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| PART I | | 5 |
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| Item 1. Business | | 5 |
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| Item 1A. Risk Factors | | 47 |
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| Item 1B. Unresolved Staff Comments | | 100 |
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| Item 1C. Cybersecurity | | 101 |
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| Item 2. Properties | | 102 |
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| Item 3. Legal Proceedings | | 102 |
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| Item 4. Mine Safety Disclosures | | 102 |
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| PART II | | 103 |
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| Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | | 103 |
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| Item 6. [Reserved] | | 103 |
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| Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations | | 104 |
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| Item 7A. Quantitative and Qualitative Disclosures About Market Risk | | 115 |
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| Item 8. Financial Statements and Supplementary Data | | 115 |
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| Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | | 115 |
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| Item 9A. Controls and Procedures | | 115 |
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| Item 9B. Other Information | | 116 |
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| Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | | 116 |
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| PART III | | 116 |
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| Item 10. Directors, Executive Officers and Corporate Governance | | 116 |
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| Item 11. Executive Compensation | | 116 |
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| Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | | 116 |
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| Item 13. Certain Relationships and Related Transactions, and Director Independence | | 117 |
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| Item 14. Principal Accounting Fees and Services | | 117 |
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| PART IV | | 117 |
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| Item 15. Exhibits and Financial Statement Schedules | | 117 |
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Statements made in this Annual Report on Form 10-K for the fiscal year ended December 31, 2023, or this Annual Report, may include “forward-looking statements” within the meaning of the federal securities laws, which statements are subject to considerable risks and uncertainties. These forward-looking statements are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995.* * All statements included or incorporated by reference in this Annual Report, other than statements of historical fact, are forward-looking statements. You can identify forward-looking statements by the use of words such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “design,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “predict,” “positioned,” “potential,” “seek,” “should,” “suggest,” “target,” “will,” “would” and similar statements of a future or forward-looking nature and identify forward-looking statements. In particular, forward-looking statements contained in this Annual Report relate to, among other things, the process of discovering, developing and commercializing medicines that are safe and effective for use as human therapeutics, and in the endeavor of building a business around such medicines. We caution you that the foregoing may not encompass all of the forward-looking statements made in this Annual Report. In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Annual Report on Form 10-K, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information.
Forward-looking statements are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. There are or will be important factors that could cause actual results to differ materially from those indicated in these statements. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.
This Annual Report also contains estimates, projections and other information concerning our industry, our business, and the markets for our product candidates. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties, and actual events or circumstances may differ materially from events and circumstances reflected in this information. Unless otherwise expressly stated, we obtained this industry, business, market and other data from reports, research surveys, studies and similar data prepared by market research firms and other third parties, industry, medical and general publications, government data and similar sources.
You should read the following together with the more detailed information regarding our company, our common stock and our consolidated financial statements and notes to those statements appearing elsewhere in this Annual Report or incorporated by reference. The Securities and Exchange Commission, or SEC, allows us to “incorporate by reference” information that we file with the SEC, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be part of this Annual Report.
Risk Factor Summary
The risks described in the section titled “Risk Factors” immediately following this summary could impact our ability to realize the full benefits of our strengths or execute all or part of our strategy. Some of the more significant risks described in “Risk Factors” include the following:
Risks Related to Our Business
| ● | We are a biopharmaceutical company with a history of losses. We expect to continue to incur significant losses for the foreseeable future and may never achieve or maintain profitability. |
| ● | We have not yet demonstrated successful completion of clinical development, submitted a New Drug Application, obtained FDA approval for marketing, or successfully commercialized a drug product, and we may be unable to do so. Furthermore, AL102, which we recently acquired, is currently in Phase 3 development, but |
such acquisition and prior clinical success is not indicative of our ability to obtain new drug application, or NDA, approval or successfully commercialize AL102.
| ● | We will need to raise substantial additional funds to advance development of our development candidates and our discovery and ADC platforms, and we cannot guarantee that we will have sufficient funds available in the future to develop and commercialize any of our development candidates. |
Risks Related to Our Discovery, Development and Regulatory Approval of Development Candidates
| ● | We may not be successful in our efforts to use and expand our discovery and ADC platforms to build and progress a pipeline. |
| ● | We may be unable to advance any of our development candidates into and through clinical development, obtain regulatory approvals and ultimately commercialize them, or we could experience significant delays in doing so. |
| ● | We may pursue particular programs or development candidates over others; these decisions may prove to be wrong and may adversely impact our business. |
| ● | We may fail to realize the business benefits anticipated as a result of completed or pending strategic transactions. |
| ● | Clinical trials are expensive, time-consuming and difficult to design and implement. |
| ● | Preliminary results from our preclinical studies and clinical trials that we announce or publish from time to time may change as more data become available and as the data undergo audit and verification procedures. Furthermore, clinical development has an uncertain outcome, and results of earlier studies and trials may not be predictive of future trial results. |
| ● | We face substantial competition, which may result in others discovering, developing or commercializing products more quickly or marketing them more successfully than us. If their product candidates are shown to be safer or more effective than ours, then our commercial opportunity will be reduced or eliminated. |
| ● | If any of our development candidates is approved for marketing and commercialization in the future and we are unable to develop sales, marketing and distribution capabilities on our own or enter into agreements with third parties to perform these functions on acceptable terms, we will be unable to successfully commercialize any such future products. |
| ● | Additional regulatory burdens and other risks and uncertainties in foreign markets may limit our growth. |
Risks Related to Government Regulation
| ● | We are subject to stringent and evolving U.S. and foreign laws, regulations, and rules, contractual obligations, industry standards, policies and other obligations related to data privacy and security. Our actual or perceived failure to comply with such obligations could lead to regulatory investigations or government enforcement actions; private litigation (including class claims) and mass arbitration demands; fines and penalties; disruptions of our business operations; adverse publicity; and other consequences that could negatively affect our operating results and business. |
| ● | Health care legislative reform measures may have a material adverse effect on our business and results of operations. |
| ● | If we or our existing or potential future partners, manufacturers or other service providers fail to comply with health care laws and regulations, we or they could be subject to enforcement actions, which could affect our ability to develop, market and sell our products and may harm our reputation. |
| ● | Even if we receive regulatory approval of our development candidates, we will be subject to ongoing regulatory obligations and continued regulatory review, which may result in significant additional expense, and we may be subject to penalties if we fail to comply with regulatory requirements. |
Risks Related to Manufacturing, Commercialization and Reliance on Third Parties.
| ● | If we choose to pursue collaborations and other strategic transactions, we may not be able to enter into such transactions on acceptable terms, if at all, which could adversely affect our development and commercialization activities, impact our cash position, increase our expense, and present significant distractions to our management. |
| ● | If third parties on which we intend to rely to conduct our current and future preclinical studies and clinical trials do not perform as contractually required, fail to satisfy regulatory or legal requirements or miss expected deadlines, our programs could be delayed with material and adverse impacts on our business and financial condition. |
Risks Related to Our Intellectual Property
| ● | It is difficult and costly to protect our intellectual property and our proprietary technologies, and we may not be able to ensure their protection. |
| ● | Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by government patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements. |
| ● | We may not be able to protect our intellectual property rights throughout the world, which could negatively impact our business. |
| ● | If we fail to comply with our obligations under any license, collaboration or other intellectual property-related agreements, we may be required to pay damages and could lose intellectual property rights that may be necessary for developing, commercializing and protecting our current or future targeted therapeutics, or we could lose certain rights to grant sublicenses. |
| ● | Intellectual property rights of third parties could adversely affect our ability to commercialize our targeted therapeutics, and we might be required to obtain licenses from third parties to engage in development or marketing efforts, which may not be available on commercially reasonable terms or at all. |
Risks Related to Our Business Operations and Industry
| ● | We may be unable to successfully integrate the Immunome and Morphimmune businesses and realize the anticipated benefits of the Merger. |
| ● | Any inability to attract and retain qualified key management, technical personnel and employees would impair our ability to implement our business plan. |
Risks Related to Our Common Stock
| ● | The market price of our common stock is expected to be volatile, and purchasers of our common stock could incur substantial losses. |
| ● | Our ability to use net operating loss carryforwards and other tax attributes may be limited. |
