If we do not succeed in our efforts to identify or discover additional potential product candidates, your investment may be lost.

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Our potential product candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval, limit the commercial viability of an approved label, or result in significant negative consequences following marketing approval, if any.

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Difficulty in enrolling patients is a common hurdle faced by early-stage biotechnology companies and could, and often does, delay or prevent clinical trials of potential product candidates.

Risks Related to Our Operations and Industry

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Our reliance on patents, trade secrets and confidentiality agreements may not adequately protect our intellectual property, and third parties may challenge the validity or enforceability of our patents or design around our claims.

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Our trade secrets and confidential proprietary information may be disclosed, and competitors may gain access to our trade secrets or independently develop substantially equivalent information and techniques.

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Third-party claims of intellectual property infringement may prevent or delay our development and commercialization efforts.

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We may not be able to protect our intellectual property rights throughout the world.

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We may be involved in lawsuits to protect or enforce our patents or the patents of our licensors, which could be expensive, time consuming, and unsuccessful.

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If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to market and sell our potential product candidates, we may be unable to generate any revenues from product sales.

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If we lose key management or scientific personnel, cannot recruit qualified employees, directors, officers, or other personnel, or experience increases in our compensation costs, our business may materially suffer.

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If we obtain approval to commercialize any approved products outside of the United States, a variety of risks associated with international operations could materially adversely affect our business.

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We may face potential product liability, and if successful claims are brought against us, we may incur substantial liability and costs which could be greater than our insurance coverage or overall resources.

Risks Related to Ownership of our Common Stock

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The price of our common stock may fluctuate substantially.

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Future sales of a significant number of our shares of common stock in the public markets, or the perception that such sales could occur, could depress the market price of our shares of our common stock or cause our stock price to decline.

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We do not currently intend to pay dividends on our common stock, and any return to investors is expected to come, if at all, only from potential increases in the price of our common stock.

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If we were deemed to be an investment company under the Investment Company Act of 1940, as amended (the “1940 Act”), applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business, financial condition and results of operations.

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We are a “smaller reporting company” and are able to avail ourselves of reduced disclosure requirements applicable to smaller reporting companies, which could make our common stock less attractive to investors.

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Our certificate of incorporation, our bylaws, and Delaware law may have anti-takeover effects that could discourage, delay, or prevent a change in control, which may cause our stock price to decline.

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Financial reporting obligations of being a public company in the U.S. are expensive and time-consuming, and our management is required to devote substantial time to compliance matters.

General Risk Factors

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If securities or industry analysts do not publish research or reports, or publish unfavorable research or reports about our business, our stock price and trading volume may decline.

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If we fail to comply with the rules under the Sarbanes-Oxley Act related to accounting controls and procedures in the future, or, if we discover material weaknesses and other deficiencies in our internal control and accounting procedures, our stock price could decline significantly and raising capital could be more difficult.

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Changes in tax laws or exposure to additional income tax liabilities could have a material impact on our business, results of operations, financial condition and cash flows.

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Additional indirect taxes in various jurisdictions could materially adversely affect our business, financial condition, results of operations, and prospects.