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YoY shift: Lean -
Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is -0.15pp more bearish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
-0.12pp
Flat
Net-tone change vs last year's 10-K.
MD&A
-0.18pp
Flat
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
Language change vs prior 10-K
Risk Factors (Item 1A) - words with the biggest YoY frequency increase
Negative rising
adversely+21
unable+8
severely+8
negative+6
difficult+5
Positive rising
successfully+9
achieve+8
exclusive+4
favorable+4
profitability+4
Risk Factors (Item 1A)
37,045 words
RISK FACTORS
Except for the historical information contained herein or incorporated by reference, this Annual Report and the information incorporated by reference contains forward-looking statements that involve risks and uncertainties. These statements include projections about our accounting and finances, plans and objectives for the future, future operating and economic performance and other statements regarding future performance. These statements are not guarantees of future performance or events. Our actual results may differ materially from those discussed here. Factors that could cause or contribute to differences in our actual results include those discussed in the following section, as well as those discussed in Part II, Item 7 entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere throughout this Annual Report and in any other documents incorporated by reference into this Annual Report. You should consider carefully the following risk factors, together with all of the other information included or incorporated by reference into this Annual Report. Each of these risk factors, either alone or taken together, could adversely affect our business, operating results and financial condition, as well as adversely affect the value of an investment in our common stock. There may be additional risks that we do not presently know of or that we currently believe are immaterial which could also impair our business and financial position.
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
prolongation+5
adverse+3
loss+2
negative+2
warning+2
Positive rising
achieved+6
collaboration+3
progress+2
positive+2
advancing+2
MD&A (Item 7)
10,406 words
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion of the financial condition and results of operations of Kura Oncology, Inc. should be read in conjunction with the financial statements and the notes to those statements appearing in this Annual Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks, assumptions and uncertainties. Important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis include, but are not limited to, those set forth in “Item 1A. Risk Factors” in this Annual Report. All forward-looking statements included in this Annual Report are based on information available to us as of the time we file this Annual Report and, except as required by law, we undertake no obligation to update publicly or revise any forward-looking statements. For the comparison of the financial results for the fiscal years ended December 31, 2024 and 2023, see Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on February 28, 2025 .
References to “Kura Oncology, Inc.,” “we,” “us” and “our” refer to Kura Oncology, Inc.
Risks Related to the Commercialization of KOMZIFTI and Our Product Candidates
Our ability to generate revenue is highly dependent on the successful commercialization of KOMZIFTI in the United States and continued global development of ziftomenib. If we are unable to successfully commercialize KOMZIFTI in the United States, or to expand ziftomenib’s indications of use or market opportunity, our ability to generate meaningful revenue or achieveprofitability will be materially and adversely affected.
KOMZIFTI is our only approved product and it has been approved solely as a monotherapy for the treatment of adult patients with relapsed or refractory NPM1-mutated AML. Prior to KOMZIFTI, we have not, as an organization, launched or commercialized a product, and there is no guarantee that we will be able to do so successfully with KOMZIFTI. Our ability to generate revenue and achieveprofitability is wholly dependent on our ability to successfully commercialize KOMZIFTI in the United States and to expand ziftomenib’s indications for use beyond monotherapy in adult patients with relapsed or refractory NPM1-mutated AML.
The success of KOMZIFTI and ziftomenib will depend on several factors, including the following:
KOMZIFTI’s ability to achieve market acceptance by physicians, patients, third-party payors and others in the medical community;
the willingness of physicians to prescribe KOMZIFTI as a monotherapy;
the length of time that patients who are prescribed KOMZIFTI remain on treatment, which may be shorter than we anticipate;
our lack of experience in marketing, selling and distributing KOMZIFTI or, as an organization, any other approved product;
our ability to obtain and maintain third-party payor coverage and adequate reimbursement in both public and private payor spaces;
the reimbursement and coverage policies of government and private payors such as Medicare, Medicaid, insurance companies, health maintenance organizations and other plan administrators;
effectively competing with other existing and future therapies;
the relative price of KOMZIFTI as compared to alternative treatment options;
the relatively low incidence and prevalence of patients in KOMZIFTI’s approved indication;
the high unmet need and relatively poor prognosis for patients in KOMZIFTI’s approved indication;
future competitive or other market factors that may adversely affect the commercial potential of KOMZIFTI;
timely and successful enrollment of patients in, and completion of, clinical trials of ziftomenib with favorable results;
our ability to obtain and maintain regulatory approvals for ziftomenib for any other indications;
changed or increased regulatory restrictions;
changes to the label for KOMZIFTI that could restrict how we market and sell KOMZIFTI, including as a result of new data from spontaneous adverse event reports, post-marketing studies, or ongoing or future clinical trials of ziftomenib;
our ability to maintain adequate commercial supplies of KOMZIFTI and clinical supplies of ziftomenib to meet demand;
our ability, or that of our collaborators, to develop and obtain clearance or approval of companion diagnostics on a timely basis, or at all, and an adequate supply of these diagnostics and access to these diagnostics that outpaces demand;
the successful completion of any required or committed post-marketing studies and available funding to perform any such post-marketing requirements or post-marketing commitments; and
our ability to obtain and maintain patent, trade secret and other intellectual property protection and statutory exclusivities for KOMZIFTI and ziftomenib, and to protect and enforce our intellectual property rights.
Many of these factors are beyond our control, and if we cannot address any of them in a timely manner or at all, we could experience significant delays or an inability to successfully commercialize KOMZIFTI and continue to develop ziftomenib, which would materially harm our business. Moreover, successful commercialization of KOMZIFTI may not generate sufficient revenue from product sales, and we may not become profitable in the near term, or at all. If we are unable to successfully commercialize KOMZIFTI, our ability to generate meaningful revenue from product sales and achieveprofitability will be materially and adversely affected, which in turn would severely and adversely affect our financial results, business and business prospects.
KOMZIFTI may fail to achieve the degree of market acceptance by physicians, patients, third-party payors and others in the medical community necessary for commercial success.
While KOMZIFTI has received marketing approval in the United States for the treatment of adult patients with relapsed or refractory NPM1-mutated AML, it may nonetheless fail to gain sufficient market acceptance by physicians, patients, third-party payors and others in the medical community. For example, current cancer treatments like immunotherapy, chemotherapy, targeted therapy and radiation therapy are well established in the medical community, and doctors may continue to rely on these treatments to the exclusion of KOMZIFTI. If KOMZIFTI does not achieve an adequate level of market acceptance, we may not generate significant product revenues and we may not become profitable. The degree of KOMZIFTI’s market acceptance will depend on a number of factors, including:
KOMZIFTI's efficacy, safety and potential advantages and disadvantages compared to alternative available treatments;
our ability to offer KOMZIFTI for sale at a price reflective of its value to the market;
the convenience and ease of administration compared to alternative treatments;
the willingness of the target patient population to try KOMZIFTI and of physicians to prescribe KOMZIFTI;
the willingness of physicians to keep patients of the target patient population on therapy for a duration of time;
the strength of our marketing and distribution support;
the availability of third-party coverage and adequate reimbursement, including patient cost-sharing programs such as copays and deductibles;
the ability of our third-party collaborators to develop companion diagnostics;
the acceptance and utilization of companion diagnostics to identify appropriate patients;
the prevalence and severity of any side effects; and
any restrictions on the use of KOMZIFTI together with other medications.
If the market opportunities for KOMZIFTI are smaller than we believe, our revenue may be adversely affected, and our business may suffer.
We are commercializing KOMZIFTI as a monotherapy for the treatment of adult patients with relapsed or refractory NPM1-mutated AML in the United States. We also intend to seek to expand ziftomenib’s indications of use into combination therapy in the frontline setting. Our estimates of the size of the patient populations with relapsed or refractory AML and newly diagnosed AML in the United States are based on a variety of sources, including scientific literature, government databases, industry reports and internal analyses. These estimates involve assumptions and uncertainties and may prove to be incorrect. Further, new data generated by us or others could change the estimated incidence or prevalence of relapsed or refractory AML or newly diagnosed AML in the United States.
The potentially addressable patient population for KOMZIFTI may be smaller than we expect. Patients within the eligible population may not be eligible for, or amenable to, treatment with KOMZIFTI, and we may be unable to successfully identify and reach appropriate patients or achieve a significant market share in the approved indication. In addition, initial sales of KOMZIFTI may deplete the prevalence pool of patients in KOMZIFTI’s approved indication more quickly than expected, which would have a negative impact on sales of KOMZIFTI in the future.
Our commercialization of KOMZIFTI in the United States currently is limited to relapsed or refractory NPM1-mutated AML. Any future potential commercialization will be limited to the therapeutic indications examined in our clinical trials and approved by the FDA and other applicable regulatory authorities. We are not permitted to market KOMZIFTI for any unapproved indications. Future regulatory approvals for KOMZIFTI, if any, could be conditioned upon label restrictions that materially limit the addressable patient population.
Our market opportunity may also be limited by the pricing we are able to achieve, the quality and expiration of our intellectual property rights and regulatory exclusivity, duration of treatment and future competitor treatments that enter the market. If any of our estimates prove to be inaccurate, our market opportunity could be significantly diminished, which would have a material adverse impact on our business and business prospects, and would adversely affect our ability to achieveprofitability.
If we are unable to execute on our sales, marketing and distribution plans to commercialize KOMZIFTI, we may be unable to generate meaningful product revenue.
To successfully commercialize KOMZIFTI, we need to execute on our sales, marketing and distribution plans. The execution of our sales, marketing and distribution plans is, and will continue to be, expensive and time-consuming and we cannot be certain that we will be able to execute on these plans successfully.
We may compete with companies that have more extensive, experienced or well-funded sales and marketing operations to recruit, hire, train and retain marketing and sales personnel. If we are unable to retain and effectively train marketing and sales personnel and equip them with compliant and effective materials, our efforts to successfully commercialize KOMZIFTI could be adversely affected. In addition, under the Kyowa Co-Promotion Agreement, Kyowa Kirin has the right and responsibility to co-promote ziftomenib in the United States and is obligated to meet minimum detailing requirements using sales representatives meeting specific qualifications. If Kyowa Kirin does not perform in the manner we expect or fulfill its responsibilities in a timely manner, or at all, the commercialization efforts related to KOMZIFTI could be adversely impacted. Any of the foregoing would negatively impact our business and business prospects, severely and adversely affect our financial results, and might cause us to cease operations.
In addition, we rely on a select network of third-party distributors, specialty pharmacies and other vendors to distribute KOMZIFTI in the United States. We rely on such vendors to effectively distribute KOMZIFTI in a timely manner, provide certain patient support services, manage prescription intake, collect accurate patient and inventory data and collect payments from payors. While we have entered into agreements with these third parties, they may not perform as agreed, our strategic priorities may change, they may terminate their agreements with us or they may experience business disruption or failure, and any of these circumstances could adversely affect our revenues, financial condition or results of operations. Further, an inability by our distributors or specialty pharmacies to meet our patients’ needs may lead to reputational harm or patient loss. In the event that such network fails to properly meet our or our patients’ needs, we may need to partner with other distributors, specialty pharmacies or vendors to replace or supplement our current network and there is no guarantee that we will be able to do so on commercially reasonable terms or at all.
If competitors develop products, product candidates or technologies that are superior to or more favorable than KOMZIFTI or our product candidates, such development would significantly impact the development and commercial viability of KOMZIFTI and our product candidates, which would severely and adversely affect our financial results, business and business prospects, and might cause us to cease operations.
The development and commercialization of new drug products is highly competitive. We face competition with respect to KOMZIFTI and our current product candidates, and we will face competition with respect to any other product candidates that we may seek to develop or commercialize in the future, from major pharmaceutical companies, specialty pharmaceutical companies and biotechnology companies worldwide. Specifically, there are a large number of companies developing or marketing treatments for cancer, including many major pharmaceutical and biotechnology companies. Some of these competitive products and therapies are based on scientific approaches that are the same as or similar to our approach, and others are based on entirely different approaches. Potential competitors also include academic institutions, government agencies and other public and private research organizations that conduct research, seek patent protection and establish collaborative arrangements for research, development, manufacturing and commercialization.
KOMZIFTI competes with a number of widely accepted treatments for relapsed or refractory AML, including intensive and non-intensive chemotherapy, and other targeted therapies that target specific mutations that can be co-mutated with NPM1 mutations, including IDH1, IDH2 or FLT3 inhibitors. KOMZIFTI also competes with revumenib (REVUFORJ®), another FDA-approved menin inhibitor targeting relapsed or refractory NPM1-mutated AML as well as relapsed or refractory KMT2A-rearranged acute leukemia. In addition, KOMZIFTI may face future competition from treatments, including other menin inhibitors, that are currently under development.
Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products that are safer, are more effective, have fewer or less severe side effects, are more convenient or are less expensive than KOMZIFTI. Our competitors may price their products below our price for KOMZIFTI, or may receive better third-party payor coverage and/or reimbursement. Such competitive practices may limit the commercial potential of KOMZIFTI.
Many of the companies against which we are competing or against which we may compete in the future have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved products than we do. Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in even more resources being concentrated among a smaller number of our competitors. Smaller and early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These third parties compete with us in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.
If we are unable to compete effectively as a result of the factors described above, our financial results, business and business prospects could be severely and adversely affected, and might cause us to cease operations.
Post-approval results for KOMZIFTI in larger numbers of patients, broader populations or real world clinical practice may not be consistent with the results from our clinical trials.
Prior to approval, KOMZIFTI had been administered only to a limited number of patients and in limited populations in clinical trials. We do not know whether the results when a larger number of patients and a broader population are exposed to KOMZIFTI, including results related to safety and efficacy, will be consistent with the results from earlier clinical trials that served as the basis for the approval. New data, including from spontaneous adverse event reports and post-marketing studies in the United States, and other ongoing clinical trials to evaluate real world experience and outcomes of patients in the United States may result in changes to the product label and may adversely affect sales or reimbursement decisions by payors, or result in withdrawal of KOMZIFTI from the market. The FDA and regulatory authorities in other jurisdictions may also consider the new data in reviewing potential marketing applications or imposing post-approval requirements. If any of these actions were to occur, it could result in significant expense and delay or limit our ability to generate sales revenues.
We have limited experience as a commercial company and our sales, marketing and distribution of KOMZIFTI may be unsuccessful or less successful than anticipated.
As a company, we have no prior experience in selling, marketing or commercializing an approved drug product. The success of our commercialization efforts is difficult to predict and subject to, among other things, continued development of our internal sales, marketing and distribution capabilities and our ability to navigate the significant expenses and risks involved with the development and management of such capabilities. For example, our commercial launch may not develop as planned
or anticipated, which may require us to, among others, adjust or amend our commercialization plan and incur significant expenses. Further, given our lack of historical experience commercializing drug products as an organization, we do not have a track record of successfully executing a commercial launch. If we are unsuccessful in accomplishing our objectives or if our commercialization efforts do not proceed as planned, we may not be able to successfully commercialize KOMZIFTI in adult patients with relapsed or refractory NPM1-mutated AML, we may require significant additional capital and financial resources, we may not become profitable, and we may not be able to compete against more established companies in our industry, any of which would severely and adversely affect our financial results, business and business prospects, and might cause us to cease operations.
The insurance coverage and reimbursement status of newly-approved products are uncertain. Failure to obtain or maintain coverage and adequate reimbursement for KOMZIFTI or any product candidates for which we receive marketing approval could limit our ability to market those products and decrease our ability to generate revenue.
The availability and extent of coverage and reimbursement by governmental and private payors is essential for most patients to be able to afford expensive treatments. Sales of KOMZIFTI and any product candidates for which we receive marketing approval will depend substantially, both domestically and abroad, on the extent to which the costs of KOMZIFTI and such product candidates will be paid by health maintenance, managed care, pharmacy benefit and similar healthcare management organizations, or reimbursed by government health administration authorities, private health coverage insurers and other third-party payors. If reimbursement is not available, or is available only to limited levels, we may not be able to successfully commercialize KOMZIFTI or any product candidates for which we receive marketing approval. Even if coverage is provided, the approved reimbursement amount may not be high enough to allow us to establish or maintain pricing sufficient to realize a sufficient return on our investment. Further, coverage policies and third-party payor reimbursement rates may change at any time. Even if favorable coverage and reimbursement status is attained for KOMZIFTI or any product candidates for which we receive marketing approval, less favorable coverage policies and reimbursement rates may be implemented in the future. Further, any companion diagnostic that we or our collaborators develop will be subject to separate coverage and reimbursement determinations by third-party payors.
There is significant uncertainty related to the insurance coverage and reimbursement of newly approved products. In the United States, the principal decisions about government-funded reimbursement for new medicines are typically made by CMS, an agency within HHS, as CMS decides whether and to what extent a new medicine will be covered and reimbursed under Medicare. Private payors often, but not always, follow CMS’s decisions regarding coverage and reimbursement. It is difficult to predict what CMS will decide with respect to coverage and reimbursement for fundamentally novel products such as ours, as there is no body of established practices and precedents for these new products. One payor’s determination to provide coverage for a drug product does not assure that other payors will also provide coverage for the drug product. Further, a payor’s decision to provide coverage for a drug product does not imply that an adequate reimbursement rate will be approved. We or our collaborators may need to conduct expensive pharmacoeconomic studies in order to demonstrate the medical necessity and cost-effectiveness of our products, in addition to the costs required to obtain FDA approvals. Nonetheless, our products may not be considered medically necessary or cost-effective.
Reimbursement agencies in countries other than the United States may be more conservative than CMS. For example, a number of cancer drugs have been approved for reimbursement in the United States and have not been approved for reimbursement in certain European countries. Outside the United States, international operations are generally subject to extensive governmental price controls and other market regulations, and we believe the increasing emphasis on cost-containment initiatives in Europe, Canada, and other countries has and will continue to put pressure on the pricing and usage of our products. In many countries, the prices of medical products are subject to varying price control mechanisms as part of national health systems. In general, the prices of medicines under such systems are substantially lower than in the United States. Other countries allow companies to fix their own prices for medicines but monitor and control company profits. Additional foreign price controls or other changes in pricing regulation could restrict the amount that we are able to charge for our products. Accordingly, in markets outside the United States, the reimbursement for our products may be reduced compared with the United States and may be insufficient to generate commercially reasonable revenues and profits.
Moreover, increasing efforts by governmental and third-party payors, in the United States and abroad, to cap or reduce healthcare costs may cause such organizations to limit both coverage and level of reimbursement for new products approved and, as a result, they may not cover or provide adequate payment for our products. In addition, drug-pricing by pharmaceutical companies has come under increased scrutiny. Specifically, there have been several recent U.S. Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to drug pricing by requiring drug companies to notify insurers and government regulators of price increases and provide an explanation of the reasons for the increase, reduce the out-of-pocket cost of prescription drugs, review the relationship between pricing and manufacturer patient programs and reform government program reimbursement methodologies for drugs. Further, HHS imposes rebates on many Medicare Part B and Medicare Part D products to penalize price increases that outpace inflation on an annual basis. In addition, HHS has been empowered to negotiate the price of certain single-source drugs that have been on the market for at least seven years covered under Medicare as part of the Medicare Drug Price Negotiation Program. Each year up to 20 products will be selected by HHS for the Medicare Drug Price Negotiation Program. Products subject to the Medicare Drug Price Negotiation Program are expected to experience a significant reduction in reimbursement from the Medicare program on a per unit basis. If coverage and adequate reimbursement are not available, or are available only to limited levels, we may not be able to successfully commercialize our current and any future product candidates that we develop, which could have an adverse effect on our operating results and our overall financial condition. We expect to experience pricing pressures in connection with the sale of our products, due to the trend toward managed healthcare, the increasing influence of health maintenance organizations and additional legislative changes. The downward pressure on healthcare costs in general, particularly prescription drugs and surgical procedures and other treatments, has become very intense. As a result, increasingly high barriers are being erected to the entry of new products into the healthcare market.
In addition to CMS and private payors, professional organizations such as the NCCN and American Society of Clinical Oncology can influence decisions about reimbursement for new medicines by determining standards for care. Also, many private payors contract with commercial vendors who sell software that provide guidelines that attempt to limit utilization of, and therefore reimbursement for, certain products deemed to provide limited benefit to existing alternatives. Such organizations may set guidelines that limit reimbursement or utilization of our products.
Further, we or our collaborators will be required to obtain coverage and reimbursement for companion diagnostic tests separate and apart from the coverage and reimbursement we seek for KOMZIFTI and any product candidates for which we receive marketing approval. There is significant uncertainty regarding our and our collaborators’ ability to obtain coverage and adequate reimbursement for any companion diagnostic test for the same reasons applicable to KOMZIFTI and our product candidates. If insurance coverage and reimbursement for companion diagnostic tests for our products is inadequate, utilization may be low, and patients may not be comprehensively screened for the presence of the genetic markers that predict response to our products.
Product liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of KOMZIFTI or any other approved products.
We face an inherent risk of product liability exposure related to the commercialization of KOMZIFTI and testing of our product candidates in human clinical trials. If we cannot successfullydefend ourselves againstclaims that KOMZIFTI or any of our product candidates caused injuries, we will incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:
FDA or other regulatory authority investigations, which could lead to a product recall or more serious enforcement action, limitations on approved indications or suspension or withdrawal of approvals;
decreased demand for KOMZIFTI or any other approved products;
injury to our reputation and significant negative media attention;
withdrawal of clinical trial participants;
significant costs to defend the related litigation;
substantial monetary awards to clinical trial participants or patients;
loss of revenue;
reduced resources of our management to pursue our business strategy; and
the inability to commercialize KOMZIFTI or any other approved products.
We currently have product liability and clinical trial liability insurance coverage that we believe is sufficient, but such coverage may not be adequate to cover all liabilities that we may incur. We may need to increase our insurance coverage if we successfully commercialize KOMZIFTI and each time we commence or expand a clinical trial. Insurance coverage is increasingly expensive. We may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise.
Risks Related to Regulatory Approval of Our Product and Product Candidates and Other Legal Compliance Matters
We may be unable to maintain FDA approval of KOMZIFTI for adult patients with relapsed or refractory NPM1-mutated AML, which would severely and adversely affect our business and business prospects.
In November 2025, we received regulatory approval from the FDA to commercialize ziftomenib under the trade name KOMZIFTI in the United States for adult patients with relapsed or refractory NPM1-mutated AML. Ziftomenib does not yet have regulatory approval for any other indication. Failure to maintain FDA approval for KOMZIFTI for adult patients with relapsed or refractory NPM1-mutated AML, or delays in obtaining, failure to obtain, or limitations in the scope of any obtained approvals for ziftomenib for any other indications, could:
result in a withdrawal of KOMZIFTI from the market or otherwise delay, limit or preclude any revenue we may receive from the commercialization of KOMZIFTI in the United States;
significantly harm the commercial potential of KOMZIFTI; or
impede, halt or increase the costs of our activities and plans for further clinical development of ziftomenib.
In addition, approved products and their manufacturers are subject to continual review, and discovery of previously unknown problems with a product or its manufacturer may result in restrictions on the product or manufacturer, including import restrictions, seizure and withdrawal of the product from the market. Commercialization and sales of KOMZIFTI are subject to government regulations related to numerous matters, including the processes of manufacturing, advertising and promotion, sales and marketing, medical information, labeling and distribution. If, and to the extent that, we are unable to comply with these regulations, our ability to earn revenue from the commercialization of KOMZIFTI will be materially and adversely impacted.
Further, if KOMZIFTI causes serious or unexpected side effects, or if other safety risks are observed as a result of our commercialization efforts for KOMZIFTI in the United States in relapsed or refractory NPM1-mutated AML or in current or potential future clinical trials of ziftomenib, a number of potential significant negative consequences could result, including:
the FDA may withdraw its approval of KOMZIFTI;
we may be required to recall KOMZIFTI, seek to change the way it is administered or conduct additional clinical trials;
the FDA may require revisions to the labeling of KOMZIFTI, including limitations on approved uses or the addition of further warnings, contraindications or other safety information, or may impose restrictions on distribution in the form of risk evaluation and mitigation strategies;
we may experience manufacturing delays and supply disruptions if regulatory inspectors identify regulatory noncompliance by third-party manufacturers requiring remediation;
KOMZIFTI may be rendered less competitive and sales, if any, may decrease;
our reputation may suffer generally both among clinicians and patients;
we may be exposed to lawsuits and associated legal expenses, including costs of resolving claims;
the FDA or similar international regulatory authorities may refuse to approve pending applications, or may suspend or revoke license approvals; or
we may be required to change or stop ongoing clinical trials of ziftomenib, which would negatively impact the development of ziftomenib for other potential indications.
Any of these events could prevent us from achieving or maintaining market acceptance for KOMZIFTI, could substantially increase the costs and expenses of commercializing KOMZIFTI, or could limit its commercial potential, which in turn could delay or prevent us from generating any meaningful revenues from the sale of the KOMZIFTI.
If we are not able to obtain, or if there are delays in obtaining, required regulatory approvals in some or all planned regions, whether due to actual or perceived deficiencies in our applications, changes in regulatory requirements, evolving agency guidance or interpretation, resource constraints at regulatory authorities, or other factors, we will not be able to commercialize, or may be delayed in commercializing, our product candidates, and our ability to generate revenue will be materially impaired.
Our product candidates must be approved by the FDA in the United States and similar regulatory authorities outside the United States prior to commercialization.
The process of obtaining marketing approvals, both in the United States and abroad, is expensive and takes many years, if approval is obtained at all, and can vary substantially based upon a variety of factors, including the type, complexity and novelty of the product candidates involved. Failure to obtain marketing approval for a product candidate will prevent us from commercializing the product candidate. Securing marketing approval requires the submission of extensive preclinical and clinical data and supporting information to regulatory authorities for each therapeutic indication to establish the product candidate’s safety and efficacy. Securing marketing approval also requires the submission of information about the product manufacturing process to, and inspection of manufacturing facilities by, the regulatory authorities, among other requirements. Our product candidates may not be effective, may be only moderately effective, may not have an acceptable durability of response, may not have an acceptable risk-benefit profile or may prove to have undesirable or unintended side effects, toxicities or other characteristics that may preclude us from obtaining marketing approval or prevent or limit commercial use.
Regulatory authorities have substantial discretion in the approval process and may refuse to accept any application or may decide that our data are insufficient for approval and require additional preclinical studies, clinical trials or other studies. In addition, varying interpretations of the data obtained from preclinical and clinical testing could delay, limit or prevent marketing approval of a product candidate. Moreover, the regulatory environment for new drug development is dynamic and subject to change, and the FDA and other regulatory agencies may modify their policies, guidance, review processes, or approval standards in ways that are difficult to predict. Changes in marketing approval policies during the development period, changes in or the enactment of additional statutes or regulations, or changes in regulatory review for each submitted product application, may cause delays in or prevent the approval of an application.
The ability of the FDA to review and approve new products or review other regulatory submissions can be affected by a variety of factors, including statutory, regulatory and policy changes, inadequate government budget and funding levels, a reduction in the FDA’s workforce and its ability to hire and retain key personnel. Disruptions at the FDA and other agencies may also increase the time to meet with and receive agency feedback, review and/or approve our submissions, conduct inspections, issue regulatory guidance, or take other actions that facilitate the development, approval and marketing of regulated products, which would adversely affect our business. In addition, government proposals to reduce or eliminate budgetary deficits may include reduced allocations to FDA and other related government agencies. For example, government shutdowns and furlough of employees have reduced federal government employee headcount and the size of the federal government. The reductions in the FDA’s workforce and budgetary pressures could significantly impact the ability of the FDA to timely review and process our regulatory submissions or take other actions critical to the marketing of our products which could have a material adverse effect on our business. In addition, public health epidemics or outbreaks could also potentially affect the business of the FDA or other health authorities, which could result in delays in meetings related to planned clinical trials and ultimately of reviews and approvals of our product candidates.
If we experience delays in obtaining approval or if we fail to obtain approval of ziftomenib beyond use as monotherapy in adult patients with relapsed or refractory NPM1-mutated AML, ziftomenib’s commercial prospects may be harmed and our ability to generate revenues will be materially impaired.
Our marketing approval for KOMZIFTI in the United States for adult patients with relapsed or refractory NPM1-mutated AML is subject to post-approval regulatory requirements and commitments, and we may be subject to penalties, restrictions or withdrawal from the market if we fail to comply with these requirements and commitments or if we experience unanticipatedproblems with KOMZIFTI.
The FDA’s approval of KOMZIFTI in adult patients with relapsed or refractory NPM1-mutated AML is subject to clinical and non-clinical post-marketing requirements and commitments, including a trial in pediatrics, a trial to assess long-term safety, trials to evaluate pharmacokinetics in patients with severe renal and hepatic impairment, trials to evaluate pharmacokinetic drug-drug interactions, a study to support the availability of an NPM1 mutation companion diagnostic, and an in vitro study to further characterize the activity of ziftomenib in AML cells with NPM1 mutations other than the A, B and D subtypes.
As a manufacturer of an FDA-approved product, our company, along with KOMZIFTI, our manufacturing processes and facilities, and our post-approval clinical data, will be subject to the continual requirements of, and review by, the FDA. These requirements include submissions of safety and other post-marketing information and reports, registration and listing requirements, cGMP requirements relating to manufacturing, quality control, quality assurance and corresponding maintenance of records and documents, including periodic inspections by the FDA and other regulatory authorities, and requirements regarding promotional interactions with healthcare professionals. In addition, the FDA closely regulates the post-approval marketing and promotion of drugs to ensure drugs are marketed only for the approved indications and in accordance with the provisions of the approved labeling. The FDA imposes stringent restrictions on manufacturers’ communications regarding use of their products and if we promote KOMZIFTI beyond relapsed or refractory NPM1-mutated AML, or for use in combination with other therapies, we may be subject to enforcement action for off-label promotion. Violations of the Federal Food, Drug and Cosmetic Act relating to the promotion of prescription drugs may lead to investigationsallegingviolations of federal and state healthcare fraud and abuse laws, as well as state consumer protection laws.
Failure to comply with our post-marketing requirements and commitments or any other regulatory requirements, later discovery of previously unknown adverse events or other problems with KOMZIFTI, our contract manufacturers or our manufacturing processes, may yield various results, including:
restrictions on KOMZIFTI, our contract manufacturers or our manufacturing processes;
restrictions on the labeling or marketing of KOMZIFTI;
restrictions on the distribution or use of KOMZIFTI;
requirements to conduct additional post-approval studies or clinical trials;
warning or untitled letters;
withdrawal of KOMZIFTI from the market;
refusal to approve pending applications or supplements to approved applications that we submit;
recall of KOMZIFTI;
fines, restitution or disgorgement of profits or revenues;
suspension or withdrawal of marketing approvals;
refusal to permit the import or export of KOMZIFTI;
product seizure; or
injunctions or the imposition of civil or criminalpenalties.
Any government investigation of allegedviolations of law could require us to expend significant time and resources in response and could generate negative publicity. In addition, the FDA’s regulations, policies or guidance may change and new or additional statutes or government regulations may be enacted that could prevent or delay regulatory approval of our product candidates or further restrict or regulate post-approval activities. We also cannot predict the likelihood, nature, or extent of adverse government regulation that may arise from pending or future legislation or administrative action.
If we are unable to fulfill the post-marketing requirements and commitments established by the FDA for KOMZIFTI in relapsed or refractory NPM1-mutated AML, or are unable to adapt to changes in existing regulatory requirements or adoption of new regulatory requirements or policies, there may be a negative impact to our business and continued regulatory approval of ziftomenib. Under such circumstances, we or our respective service providers may be subject to the actions listed above, including losing marketing approval for KOMZIFTI, which would severely and adversely affect our business and business prospects, and might cause us to cease operations.
Failure to obtain marketing approval in international jurisdictions would prevent our product candidates from being marketed abroad.
In order to market and sell our products in Japan, the European Union and many other jurisdictions, we or our third-party collaborators must obtain separate marketing approvals and comply with numerous and varying regulatory requirements. The approval procedure varies among countries and can involve additional testing and different criteria for approval. The time required to obtain approval may differ substantially from that required to obtain FDA approval. The regulatory approval process outside the United States generally includes all of the risks associated with obtaining FDA approval. In addition, in many countries outside the United States, it is required that the product be approved for reimbursement before the product can be approved for sale in that country. We or our third-party collaborators may not obtain approvals from regulatory authorities outside the United States on a timely basis, if at all. Approval by the FDA does not ensure approval by regulatory authorities in other countries or jurisdictions, and approval by one regulatory authority outside the United States does not ensure approval by regulatory authorities in other countries or jurisdictions or by the FDA. However, failure to obtain marketing approval in some countries or jurisdictions may compromise our ability to obtain approval elsewhere. We may not be able to file for marketing approvals and may not receive necessary approvals to commercialize our products in any market.
While we have obtained regulatory approval of KOMZIFTI for the treatment of adults with relapsed or refractory NPM1-mutated AML in the United States, we are dependent on Kyowa Kirin to obtain and maintain regulatory approval to market ziftomenib in every other jurisdiction. There is no guarantee that Kyowa Kirin will be able to obtain or maintain regulatory approval of ziftomenib outside of the United States. If Kyowa Kirin fails to comply with the regulatory requirements in international markets and/or obtain and maintain applicable marketing approvals, Kyowa Kirin’s ability to realize the full market potential of KOMZIFTI will be harmed and our receipt of milestone payments for the development of ziftomenib, and/or royalties on sales of ziftomenib, outside the United States could be limited, which could have a material adverse impact on our business and our results of operation and financial condition.
Although the FDA has granted Orphan Drug Designation to ziftomenib for the treatment of AML, we may not be able to obtain orphan drug exclusivity, and even if obtained, such exclusivity may not effectively protect ziftomenib from competition, which could limit the potential profitability of ziftomenib.
Regulatory authorities in some jurisdictions, including the United States and Europe, may designate drugs for relatively small patient populations as orphan drugs. Under the Orphan Drug Act, the FDA may designate a product as an orphan drug if it is a drug intended to treat a rare disease or condition, which is generally defined as a patient population of fewer than 200,000 individuals in the United States. Generally, if a product with an Orphan Drug Designation subsequently receives the first marketing approval for the indication for which it receives the designation, then the product is entitled to a period of marketing exclusivity that precludes the applicable regulatory authority from approving another marketing application for the same drug for the same indication during the exclusivity period. The applicable period is seven years in the United States and ten years in Europe. The European exclusivity period can be reduced to six years if a drug no longer meets the criteria for orphan designation or if the drug is sufficiently profitable so that market exclusivity is no longer justified.
In July 2019, the FDA granted Orphan Drug Designation to ziftomenib for the treatment of AML. We anticipate that the FDA will confirm seven years of orphan drug exclusivity for KOMZIFTI following marketing approval for adult patients with relapsed or refractory NPM1-mutated AML. However, orphan drug exclusivity may not effectively protect KOMZIFTI from competition. The FDA could still approve drugs having different active moieties than KOMZIFTI for AML, as well as any drug having the same active moiety if the FDA concludes that such drug is safer, is more effective or makes a major contribution to patient care. In addition, we may lose orphan drug exclusivity for certain reasons, including if the FDA determines that the request for Orphan Drug Designation was materially defective or if we cannot ensure sufficient quantities of KOMZIFTI to meet the needs of patients with relapsed or refractory NPM1-mutated AML. The occurrence of any of these events could limit the period of exclusivity that we obtained for KOMZIFTI, thereby reducing our ability to make sufficient sales of KOMZIFTI to balance our expenses incurred to develop it, which would have a negative impact on our operational results and financial condition.
Our relationships with healthcare professionals, customers and third-party payors and our general business operations are subject to applicable fraud and abuse laws, including anti-kickback and falseclaims laws, transparency laws, privacy laws and other healthcare laws and regulations, which could expose us to significant penalties, including criminal sanctions, administrative and civil penalties, contractual damages, reputational harm and diminished profits and future earnings, among other penalties.
Healthcare providers and third-party payors will play a primary role in the recommendation and prescription of KOMZIFTI and any other product candidates for which we obtain marketing approval. Our current and future arrangements with healthcare providers, third-party payors and customers may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we research as well as market, sell and distribute KOMZIFTI and any other product candidates for which we obtain marketing approval. Restrictions under applicable federal and state healthcare laws and regulations include the following:
the federal Anti-Kickback Statute, which prohibits, among other things, individuals and entities from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made under a federal healthcare program such as Medicare and Medicaid;
the federal civil and criminalfalseclaims laws, including the civil FalseClaims Act, which can be enforced by private citizens, on behalf of the government, through whistleblower actions, and civil monetary penalties laws which prohibits, among other things, individuals and entities from knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government;
the Health Insurance Portability and Accountability Act of 1996, or HIPAA, which imposes criminal and civil liability for, among other things, executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;
HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, and their implementing regulations, which also impose obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of protected health information on covered entities which include certain healthcare providers, health plans and healthcare clearinghouses, and their business associates that create, receive, maintain, or transmit protected health information in connection with providing a service for or on behalf of a covered entity as well as their covered subcontractors;
the federal Physician Payments Sunshine Act, which requires applicable manufacturers of certain drugs, devices, biologics, and medical supplies for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program, with specific exceptions, to report annually to CMS information related to payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain other healthcare professionals (such as physician assistants and nurse practitioners), and teaching hospitals, as well as certain manufacturers and group purchasing organizations to report annually ownership and investment interests held by physicians or their immediate family; and
analogous state and foreign laws and regulations, such as state anti-kickback and falseclaims laws, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers.
Some state and local laws require certain regulatory licenses to manufacture or distribute our products commercially and/or the registration of pharmaceutical sales representatives. Further, some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government and may require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers, marketing expenditures, and/or drug pricing.
Efforts to ensure that our business arrangements with third parties comply with applicable healthcare laws and regulations involve substantial costs. It is possible that governmental authorities will conclude that our business practices do not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, disgorgement, imprisonment, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolveallegations of non-compliance with these laws, exclusion from government funded healthcare programs, such as Medicare and Medicaid, contractual damages, reputational harm, diminished profits and future earnings, and the curtailment or restructuring of our operations. If any of the physicians or other healthcare providers or entities with whom we do business is found to be not in compliance with applicable laws, they may be subject to significant criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs.
We and the third parties with whom we work 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 (or such failure by the third parties with whom we work) could lead to regulatory investigations or actions; litigation (including class claims) and mass arbitration demands; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; and other adverse business consequences.
In the ordinary course of business, we collect, receive, store, process, generate, use, transfer, disclose, make accessible, protect, secure, dispose of, transmit, and share, or collectively, process, personal data, including health and other data we collect about patients and participants in our clinical trials, and other sensitive information, including proprietary and confidential business data, trade secrets, intellectual property, sensitive third-party data, business plans, transactions, and financial information, or collectively, sensitive data. Our data processing activities subject us to numerous data privacy and security obligations, such as various laws, regulations, guidance, industry standards, external and internal privacy and security policies, contractual requirements, and other obligations relating to data privacy and security.
In the United States, federal, state, and local governments have enacted numerous data privacy and security laws, including data breach notification laws, personal data privacy laws, consumer health data privacy laws, consumer protection laws (e.g., Section 5 of the Federal Trade Commission Act), and other similar laws (e.g., wiretapping laws). For example, HIPAA, as amended by HITECH, imposes specific requirements relating to the privacy, security, and transmission of individually identifiable health information. Numerous U.S. states have enacted comprehensive privacy laws that impose certain obligations on covered businesses, including providing specific disclosures in privacy notices and affording residents with certain rights concerning their personal data. As applicable, such rights may include the right to access, correct, or delete certain personal data, and to opt-out of certain data processing activities, such as targeted advertising, profiling, and automated decision-making. The exercise of these rights may impact our business. Certain states also impose stricter requirements for processing certain personal data, including sensitive information, such as conducting data privacy impact assessments. These state laws allow for statutory fines for noncompliance. For example, the California Consumer Privacy Act of 2018, as amended by the California Privacy Rights Act of 2020, or collectively CCPA, applies to personal data of consumers, business representatives, and employees who are California residents, and requires covered businesses to provide specific disclosures in privacy notices and honor requests of such individuals to exercise certain privacy rights. The CCPA provides for fines and allows private litigants affected by certain data breaches to recover significant statutory damages. Although the CCPA and other state laws exempt some data processed in the context of clinical trials, these developments may increase compliance costs and potential liability. Similar laws are being considered in several other states, and we expect more states to pass similar laws in the future. In addition, data privacy and security laws have been proposed at the federal and local levels in recent years, which could further complicate compliance efforts.
We are also subject to certain new laws governing the privacy of consumer health data. For example, Washington’s My Health My Data Act broadly defines consumer health data, places restrictions on processing consumer health data (including imposing stringent requirements for consents), provides consumers certain rights with respect to their health data, and creates a private right of action to allow individuals to sue for violations of the law. Other states have passed, are considering, and may adopt similar laws.
Outside the United States, an increasing number of laws, regulations, and industry standards govern data privacy and security. For example, the General Data Protection Regulation (EU) 2016/679, or GDPR, and the United Kingdom’s GDPR, or UK GDPR (collectively, GDPR), and Australia's Privacy Act impose strict requirements for processing personal data. For example, under GDPR, companies may face temporary or definitive bans on data processing, and other corrective actions, fines of up to 20 million Euros under the GDPR/17.5 million pounds sterling under the UK GDPR, or, in each case, 4% of annual global revenue, whichever is greater, or private litigation related to processing of personal data brought by classes of data subjects or consumer protection organizations authorized at law to represent their interests. The Personal Information Protection and Electronic Documents Act and various related provincial laws, as well as Canada’s Anti-Spam Legislation, apply to clinical trials conducted in Canada. Clinical trials conducted in Asia are and may in the future be subject to existing, new and emerging data privacy regimes in that region.
In addition, we may be unable to transfer personal data from Europe and other jurisdictions to the United States or other countries due to data localization requirements or limitations on cross-border data flows. Europe and other jurisdictions have enacted laws requiring data to be localized or limiting the transfer of personal data to other countries. In particular, the European Economic Area, or EEA, and the United Kingdom, or UK, have significantly restricted the transfer of personal data to the United States and other countries whose privacy laws it generally believes are inadequate. Other jurisdictions have in the past and may in the future adopt similarly stringent data localization and cross-border data transfer laws. Although there are currently various mechanisms that may be used to transfer personal data from the EEA and UK to the United States in compliance with law, such as the EEA standard contractual clauses, the UK’s International Data Transfer Agreement / Addendum, and the EU-U.S. Data Privacy Framework and the UK extension thereto (which allows for transfers to relevant U.S.-based organizations who self-certify compliance and participate in the Framework), these mechanisms are subject to legal challenges, and there is no assurance that we can satisfy or rely on these measures to lawfully transfer personal data to the United States.
If there is no lawful manner for us to transfer personal data from the EEA, the UK, or other jurisdictions to the United States, or if the requirements for a legally-compliant transfer are too onerous, we could face significant adverse consequences, including the interruption or degradation of our operations, the need to relocate part of or all of our business or data processing activities to other jurisdictions (such as Europe) at significant expense, increased exposure to regulatory actions, substantial fines and penalties, the inability to transfer data and work with partners, vendors and other third parties, and injunctionsagainst our processing or transferring of personal data necessary to operate our business. Additionally, companies that transfer personal data out of the EEA and UK to other jurisdictions, particularly to the United States, are subject to increased scrutiny from regulators, individual litigants, and activities groups. Some European regulators have ordered certain companies to suspend or permanently cease certain transfers of personal data out of Europe for allegedlyviolating the GDPR’s cross-border data transfer limitations.
Additionally, the U.S. Department of Justice issued a rule entitled Preventing Access to U.S. Sensitive Personal Data and Government-Related Data by Countries of Concern or Covered Persons, which places additional restrictions on certain data transactions involving countries of concern (e.g., China, Russia, Iran) and covered individuals (i.e., individuals and entities located in or controlled by individuals or entities located in those jurisdictions) that may impact certain business activities such as vendor engagements, employment of certain individuals and investor agreements. Violations of the rule could lead to significant civil and criminalfines and penalties. The rule applies regardless of whether data are anonymized, key-coded, pseudonymized, de-identified or encrypted.
In addition to data privacy and security laws, we are bound by certain contractual obligations related to data privacy and security, and our efforts to comply with such obligations may not be successful. We publish privacy policies, materials, and other statements regarding data privacy and security. Regulators in the United States have scrutinized and are increasingly scrutinizing these statements, and if these policies, materials, or statements are found to be deficient, lacking in transparency, deceptive, unfair, misleading, or misrepresentative of our practices, we may be subject to investigation, enforcement actions by regulators, or other adverse consequences.
Obligations related to data privacy and security (and individuals’ data privacy expectations) are quickly changing, becoming increasingly stringent, and creating uncertainty. Additionally, these obligations may be subject to differing applications and interpretations, which may be inconsistent or conflict among jurisdictions. Preparing for and complying with these obligations requires us to devote significant resources and has in the past and may in the future necessitate changes to our information technologies, systems, and practices and to those of any third parties that process personal data on our behalf.
We may at times fail (or be perceived to have failed) in our efforts to comply with our data privacy and security obligations. Moreover, despite our efforts, our personnel or third parties with whom we work may fail to comply with such obligations, which could negatively impact our business operations. If we or the third parties with whom we work fail, or are perceived to have failed, to address or comply with applicable data privacy and security obligations, we could face significant consequences including, but not limited to, government enforcement actions (e.g., investigations, fines, penalties, audits, inspections, and similar); litigation (including class-action claims) and mass arbitration demands; additional reporting requirements and/or oversight; bans or restrictions on processing personal data; orders to destroy or not use personal data; and imprisonment of company officials. In particular, plaintiffs have become increasingly more active in bringing privacy-related claimsagainst companies, including class claims and mass arbitration demands. Some of these claims allow for the recovery of statutory damages on a per violation basis, and, if viable, carry the potential for monumental statutory damages, depending on the volume of data and the number of violations. Any of these events could have a material adverse effect on our reputation, business, or financial condition, including but not limited to: interruptions or stoppages in our business operations (including, as relevant, clinical trials); inability to process personal data or to operate in certain jurisdictions; limited ability to develop or commercialize our products; expenditure of time and resources to defend any claim or inquiry; adverse publicity; or revision or restructuring of our operations.
Recently enacted and future legislation may increase the difficulty and cost for us to obtain marketing approval of our product candidates and commercialize our products, and may affect the prices we may obtain.
In the United States and some foreign jurisdictions, there have been a number of legislative and regulatory changes and proposed changes regarding the healthcare system that could prevent or delay marketing approval of our product candidates, restrict or regulate post-approval activities and affect our ability to profitably sell KOMZIFTI or any other product candidates for which we obtain marketing approval.
For example, in March 2010, the ACA was signed into law. The ACA was intended to broaden access to health insurance, improve quality, reduce or constrain the growth of healthcare spending, enhance remedies againstfraud and abuse, add new transparency requirements for the healthcare and health insurance industries, impose new taxes and fees on the health industry and impose additional health policy reforms. With regard to pharmaceutical products, among other things, the ACA expanded and increased industry rebates for drugs covered under Medicaid programs and made changes to the coverage requirements under the Medicare prescription drug benefit.
There have been executive, judicial and Congressional challenges and amendments to certain aspects of the ACA. For example, the OBBBA, signed into law in July 2025, narrowed access to enrollment through ACA marketplace exchanges and did not extend the enhanced premium tax credits that expired at the end of 2025. These and other provisions in the law are expected to reduce the number of Americans with health insurance. The OBBBA also is expected to reduce Medicaid spending and enrollment by implementing work requirements for some beneficiaries, capping state-directed payments, reducing federal funding, and limiting provider taxes used to fund the program. Congress is considering proposed legislation intended to further reduce healthcare costs with alternatives to replace the expired ACA subsidies. It is possible that the ACA will be subject to judicial or Congressional challenges in the future. We cannot predict the ultimate content, timing or effect of healthcare reform legislation or regulation or the impact of potential legislation or regulation on us.
In addition, other legislative changes have been proposed and adopted since the ACA was enacted. For example, the Budget Control Act of 2011, among other things, created measures for spending reductions by Congress. A Joint Select Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required goals, thereby triggering the legislation’s automatic reduction to several government programs. These changes included aggregate reductions to Medicare payments to providers of up to 2% per fiscal year, starting in 2013, that due to subsequent legislative amendments, will stay in effect until 2032. Additionally, in March 2021, the American Rescue Plan Act of 2021 was signed into law, which eliminated the statutory Medicaid drug rebate cap, previously set at 100% of a drug’s average manufacturer price, for single source and innovator multiple source drugs, effective January 1, 2024. These laws and other potential legislation may result in additional reductions in Medicare and other healthcare funding, which could have a material adverse effect on customers for our drugs, if approved, and accordingly, our financial operations.
Further, recently there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products. As a result, there have been several recent U.S. Presidential executive orders, Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, reduce the cost of drugs under Medicare, and reform government program reimbursement methodologies for drug products.
The current Trump administration is pursuing policies to reduce regulations and expenditures across government including at HHS, the FDA, CMS and related agencies. These actions, presently directed by executive orders or memoranda from the Office of Management and Budget, may propose policy changes that create additional uncertainty for our business. For example, in September 2025, the current administration announced agreements with a major pharmaceutical companies that requires the drug manufacturers to offer, through a direct-to-consumer platform (TrumpRx), U.S. patients and Medicaid programs prescription drug Most-Favored Nation pricing equal to or lower than those paid in other developed nations, with additional mandates for direct-to-patient discounts and repatriation of foreign revenues. Other recent actions and proposals include, for example, (1) directives to reduce agency workforce and cut programs; (2) directing HHS to lower prescription drug costs for Medicare through a variety of initiatives; (3) imposing tariffs of imported pharmaceutical products; and (4) as part of the Make America Healthy Again Commission’s recent Strategy Report, working across government agencies to increase enforcement on direct-to-consumer pharmaceutical advertising. Additionally, the current administration recently called on Congress to enact “The Great Healthcare Plan,” to codify and expand Most-Favored Nation pricing, lower government subsidies to private insurance companies, increase healthcare price transparency, expand pharmaceutical drugs available for over-the-counter purchase, and enact restrictions on pharmacy benefit manager payment methodologies, among other things. These actions and policies may significantly reduce U.S. drug prices, potentially impacting manufacturers’ global pricing strategies and profitability, while increasing their operational costs and compliance risks. In June 2024, in Loper Bright Enterprises v. Raimondo, the U.S. Supreme Court greatly reduced judicial deference to regulatory agencies, which could result in additional legal challenges to federal regulations affecting our operations. Congress may introduce and ultimately pass health care related legislation that could impact the drug approval process and make changes to the Medicare Drug Price Negotiation Program.
At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. Any such approved importation plans, when implemented, may result in lower drug prices for products covered by those programs. Future legislation could potentially change drug pricing dynamics. We cannot predict all of the ways in which future healthcare reform legislation or regulation could affect our business.
We expect that healthcare reform measures that have been adopted and may be adopted in the future, may result in more rigorous coverage criteria and in additional downward pressure on the price that we receive for KOMZIFTI or any other approved product. Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attainprofitability, or commercialize KOMZIFTI or any other approved product.
Legislative and regulatory proposals have been made to expand post-approval requirements and restrict sales and promotional activities for pharmaceutical products. We cannot be sure whether additional legislative changes will be enacted, or whether FDA regulations, guidance or interpretations will be changed, or what the impact of such changes on the marketing approvals of KOMZIFTI or any other approved product may be. Foreign legislative changes may also affect our ability to commercialize KOMZIFTI or any other approved product.
Governments outside the United States tend to impose strict price controls, which may adversely affect our revenues, if any.
In some countries, particularly the countries of the European Union, the pricing of prescription pharmaceuticals is subject to governmental control. In these countries, pricing negotiations with governmental authorities can take considerable time after the receipt of marketing approval for a product. To obtain reimbursement or pricing approval in some countries, we may be required to conduct a clinical trial that compares the cost-effectiveness of our product candidate to other available therapies. If reimbursement for our products is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, our business could be harmed, possibly materially.
If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could harm our business.
We are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment and disposal of hazardous materials and wastes. Our operations involve the use of hazardous and flammable materials, including chemicals and biological materials. Our operations also produce hazardous waste products. We generally contract with third parties for the disposal of these materials and wastes. We cannot eliminate the risk of contamination or injury from these materials. In the event of contamination or injury resulting from our use of hazardous materials, we could be held liable for any resulting damages, and any liability could exceed our resources. We also could incur significant costs associated with civil or criminalfines and penalties for failure to comply with such laws and regulations.
Although we maintain workers’ compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees resulting from the use of hazardous materials and a pollution liability policy, this insurance may not provide adequate coverage against potential liabilities. Other than our pollution liability policy, we do not maintain insurance for environmental liability or toxic tort claims that may be asserted against us in connection with our storage or disposal of biological, hazardous or radioactive materials.
In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations. These current or future laws and regulations may impair our discovery, preclinical development or production efforts. Our failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions.
Risks Related to the Discovery and Development of Our Product Candidates
We are highly dependent on the success of the continued development of ziftomenib in combination with other therapies and in the frontline AML setting, and we cannot give any assurance that ziftomenib will receive regulatory approval in such indications or that any of our other product candidates will receive regulatory approval in any indications, which is necessary before they can be commercialized in such indications. Even if our product candidates receive regulatory approval and are commercialized in such indications, they may be less competitive and generate less revenue than we anticipate.
Currently, ziftomenib’s marketing approval in the United States is limited to use as a monotherapy in adult patients with relapsed or refractory NPM1-mutated AML, which represents a small patient population. Our future success is highly dependent on obtaining regulatory approval for, and then successfully commercializing, ziftomenib in AML both in combination with other therapies and in the frontline setting.
Our ability to further develop ziftomenib and to expand its indications of use is subject to significant risks and uncertainties, including, among other things, our ability to:
enter into and maintain commercially reasonable arrangements with third parties to provide services needed to further research, develop and commercialize ziftomenib in other indications, including maintaining the agreements with our contract research organizations, or CROs, and third-party manufacturers;
obtain and maintain required regulatory clearances and approvals to enable continued clinical development of ziftomenib;
generate sufficient safety and efficacy data from our clinical trials of ziftomenib in combination with current standards of care in relapsed or refractory and frontline AML to support applications for regulatory approval in such indications;
recruit and retain sufficient qualified and experienced personnel to support the continued development and potential commercialization of ziftomenib in other indications;
achieve acceptance of ziftomenib treatment in other indications by patients and the relevant medical communities; and
obtain appropriate coverage and reimbursement levels for the cost of ziftomenib in other indications from governmental authorities, private health insurers and other third-party payors.
If we are not able to successfullyachieve these goals and overcome other challenges that we may encounter in the research, development, manufacturing and potential commercialization of ziftomenib in indications other than relapsed or refractory NPM1-mutated AML, we may be forced to abandon our development and/or commercialization of ziftomenib in such other indications, which could severelyharm our financial results, business and business prospects.
Our future success further depends on the successful development and commercialization of product candidates beyond ziftomenib. Our product candidates will require additional clinical development, evaluation of clinical, preclinical and manufacturing activities, regulatory approval in one or more jurisdictions, substantial investment, access to sufficient commercial manufacturing capacity and significant marketing efforts before we can generate any revenues from product sales. We are not permitted to market or promote any product candidates before we receive regulatory approval from the FDA or comparable foreign regulatory authorities, and we may never receive such regulatory approvals. Although the scope of regulatory approval is similar in other countries, in some countries there are additional regulatory requirements and potential regulatory risks and we cannot predict success in these jurisdictions.
Prior to receiving approval, if any, to commercialize a product candidate in the United States or internationally, we or our collaborators must demonstrate to the satisfaction of the FDA and other regulatory authorities that such product candidate is safe and effective for its intended use. The results from preclinical studies and clinical trials can be interpreted in different ways, and the favorable results from previous trials of a product candidate may not be replicated in subsequent clinical trials. Even if we believe the preclinical or clinical data are promising, such data may not be sufficient to support approval by the FDA and other regulatory authorities. We maintain frequent, ongoing dialogue with the FDA and other regulatory bodies regarding our clinical trial designs, including the patient selection criteria, dosing plans and statistical analysis plans. There is a risk that the FDA or other regulatory agencies could at any time raise objections to the design or conduct of our clinical trials. Any such objections could delay the initiation or completion of our registration-directed clinical trials. We may learn of certain information or data that the FDA may request, which may necessitate conducting additional preclinical studies or generating additional information at significant cost in terms of both time and expense, including under a clinical hold imposed on an IND. For example, if the FDA does not believe we have sufficiently demonstrated that the selected doses for our investigational products maximize not only the efficacy of the investigational product, but the safety and tolerability as well, our ability to initiate new studies may be delayed. Even if we conducted the additional studies or generated the additional information requested, the FDA could disagree that we have satisfied their requirements, all of which will cause significant delays and expense to our programs.
Although we believe there may be potential to pursue a path to approval for our product candidates, we cannot guarantee that our product candidates will demonstrate sufficient safety and tolerability and clinical activity to support an application for approval. Even if a product candidate demonstrates sufficient activity in one patient subset to support an application in that subset, there can be no assurance it will demonstrate sufficient activity to support an application for approval in other patient subsets. Even if the trial results from a product candidate demonstrate a compelling clinical benefit, the FDA has substantial discretion in the approval process and may not grant approval based on data generated by us.
If the results of our trials are not satisfactory to the FDA or foreign regulatory authorities for support of a marketing application, we may be required to expend significant additional resources to conduct additional trials in support of potential approval of our product candidates.
If we do not receive regulatory approvals for and successfully commercialize any additional product candidates on a timely basis or at all, we may not be able to continue our operations. Even if we successfully obtain regulatory approvals to market any additional product candidates, our revenues may be dependent, in part, on our third-party collaborators’ ability to co-commercialize such product candidates or to commercialize the companion diagnostics for such product candidates, as applicable. Further, our revenues may be dependent on the size of the markets in the territories for which we gain regulatory approval and have commercial rights. If the market opportunities for the indications we pursue are not as significant as we estimate, our business and prospects may be harmed.
Our discovery, preclinical and clinical development activities are primarily focused on the development of targeted therapeutics for patients with genetically defined cancers, which is a rapidly evolving area of science, and the approach we are taking to discover and develop drugs may not lead to new marketable products or new approved disease indications.
The discovery and development of targeted therapeutics for patients with genetically defined cancers, and the scientific discoveries that form the basis for our efforts to discover and develop product candidates, are a relatively new and rapidly evolving area of science. The scientific evidence to support the feasibility of developing product candidates based on these discoveries is both preliminary and limited. The patient populations for our product candidates are not completely defined but are substantially smaller than the general treated cancer population, and patients will need to be screened and identified in order to be eligible for our therapies. Successful identification of patients is dependent on several factors, including screening a sufficient number of patients to identify whether they harbor a particular genetic alteration or expression level, achieving certainty as to how specific genetic alterations or expression levels respond to our product candidates and developing companion diagnostics to identify such genetic alterations or expression levels. Furthermore, even if we are successful in identifying patients, we cannot be certain that the resulting patient populations will be large enough to allow us to successfully commercialize any new products for which we are able to obtain marketing approval and achieveprofitability. Therefore, we do not know if our approach of treating patients with genetically defined cancers will be successful. If our approach is unsuccessful, our business will suffer.
In order to execute on our strategy of advancing the clinical development of our product candidates for patients with genetically defined cancers, we have designed our clinical trials, and expect to design future clinical trials, of such product candidates to include patients who harbor a particular attribute such as a particular genetic alteration, tumor histology or expression level that we believe contribute to or are associated with particular cancer subsets. Our goal in doing this is to enroll patients who have the highest probability of responding to our product candidate and, in our Phase 1 and/or proof-of-concept Phase 2 clinical trials, to show early and statistically significant evidence of clinical efficacy. Potential molecular biomarkers we have identified in retrospective analyses of data from clinical trials of a product candidate in certain cancer indications may not be prospectively validated as biomarkers in future clinical trials that we may conduct in these indications. If we are unable to identify molecular or genetic alterations, or biomarkers, that are predictive of response to our product candidates, or we are unable to include patients who harbor the applicable genetic alterations or expression levels in our clinical trials, or if our product candidates fail to work as we expect, our ability to assess the therapeutic effect, seek participation in FDA expedited review and approval programs, including Breakthrough Therapy Designation, Fast Track Designation, Priority Review and Accelerated Approval, or otherwise to seek to accelerate clinical development and regulatory timelines, could be compromised, resulting in longer development times, larger clinical trials and a reduced likelihood of obtaining regulatory approval.
Clinical drug development involves a lengthy and expensive process with an uncertain outcome. The results of preclinical studies and early clinical trials of our product candidates may not be predictive of the results of subsequent clinical trials, and preliminary or interim results of a clinical trial do not necessarily predict final results. We may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates.
The risk of failure for our product candidates is high. Before obtaining marketing approval from regulatory authorities for the sale of any product candidate, we must conduct extensive preclinical and clinical testing to demonstrate the safety and efficacy of our product candidates in humans. This testing is expensive, difficult to design and implement and can take many years to complete, and its outcome is inherently uncertain. Failure can occur at any time during the clinical trial process. Further, the results of preclinical studies and early clinical trials of our product candidates may not be predictive of the results of subsequent clinical trials, and preliminary or interim results of a clinical trial do not necessarily predict final results.
Results from clinical trials conducted at a single clinical site or a small number of clinical sites may not be predictive of results from additional clinical sites or from subsequent clinical trials. Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing approval of their products. It is impossible to predict with certainty if or when any of our product candidates will prove effective or safe in humans or will receive regulatory approval.
We may experience delays in our clinical trials, and we do not know whether ongoing or planned clinical trials will begin or enroll patients on time, need to be redesigned or be completed on schedule, if at all. If the FDA, comparable foreign regulatory authorities or IRBs have comments on our study plans for our clinical trials that we are required to address, such trials may be delayed, or may not start at all. Clinical trials may be delayed, suspended or prematurelyterminated at any time by us or by the FDA or other similar regulatory agency if it is determined at any time that patients may be or are being exposed to unacceptable health risks, including risk of death, or if compounds are not manufactured in compliance with current good manufacturing practice, or cGMP, regulations or with acceptable quality. There can be no assurance that the FDA or other similar regulatory agency will not put any of our product candidates on clinical hold in the future. We may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent our ability to receive marketing approval or commercialize our product candidates. Clinical trials may be delayed, suspended or prematurelyterminated because costs are greater than we anticipate or for a variety of reasons, such as:
failure to generate sufficient preclinical, toxicology or other in vivo or in vitro data to support the initiation or continuation of clinical trials;
delay or failure in reaching agreement with the FDA or a comparable foreign regulatory authority on a clinical trial design that we are able to execute;
delay or failure in obtaining authorization to commence a clinical trial or inability to comply with conditions imposed by a regulatory authority regarding the scope or design of a clinical trial;
delays in reaching, or failure to reach, agreement on acceptable clinical trial contracts or clinical trial protocols with prospective clinical trial sites;
inability, delay or failure in identifying and maintaining a sufficient number of clinical trial sites, many of which may already be engaged in other clinical programs;
delay or failure in recruiting and enrolling suitable subjects to participate in a clinical trial;
delay or failure in having subjects complete a clinical trial or return for post-treatment follow-up;
delay or failure in determining an acceptable dose and schedule for a product candidate in a clinical trial;
clinical sites and investigators deviating from clinical trial protocol, failing to conduct the clinical trial in accordance with regulatory requirements or dropping out of a clinical trial;
lack of adequate funding to continue the clinical trial, including the incurrence of unforeseen costs due to enrollment delays, requirements to conduct additional clinical trials and increased expenses associated with the services of our CROs and other third parties;
clinical trials of our product candidates may produce negative or inconclusive results, and we may decide, or regulators may require us, to redesign or modify our clinical trial protocols, conduct additional clinical trials or abandon product development programs;
the number of patients required for clinical trials of our product candidates may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate or participants may drop out of these clinical trials at a higher rate than we anticipate;
we may experience delays or difficulties in the enrollment of patients with the specific genetic alterations that our product candidates are designed to target;
our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all;
we may have difficulty partnering with experienced CROs that can screen for patients with the applicable genetic alterations and run our clinical trials effectively;
regulators or IRBs may require that we or our investigators suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks;
the supply or quality of our product candidates or other materials necessary to conduct clinical trials of our product candidates may be insufficient or inadequate; or
there may be changes in governmental regulations or administrative actions.
If we are required to conduct additional clinical trials or other testing of our product candidates beyond those that we currently contemplate, if we are unable to successfully complete clinical trials of our product candidates or other testing, if the results of these clinical trials or tests are not positive or are only modestly positive or if there are safety concerns, we may:
be delayed in obtaining marketing approval for our product candidates;
not obtain marketing approval at all;
obtain approval for indications or patient populations that are not as broad as intended or desired;
obtain approval with labeling that includes significant use or distribution restrictions or safety warnings that could reduce the potential market for our products or inhibit our ability to successfully commercialize our products;
be subject to additional post-approval restrictions and/or testing requirements; or
have the product removed from the market after obtaining marketing approval.
Our product development costs will also increase if we experience delays in testing or marketing approvals. We do not know whether any of our preclinical studies or clinical trials will need to be restructured or will be completed on schedule, or at all. Significant preclinical or clinical trial delays also could shorten any periods during which we may have the exclusive right to commercialize our product candidates or allow our competitors to bring products to market before we do and impair our ability to successfully commercialize our product candidates and may harm our business and results of operations.
We anticipate that our current product candidates and any future product candidates may be used in combination with third-party drugs or biologics, some of which may still be in development, and we have limited or no control over the supply, regulatory status, or regulatory approval of such drugs or biologics.
We are currently developing our product candidates, and may develop future product candidates, for use in combination with one or more other cancer therapies, such as venetoclax, azacitidine, cytarabine, daunorubicin, quizartinib, gilteritinib, FLAG-IDA, LDAC and imatinib, in the case of ziftomenib, and cabozantinib and adagrasib, in the case of darlifarnib, or other drugs, both approved and unapproved. Our ability to develop and ultimately commercialize our current product candidates and any future product candidates used in combination with another drug or biologic will depend on our ability, or the ability of third-party clinical trial sites on which we rely, to access such drugs or biologics on commercially reasonable terms for the clinical trials and their availability for use with the commercialized product, if approved. We cannot be certain that we, or third-party clinical trial sites on which we rely, will be able to secure a steady supply of such drugs or biologics on commercially reasonable terms or at all.
Any failure by us, or by third-party clinical trial sites on which we rely, to secure a steady supply of such drugs or biologics may delay our development timelines, increase our costs and jeopardize our ability to develop our current product candidates and any future product candidates as commercially viable therapies. If any of these occur, our business, financial condition, results of operations, stock price and prospects may be materially harmed.
Moreover, the development of our product candidates for use in combination with another product or product candidate may present challenges that are not faced for single agent product candidates. The FDA or comparable foreign regulatory authorities may require us to use more complex clinical trial designs in order to evaluate the contribution of each product and product candidate to any observed effects. It is possible that the results of such trials could show that any positive previous trial results are attributable to the combination therapy and not our current product candidates and any future product candidates. Moreover, following product approval, the FDA or comparable foreign regulatory authorities may require that products used in conjunction with each other be cross labeled for combined use. To the extent that we do not have rights to the other product, this may require us to work with a third party to satisfy such a requirement. Moreover, developments related to the other product may impact our clinical trials for the combination as well as our commercial prospects should we receive marketing approval. Such developments may include changes to the other product’s safety or efficacy profile, changes to the availability of the approved product, quality, manufacturing and supply issues, and changes to the standard of care.
In the event that any future collaborator or supplier cannot continue to supply their products on commercially reasonable terms, we would need to identify alternatives for accessing such products. Additionally, should the supply of products from any future collaborator or supplier be interrupted, delayed or otherwise be unavailable, our clinical trials may be delayed. In the event we are unable to source an alternative supply or are unable to do so on commercially reasonable terms, our business, financial condition, results of operations, stock price and prospects may be materially harmed.
In addition, to the extent a third-party clinical trial site on which we rely sources a combination therapy itself and does not submit the costs of such therapy to government programs or patients’ insurance, the costs of such therapy may be passed on to us, which could harm our business, financial condition, results of operations, stock price and prospects.
Our product candidates may cause seriousadverse events or have unacceptable side effects that could delay, limit or prevent their development.
If our product candidates are associated with unacceptable side effects in preclinical or clinical trials or have characteristics that are unexpected, we may need to interrupt, delay or abandon their development or limit development to more narrow uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective.
Any observed drug-related side effects could affect the ability of patients to tolerate potentially therapeutically effective doses of the drug, which in turn could affect patient recruitment or the ability of enrolled patients to complete the clinical trial or result in potential product liability claims. Additionally, if results of our ongoing or planned clinical trials reveal an unacceptable frequency and severity of seriousadverse events or side effects, our trials could be suspended or terminated and the FDA or comparable foreign regulatory agencies could require us to cease further development of, or deny approval of, our product candidates for any or all targeted indications. Many compounds developed in the biopharmaceutical industry that initially showed promise in early-stage testing for treating cancer have later been found to cause side effects that prevented further development of those compounds. Any of these occurrences may significantly harm our business, financial condition and prospects.
We have observed seriousadverse events in conducting clinical trials of our product candidates. The most common treatment-related seriousadverse event observed to date with ziftomenib, occurring in more than 10% of patients, is DS. While no Grade 4 or Grade 5 treatment-related DS has been observed in patients with NPM1-mutated AML treated with ziftomenib, we note that during its review of the NDA for ziftomenib for the treatment of adult patients with NPM1-mutated AML, the FDA adjudicated two cases with fatal outcomes where DS could not be ruled out as a contributing factor, although the investigators who reported such cases suspected alternate etiologies. Other treatment-related seriousadverse events observed with ziftomenib, occurring in fewer than 10% of patients, include febrile neutropenia, leukocytosis, dyspnea, pulmonary embolism, nausea, diarrhea and increased white blood cell count.
Our FIT-001 trial represents the first time our darlifarnib compound has been tested in humans. To date, treatment-related seriousadverse events have been reported in fewer than 10% of patients treated with darlifarnib, and have been limited to neutropenia, febrile neutropenia and thrombocytopenia.
Additionally, we are evaluating, and may in the future evaluate, our product candidates in combination with third-party drugs or biologics, and safety concerns arising during a combination trial could negatively affect the individual development program of each candidate, as the FDA or comparable foreign regulatory authorities may require us to discontinue single-candidate trials until the contribution of each product candidate to any safety issues is better understood.
Failure by us or our third-party collaborators to develop, validate and obtain regulatory approval for a diagnostic testing platform could harm our drug development strategy and operational results.
One of the central elements of our business strategy is to screen and identify subsets of patients with molecular or genetic alterations who may derive meaningful clinical benefit from our product candidates. In general, successful identification of these patient subsets depends on the development of sensitive, accurate and cost-effective molecular and other diagnostic tests and the widespread adoption and use of these tests at clinical sites to screen a sufficient number of patients to identify whether they are appropriate candidates for treatment with one of our product candidates.
Companion diagnostics are subject to regulation by the FDA and comparable foreign regulatory authorities as medical devices and require separate clearance or approval prior to their commercialization. The FDA generally will require either approval or clearance of the diagnostic at the same time the FDA approves the therapeutic product, or as a post-marketing commitment at the time of the therapeutic product’s approval. For example, KOMZIFTI’s approval in the United States is subject to a post-marketing commitment to conduct a study to support the availability of an in vitro diagnostic device (companion diagnostic) to identify susceptible NPM1 mutations in patients with AML for the safe and effective use of ziftomenib. We presently anticipate that approved companion diagnostics will be required in order to obtain approval for our product candidates for the treatment of patients with other molecular or genetic alterations.
As we do not have in-house diagnostic testing capabilities, we rely extensively on third-party collaborators for the development, validation and regulatory approval of these diagnostic tests. We and our third-party collaborators may encounter difficulties in developing, validating and obtaining regulatory approval for these diagnostic tests. We may also experience difficulties in having these diagnostic tests adopted and used by oncologists, both during the clinical development phase and if and when approved as a companion diagnostic for commercial sale.
Any delay or failure by us or third-party collaborators to develop, validate or obtain regulatory approval of a companion diagnostic could delay or prevent approval of our product candidates. We may also experience delays in developing a sustainable, reproducible and scalable manufacturing process or transferring that process to commercial partners or negotiating insurance reimbursement plans, all of which may prevent us from completing our clinical trials or commercializing our products on a timely or profitable basis, if at all.
Even if we or our companion diagnostic collaboratorssuccessfully obtain regulatory approval for the companion diagnostics for our product candidates, our collaborators:
may not perform their obligations as expected;
may not pursue commercialization of companion diagnostics for our therapeutic product candidates that achieve regulatory approval;
may not commit sufficient resources to the marketing and distribution of such companion diagnostics;
may elect not to continue or renew commercialization programs based on changes in the collaborators’ strategic focus or available funding, or external factors, such as an acquisition, that divert resources or create competing priorities; and
may terminate their relationship with us.
Additionally, we or our collaborators may encounter production difficulties that could constrain the supply of the companion diagnostics, affect the ease of use, affect the price or have difficultiesgaining acceptance of the use of the companion diagnostics in the clinical community.
If companion diagnostics for use with our product candidates fail to gain market acceptance, our ability to derive revenues from sales of our product candidates could be harmed. If insurance reimbursement to the laboratories who perform the companion diagnostic tests is inadequate, utilization may be low, and patients may not be comprehensively screened for the presence of the genetic markers that predict response to our product candidates. If we or our collaboratorsfail to commercialize these companion diagnostics, we may not be able to enter into arrangements with another diagnostic company to obtain supplies of an alternative diagnostic test for use in connection with our product candidates or do so on commercially reasonable terms, which could adversely affect and delay the development or commercialization of our product candidates.
We may find it difficult to enroll patients in our clinical trials. Difficulty in enrolling patients could delay or prevent clinical trials of our product candidates.
Identifying and qualifying patients to participate in clinical trials of our product candidates is critical to our success. The timing of our clinical trials depends in part on the speed at which we can recruit patients to participate in testing our product candidates, and we may experience delays in our clinical trials if we encounter difficulties in enrollment.
In addition to the potentially small populations for our clinical trials, the eligibility criteria of our clinical trials will further limit the pool of available trial participants as we will require that patients have specific characteristics that we can measure or to assure their disease is either severe enough or not too advanced to include them in a trial. Additionally, the process of finding and diagnosing patients may prove costly. For example, certain genetic alterations are not included in existing diagnostic panels, have unknown prognostic significance and/or are not targeted by any FDA-approved treatment, and as a result, biomarker testing for such alterations is not routinely performed. To seek to address these limitations, we have contracted with third-party laboratories to facilitate the genetic screening of patients for our clinical sites. However, there is no guarantee that these efforts will be effective.
We also may not be able to identify, recruit and enroll a sufficient number of patients to complete our clinical trials because of the perceived risks and benefits of the product candidate under trial including the number and frequency of trial required procedures and tests, the availability and efficacy of competing therapies and clinical trials, the proximity and availability of clinical trial sites for prospective patients, and the patient referral practices of physicians. Further, if patients do not comply with clinical trial process and procedure and, for example, drop out, miss scheduled doses or follow-up visits, or fail to follow trial protocols, then the integrity of data from our trials may be compromised or not accepted by the FDA or other regulatory authorities.
Additionally, in estimating the frequency of biomarkers, we rely on data published in the scientific literature as well as our experience and that of our collaborators. The technologies used to identify mutations in published datasets may be different from the technologies we are using currently, which may make it more difficult to compare results across clinical trials or we may experience lower rates of mutation or other alteration frequencies in our clinical trials than provided in the current scientific literature. Moreover, sample quality in academic studies of molecular biomarkers may not reflect standard clinical practice that is focused on pathological diagnosis.
Even if patients carrying specific mutations or other genetic characteristics are identified, the potential clinical benefit of a product candidate may be delayed or reduced due to increased durations in time to disease progression in patients treated with first-line therapies and the number of patients who could benefit from such product candidate may be reduced. Potential trial subjects may also be located at too great a distance to participate at our clinical trial sites. Any delay or failure by us or third-party collaborators to screen patients or identify patients for enrollment in our ongoing clinical trials could delay or prevent us from completing our clinical trials which could prevent us from obtaining regulatory approval or commercializing our product candidates on a timely or profitable basis, or at all.
If we experience delays in the completion of, or termination of, any clinical trial of our product candidates, the commercial prospects of our product candidates may be harmed, and our ability to generate product revenue from any of these product candidates could be delayed or prevented. In addition, any delays in completing our clinical trials will increase our costs, slow down our product candidate development and approval process, and jeopardize our ability to commence product sales and generate revenue. Any of these occurrences may harm our business, financial condition, and prospects significantly. In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our product candidates, including:
unforeseen safety issues or adverse side effects;
failure of our companion diagnostics to identify patients;
modifications to protocols of our clinical trials resulting from the FDA or comparable foreign regulatory authorities or institutional review board, or IRB, decisions; and
ambiguous or negative interim results of our clinical trials or results that are inconsistent with earlier results.
We may expend our limited resources to pursue a specific product candidate or indication and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success.
Because we have limited financial and managerial resources, we must focus on a limited number of research programs and product candidates and on specific indications. As a result, we may forego or delay pursuit of opportunities with other product candidates or for other indications that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities. Our spending on current and future discovery and preclinical development programs and product candidates for specific indications may not yield any commercially viable products.
Risks Related to Our Financial Position and Need for Additional Capital
We have incurred losses since our inception, expect to incur losses over the next several years and may never achieve or maintain profitability.
To date, we have financed our operations primarily through equity and debt financings and payments received under the Kyowa License Agreement. We have incurred losses since our inception and expect to continue to incur significant expenses and increasing operating losses for the foreseeable future. Losses have resulted principally from costs incurred in connection with our research and development activities, and from selling, general and administrative costs associated with our operations. The net losses we incur may fluctuate significantly from quarter-to-quarter and year-to-year. We anticipate that our expenses will increase substantially if and as we:
increase sales and marketing efforts to support commercialization of KOMZIFTI in the United States;
continue research and development of our product candidates;
initiate new clinical trials for our product candidates;
seek marketing approvals for our product candidates;
enter into collaboration arrangements for combination drugs or biologics for our product candidates;
enter into collaboration arrangements for companion diagnostics for our product candidates;
maintain, expand and protect our intellectual property portfolio;
hire additional personnel;
add operational, financial and management information systems and personnel, including personnel to support our product development and commercialization efforts; and
incur increased costs as a result of continued operations as a public company.
Although we commenced commercialization of KOMZIFTI in November 2025, our revenue and profit potential is unproven and our very limited operating history as a commercial company makes our future operating results difficult to predict. If we do not generate significant revenue from commercial sales of KOMZIFTI, or if we experience unforeseen events or choose to make other investments in our business, we may continue to experience negative cash flow as we fund our operations, clinical development activities and research programs, and continue to commercialize KOMZIFTI. If we do achieveprofitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to become and remain profitable could decrease our value and could impair our ability to raise capital, maintain our research, development and commercialization efforts, expand our business or continue our operations. A decline in the value of our company could also cause you to lose all or part of your investment.
We have limited historical product revenue, and we expect that our financial and operating results will vary significantly from period to period.
Having only commenced commercialization of KOMZIFTI in November 2025, our revenue and profit potential is unproven and our very limited operating history as a commercial company makes our future operating results difficult to predict. If we do not generate significant revenue from commercial sales of KOMZIFTI, or if we experience unforeseen events, we may continue to experience negative cash flow as we fund our operations, clinical development activities and research programs and continue to commercialize KOMZIFTI.
Biopharmaceutical product development is a highly speculative undertaking and involves a substantial degree of uncertainty. We expect our actual financial condition and operating results to fluctuate significantly from quarter-to-quarter or year-to-year due to a variety of factors, many of which are beyond our control. Factors relating to our business that may contribute to these fluctuations include:
the level of demand for KOMZIFTI;
the extent to which coverage and reimbursement for KOMZIFTI is available from government and health administration authorities, private health insurers, managed care programs and other third-party payors;
changes in the amount of deductions from gross sales, including government-mandated rebates, chargebacks and discounts that can vary because of changes to the government discount percentage, including increases in the government discount percentage resulting from price increases we may take in the future, or due to different levels of utilization by entities entitled to government rebates and discounts and changes in patient demographics;
increases in the scope of eligibility for customers to purchase KOMZIFTI at the discounted government price or to obtain government-mandated rebates on purchases of KOMZIFTI;
the timing, cost and level of investment in our sales and marketing efforts to support KOMZIFTI sales;
competition from existing products or new products that may receive marketing approval;
the success of our clinical trials through all phases of clinical development;
delays in the commencement, enrollment and completion of clinical trials;
our ability to secure and maintain collaborations, licensing or other strategic partnerships for the future development and/or commercialization of KOMZIFTI and our product candidates, as well as meet the terms of those arrangements;
our and our third-party collaborators’ ability to develop and commercialize KOMZIFTI and our product candidates, and our receipt of any future milestone or royalty payments under our current and any future collaboration agreements;
our and our third-party collaborators’ ability to develop and validate companion diagnostics for KOMZIFTI and our product candidates;
our ability to obtain, as well as the timeliness of obtaining, additional funding to develop our product candidates;
the results of clinical trials or marketing applications for other product candidates that may compete with our portfolio of product candidates;
potential side effects of KOMZIFTI or our product candidates that could delay or prevent approval or cause an approved drug to be taken off the market;
any delays in regulatory review and approval of our product candidates;
our ability to identify and develop additional product candidates;
our ability, and the ability of third parties, such as CROs, to adhere to clinical trial and other regulatory requirements;
the ability of third-party manufacturers to manufacture KOMZIFTI and our product candidates and the ability to obtain key ingredients needed to produce materials for clinical trial material in order to conduct clinical trials and successfully produce KOMZIFTI and other future commercial products;
the costs to us, and our ability as well as the ability of any third-party collaborators, to obtain, maintain and protect our intellectual property rights;
costs related to and outcomes of any future intellectual property litigation;
our ability to adequately support future growth;
our ability to attract and retain key personnel to manage our business effectively; and
changes in governmental regulations, healthcare policy, pricing and reimbursement systems and our ability to set and maintain prices in the United States and other territories.
Accordingly, the likelihood of our success must be evaluated in light of many potential challenges and variables associated with a biopharmaceutical company, many of which are outside of our control, and past operating or financial results should not be relied on as an indication of future results. Fluctuations in our operating and financial results could cause our share price to decline. It is possible that in some future periods, our operating results will be above or below the expectations of securities analysts or investors, which could also cause our share price to decline.
We may need to obtain substantial additional capital in connection with our continuing operations. If we are required to raise additional capital, doing so may cause dilution to our stockholders, restrict our operations or require us to relinquish certain rights to our technologies or product candidates.
If we need to raise additional capital in connection with our continuing operations, we would expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic partnerships or licensing arrangements. Additional capital may not be available on reasonable terms, if at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect rights of our stockholders as a common stockholder. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through collaborations, strategic partnerships or licensing arrangements with third parties, such as our Kyowa License Agreement, we may have to relinquishvaluable rights to our product candidates, other technologies, future revenue streams or research programs, or grant licenses on terms that may not be favorable to us. As a result of the global pandemics, bank failures, actual or perceived changes in interest rates, current or future tariffs, and economic inflation, the global financial markets have experienced volatility and uncertainty. There can be no assurance that further volatility and uncertainty in the financial markets and declining confidence in economic conditions will not occur. If financial markets deteriorate, it may make any necessary debt or equity financing more difficult to obtain, more costly and/or more dilutive.
In November 2023, we entered into the ATM Facility, under which we may offer and sell, from time to time, at our sole discretion, shares of our common stock having an aggregate offering price of up to $150.0 million. We have not sold any shares of our common stock under the ATM Facility.
In November 2022, we entered into a loan and security agreement with several banks and other financial institutions or entities party thereto, or collectively the Lenders, and Hercules Capital, Inc., or Hercules, in its capacity as administrative agent and collateral agent for itself and the Lenders, which was amended in October 2023 and October 2025, or the Loan Agreement, providing for up to $125.0 million in a series of term loans, or Term Loans. Under the terms of the Loan Agreement, we borrowed $10.0 million of Term Loans. No further Term Loans may be drawn under the Loan Agreement. On June 1, 2024, a minimum cash covenant commenced requiring us to hold cash in the United States and subject to a first-priority perfected security interest in favor of the Lenders in an amount greater than or equal to 35.0% of the outstanding loan obligations, provided that such cash covenant will not apply at any time our market capitalization is equal to or greater than $1,250.0 million. Since June 1, 2024, our market capitalization has not always exceeded $1,250.0 million, however, we have met the minimum cash covenant. While any amounts are outstanding under our term loan facility, we are subject to affirmative and restrictive covenants, including covenants regarding delivery of financial statements, maintenance of inventory, payment of taxes, maintenance of insurance, dispositions of property, business combinations or acquisitions, incurrence of additional indebtedness, transactions with affiliates and a minimum cash covenant, among other customary covenants. If we default under our term loan facility, the Lenders may accelerate our repayment obligations and take control of our pledged assets, potentially requiring us to renegotiate our agreement on terms less favorable to us or to immediately cease operations. Further, if we are liquidated, the Lenders’ right to repayment would be senior to the rights of the holders of our common stock to receive any proceeds from the liquidation. The Lenders could accelerate our obligations under the Loan Agreement upon the occurrence of an event of default, which includes, among other things, our failure to satisfy our payment obligations under the Loan Agreement, the breach of certain of our other covenants under the Loan Agreement or the occurrence of a material adverse change, thereby requiring us to repay the loan immediately or to attempt to reverse the declaration of default through negotiation or litigation. Any declaration by the Lenders of an event of default could significantly harm our business and prospects and could cause the price of our common stock to decline.
We cannot be certain that additional funding will be available on acceptable terms, or at all. Subject to limited exceptions, our term loan facility also prohibits us from incurring indebtedness without the prior written consent of the Lenders. If we are unable to raise additional funds when needed, we may be required to delay, limit, reduce or terminate our product development or commercialization efforts.
Our limited operating history may make it difficult for you to evaluate the success of our business to date and to assess our future viability.
We have a limited operating history. Our operations to date have been limited to organizing and staffing our company, business planning, raising capital, identifying and acquiring potential product candidates, undertaking preclinical, clinical and regulatory development of our product candidates, conducting pre-commercial and diagnostic related activities for our product candidates, pursuing FDA approval of KOMZIFTI, preparing for commercialization, and promoting, selling and distributing KOMZIFTI in the United States.
In addition, we may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown factors as we transition from a company with a research and development focus to a commercial-stage organization, and we may not be successful in such a transition.
Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults or non-performance by financial institutions could adversely affect our current financial condition and projected business operations.
Events involving limitations to liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in the financial services industry, or concerns or rumors about any events of these kinds or other similar risks, have in the past led and may in the future lead to market-wide liquidity problems. We regularly maintain cash balances at third-party financial institutions in excess of the Federal Deposit Insurance Corporation, or FDIC, standard insurance limit, with balances concentrated at a small number of financial institutions. The failure of a bank, or other adverse conditions in the financial or credit markets impacting financial institutions at which we maintain balances, or with which we do business, could adversely impact our liquidity and financial performance. There can be no assurance that our deposits in excess of the FDIC or other comparable insurance limits will be backstopped by the United States or any applicable foreign government in the future or that any bank or financial institution with which we do business will be able to obtain needed liquidity from other banks, government institutions or by acquisition in the event of a future failure or liquidity crisis. In addition, if any of our partners or parties with whom we conduct business are unable to access funds due to the status of their financial institution, such parties’ ability to pay their obligations to us or to enter into new commercial arrangements requiring additional payments to us could be adversely affected.
Investor concerns regarding the U.S. or international financial systems could result in less favorable commercial financing terms, including higher interest rates or costs and tighter financial and operating covenants, or systemic limitations on access to credit and liquidity sources, thereby making it more difficult for us to acquire financing on acceptable terms or at all.
Risks Related to Our Dependence on Third Parties
Our collaboration with Kyowa Kirin is important to our business. If Kyowa Kirin ceases development efforts under the Kyowa License Agreement, or if the Kyowa License Agreement is terminated, we may not receive future milestone payments or royalties under the Kyowa License Agreement and our business could be adversely affected. If Kyowa Kirin does not fulfill its obligations under the Kyowa Co-Promotion Agreement, our business could be adversely affected.
We are dependent upon Kyowa Kirin for the development of, and the regulatory activities and commercial strategy for, ziftomenib outside the United States. Additionally, Kyowa Kirin is responsible for half of all costs and expenses for the commercialization of KOMZIFTI and, if approved by the FDA, other products containing ziftomenib, in the United States. Under the Kyowa Co-Promotion Agreement, Kyowa Kirin has the right and responsibility to co-promote KOMZIFTI and, if approved by the FDA, other products containing ziftomenib, in the United States and is obligated to meet minimum detailing requirements using sales representatives meeting specific qualifications. If Kyowa Kirin does not perform in the manner we expect or fulfill its responsibilities in a timely manner, or at all, the clinical development, regulatory approval, and commercialization efforts related to KOMZIFTI and other products containing ziftomenib could be delayed or terminated.
Disagreements between us and Kyowa Kirin regarding clinical development and commercialization matters could lead to delays in the development or commercialization of KOMZIFTI or other products containing ziftomenib and, in some cases, termination of the Kyowa License Agreement and the Kyowa Co-Promotion Agreement. Kyowa Kirin may terminate the Kyowa License Agreement for convenience upon 12 months’ prior written notice. In addition, Kyowa Kirin has the right to terminate the Kyowa License Agreement with a shorter specified notice period upon the occurrence of a material adverse regulatory event or certain other specified events. The Kyowa Co-Promotion Agreement will automatically terminate upon termination of the Kyowa License Agreement.
If our collaboration does not result in the successful development and commercialization of KOMZIFTI or other products containing ziftomenib, or if Kyowa Kirin terminates the Kyowa License Agreement, we may not receive any future milestone or royalty payments under the Kyowa License Agreement. In addition, any termination of the Kyowa License Agreement or the Kyowa Co-Promotion Agreement by Kyowa Kirin could affect our ability to further develop ziftomenib or adversely affect how we are perceived in scientific and financial communities. If any of these occur, our business, financial condition, results of operations, stock price and prospects may be materially harmed.
We rely on third-party contractors and organizations to conduct, and/or to supply materials to conduct, our clinical trials and provide commercial supply, and those third parties may not perform satisfactorily, including failing to meet deadlines for the supply of materials and/or the completion of such clinical trials or to meet the demands of our commercial supply.
We rely, and expect to continue to rely, on third-party contractors, CROs, clinical data management organizations, independent contractors, medical institutions and clinical investigators to support our preclinical development activities and conduct our clinical trials. We also rely on third-party contractors for the commercial supply of KOMZIFTI.
We compete with many other companies, some of which may be our business competitors, for the resources of these third parties. Large pharmaceutical companies often have significantly more extensive agreements and relationships with such third-party providers, and such third-party providers may prioritize the requirements of such large pharmaceutical companies over ours.
Our agreements with third-party contractors may terminate for a variety of reasons, including a failure to perform by the third parties. The third parties on whom we rely may have the right to terminate their engagements with us at any time. The termination of these agreements or engagements may cause delay in the development of our product candidates or commercialization of KOMZIFTI or other product candidates that receive marketing approval. If any such third-party terminates its engagement with us or fails to perform as agreed, we may be required to enter into alternative arrangements, which could result in significant cost and delay to our product development program or impede our distribution of KOMZIFTI. Moreover, our agreements with such third parties generally do not provide assurances regarding employee turnover and availability, which may cause interruptions in the services performed by such third parties.
Our reliance on third parties to conduct our clinical trials reduces our control over these activities but does not relieve us of our responsibilities. For example, we will remain responsible for ensuring that each of our clinical trials is conducted in accordance with the general investigational plan and protocols for the clinical trial. Moreover, the FDA and other regulatory authorities require us to comply with good clinical practice guidelines for conducting, recording and reporting the results of clinical trials to assure that data and reported results are credible and accurate and that the rights, integrity and confidentiality of clinical trial participants are protected. We are also required to register ongoing clinical trials and post the results of completed clinical trials on government-sponsored databases, such as ClinicalTrials.gov, within specified timeframes. Failure to do so can result in fines, adverse publicity and civil and criminal sanctions. Similarly, our reliance on third parties to manufacture, supply and distribute KOMZIFTI does not relieve us of our responsibility to comply with cGMP regulations and other laws and regulations applicable to drug manufacturers.
Additionally, we rely substantially on third-party data managers for our clinical trial data. There is no assurance that these third parties will not make errors in the design, management or retention of our data or data systems. There is no assurance that these third parties will pass FDA or other regulatory audits, which could delay or prevent regulatory approval.
In addition to relying upon third-party service providers, we depend on our collaborators and other third-party suppliers to supply certain therapies for our combination trials. For example, we depend on Mirati to supply adagrasib for the NSCLC, CRC and PDAC combination cohort of our FIT-001 trial. If Mirati does not perform in accordance with our collaboration agreement, or the agreement is terminated, the adagrasib cohort of our FIT-001 trial, and our development plans for darlifarnib in combination with adagrasib, could be materially adversely impacted.
If these third parties do not successfully carry out their contractual duties, meet expected timelines, conduct our clinical trials or supply clinical trial or commercial materials in accordance with regulatory requirements, our agreements or our stated protocols, we will not be able to obtain, or may be delayed in obtaining, marketing approvals for our product candidates and will not be able to, or may be delayed in our efforts to, successfully commercialize KOMZIFTI or other product candidates that receive marketing approval.
In addition, the ability of these third parties to conduct certain of their operations, including monitoring of clinical sites, as applicable, may be limited by actual or threatened public health epidemics or outbreaks, and to the extent that such third parties are unable to fulfill their contractual obligations as a result of such events or government orders in response to such events, we may have limited or no recourse under the terms of our contractual agreements with such third parties. Further, if any of the third parties with whom we engage were to experience shutdowns or other substantial disruptions due to actual or threatened public health epidemics or outbreaks, our ability to conduct our business in the manner and on the timelines presently planned could be materially and negatively affected, which could have a material adverse impact on our business and our results of operation and financial condition.
We depend on third parties for the manufacture of our product candidates for preclinical and clinical testing and for the manufacture of commercial supplies of KOMZIFTI. This reliance on third parties increases the risk that we will not have sufficient quantities of our product candidates or KOMZIFTI at an acceptable cost and quality, which could delay, prevent or impair our development or commercialization efforts.
We do not own or operate facilities for the manufacture of our product candidates or KOMZIFTI and we currently have no plans to build our own clinical or commercial scale manufacturing capabilities. We rely, and expect to continue to rely, on third parties for the manufacture of clinical supplies of ziftomenib, darlifarnib and our other product candidates for preclinical and clinical testing and for the manufacture of commercial supplies of KOMZIFTI and for any other product candidates that receive marketing approval. This reliance on third parties increases the risk that we will not have sufficient quantities of our product candidates or products or such quantities at an acceptable cost or quality, which could delay, prevent or impair our development or commercialization efforts. We also rely, and expect to continue to rely, on other third parties to package, label, store and distribute product candidates for our clinical trials and commercial supplies of KOMZIFTI and for any other product candidates that receive marketing approval.
The manufacture of pharmaceutical products is complex and requires significant expertise and capital investment, including the development of drug formulation and manufacturing techniques and process controls. Manufacturers of APIs and pharmaceutical products often encounter difficulties in production, particularly in scaling up and validating initial production and absence of contamination. These problems include difficulties with production costs and yields, quality control, including stability of the product, quality assurance testing, operator error, shortages of qualified personnel, as well as compliance with strictly enforced federal, state and foreign regulations. Furthermore, if contaminants are discovered in our products or in the manufacturing facilities in which our products are made, such manufacturing facilities may need to be closed for an extended period of time to investigate and remedy the contamination.
Some of our manufacturers and suppliers are located in China. Recent developments in international trade policies, including restrictions and tariffs, may restrict our ability to work with certain of our manufacturers and suppliers or otherwise disrupt our supply chain, and we expect to experience increased costs and expenses, which may have adverse effects on the development of our product candidates and our business operations. For further information regarding impacts to our business as a result of trade policy developments, see the risk factor titled “ International trade policies, including tariffs, sanctions and trade barriers, may adversely affect our business, financial condition, results of operations and prospects .”
If we are unable to develop formulations of our product candidates with acceptable stability and sterility characteristics, or experience an unexpecteddelay or loss of supply of any of our product candidates for any reason, whether as a result of manufacturing, supply or storage issues, geopolitical events, actual or threatened public health epidemics or outbreaks, or otherwise, our business may be harmed and we may experience delays, disruptions, suspensions or terminations of, or we may be required to restart or repeat, any pending or ongoing clinical trials. Although we generally do not begin a clinical trial unless we believe we have a sufficient supply of a product candidate to complete the clinical trial, we may be required to manufacture additional supplies of our product candidates to the extent our estimates of the amounts required prove inaccurate, we sufferunexpectedlosses of product candidate supplies, or to the extent that we are required to have fresh product candidate supplies manufactured to satisfy regulatory requirements or specifications. Any significant delay or discontinuation in the supply of a product candidate, or the raw material components thereof, due to the need to replace a supplier, contract manufacturer or other third-party manufacturer, could considerably harm our business and delay completion of our clinical trials, product testing and potential regulatory approval of our product candidates. Any performance failure on the part of our existing or future manufacturers, suppliers or distributors could delay clinical development or marketing approval of our product candidates or commercialization of our products, producing additional losses and depriving us of potential product revenue. If our current contract manufacturers cannot perform as agreed, we may be required to replace such manufacturers. Although we believe that there are several potential alternative manufacturers who could manufacture our product candidates, we may incur added costs and delays in identifying and qualifying any such replacement.
We may be unable to establish any agreements with third-party manufacturers or to do so on acceptable terms. Even if we are able to establish agreements with third-party manufacturers, reliance on third-party manufacturers entails additional risks, including:
reliance on the third party for regulatory compliance and quality assurance;
catastrophic events at the third-party organization;
the possible breach of the manufacturing agreement by the third party;
the possible misappropriation of our proprietary information, including our trade secrets and know-how; and
the possible termination or nonrenewal of the agreement by the third party at a time that is costly or inconvenient for us.
The facilities used by our contract manufacturers to manufacture our product and product candidates must be approved by the applicable regulatory authorities, including the FDA, pursuant to inspections that may be conducted after an NDA is submitted to the FDA. We are completely dependent on our contract manufacturing partners for compliance with the FDA’s requirements for manufacture of both the active drug substances and finished drug product for clinical supplies of ziftomenib, darlifarnib and our other product candidates and for commercial supplies of KOMZIFTI. If our contract manufacturers cannot successfully manufacture material that conforms to our specifications and the FDA’s regulatory requirements, they will not be able to secure or maintain FDA approval for the manufacturing facilities. In addition, we have limited control over the ability of our contract manufacturers to maintain adequate quality control, quality assurance and qualified personnel. If the FDA or any other applicable regulatory authorities does not approve these facilities for the manufacture of our product candidates or if it withdraws any such approval in the future, or if our suppliers or contract manufacturers decide they no longer want to supply or manufacture our products, we may need to find alternative manufacturing facilities, in which case we might not be able to identify manufacturers for clinical or commercial supply on acceptable terms, or at all, which would significantly impact our ability to develop and obtain regulatory approval for our product candidates or market our products. Third-party manufacturers may not be able to comply with cGMP regulations or similar regulatory requirements outside the United States. Our failure, or the failure of our third-party manufacturers, to comply with applicable regulations could result in sanctions being imposed on us, including clinical holds, fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of product candidates or products, operating restrictions and criminalprosecutions, any of which could significantly and adversely affect supplies of our products.
Our product candidates, KOMZIFTI and any other approved products may compete with other product candidates and products for access to manufacturing facilities. There are a limited number of manufacturers that operate under cGMP regulations and that might be capable of manufacturing for us.
To the extent o ur third-party manufacturers and supply chain suppliers are negatively impacted by geopolitical events such as actual or potential conflicts in the Middle East, Europe or Asia, as well as actual or threatened public health epidemics or outbreaks, we may not be able to provide continuous drug supply to our clinical sites or for commercialization purposes and our clinical trials may be delayed or may not be completed or our commercialization efforts disrupted, each of which would have a material adverse effect on our business operations and performance.
Risks Related to Our Intellectual Property
If we are unable to, or if we do not, obtain and maintain intellectual property protection for our product and product candidates, or if the scope of the intellectual property protection obtained is not sufficiently broad, our competitors could develop and commercialize products similar or identical to ours, and our ability to successfully commercialize our product and product candidates may be impaired.
We intend to rely upon a combination of regulatory exclusivity periods, patents, trade secret protection, trademarks, confidentiality agreements, and license agreements to protect the intellectual property related to our current product, product candidates and development programs.
Threats to the duration, breadth or strength of protection provided by any patents, patent applications or future patents we may own, license, or pursue with respect to any of our current or future product candidates or products could hinder our ability to commercialize any of our current or future product candidates or products. For example, our patent rights may not protect our product and product candidates if competitors devise products that compete with us without legally infringing our patent rights. Further, if we encounter delays in our development efforts, the length of time during which we could market any of our current or future product candidates or products under any patent protection we obtain would be reduced. Given the amount of time required for the development, testing and regulatory review of new product candidates or products, patents protecting such candidates might expire before or shortly after such product candidates or products are commercialized.
Ziftomenib
We have issued patents in the United States, Europe, China, Japan and other foreign jurisdictions covering the composition of matter of ziftomenib (the API in KOMZIFTI) and certain structurally related compounds and methods of using the compounds for treating cancers and other diseases. Although these patents are currently in force, there is no guarantee that a court would agree that any of the patents are valid or enforceable.
We are pursuing additional U.S. and foreign patents for ziftomenib (including U.S. and foreign patents related to KOMZIFTI); however, there is no guarantee that any such patents will be granted or that, if granted, would provide protection against third parties.
Patent term extension may be available in the United States or in other jurisdictions to account for regulatory delays in obtaining marketing approval for a product candidate; however, in the United States, only one patent may be extended per marketed product. We have submitted applications for patent term extension for two U.S. granted patents to the U.S. PTO, along with our assessment of the duration of applicable extensions. The applicable authorities, including the U.S. PTO and the FDA, and any equivalent patent or regulatory authorities in other countries, may disagree with our assessment of whether such extensions are available, and may refuse to grant extensions to patents, or may grant more limited extensions than requested. If this occurs, for example, for our ziftomenib API patent(s), our competitors who obtain the requisite regulatory approval could offer products with the same API as KOMZIFTI earlier than expected, so long as the competitors do not infringe any other patents that we may hold. Competitors may take advantage of our investment in development and clinical trials by referencing our clinical and preclinical data and launch their product earlier than might otherwise be the case.
We expect that following expiration of patents and any regulatory exclusivity we are able to obtain for any ziftomenib products, such as KOMZIFTI, competitors may manufacture and sell generic versions of those products at a lower price, which would reduce our product revenues. In certain jurisdictions, legislation mandates generic substitution for brand name drugs.
Darlifarnib
We have issued patents in the United States covering the composition of matter of darlifarnib and certain structurally related compounds, and issued patents in the United States, Europe and other foreign jurisdictions directed to methods of using a farnesyl transferase inhibitor for treating various cancers. Although these patents are currently in force, there is no guarantee that a court would agree that any of the patents are valid or enforceable.
We are pursuing additional U.S. and foreign patents for darlifarnib; however, there is no guarantee that any such patents will be granted or that, if granted, would provide protection against third parties.
While patent term extension may be available for a patent that covers an approved darlifarnib product, the applicable authorities, including the U.S. PTO and the FDA, and any equivalent patent or regulatory authorities in other countries, may disagree with our assessment of whether such extensions are available, and may refuse to grant extensions to patents, or may grant more limited extensions than requested. If this occurs, for example, for our darlifarnib API patent(s), our competitors who obtain the requisite regulatory approval could offer products with the same API as our darlifarnib product earlier than expected, so long as the competitors do not infringe any other patents that we may hold. Competitors may take advantage of our investment in development and clinical trials by referencing our clinical and preclinical data and launch their product earlier than might otherwise be the case.
We expect that following expiration of patents and any regulatory exclusivity we are able to obtain for any darlifarnib products, competitors may manufacture and sell generic versions of those products at a lower price, which would reduce our product revenues. In certain jurisdictions, legislation mandates generic substitution for brand name drugs.
We depend on our licensors to prosecute and maintain patents and patent applications that are material to our business. Any failure by our licensors to effectively protect these intellectual property rights could adversely impact our business and operations.
We have licensed patent rights from third parties for some of our development programs, including exclusive patent rights related to ziftomenib (the API in KOMZIFTI) and other compounds in our menin-KMT2A program from the University of Michigan. As a licensee of third parties, we in some cases rely on these third parties to file and prosecute patent applications and maintain patents and otherwise protect and enforce the licensed intellectual property under some of our license agreements. We have not had and do not have primary control over these activities for certain of our patents or patent applications and other intellectual property rights. We cannot be certain that such activities by third parties have been or will be conducted in compliance with applicable laws and regulations or will result in valid and enforceable patents or other intellectual property rights. Pursuant to the terms of the license agreements with some of our licensors, the licensors may have the right to control enforcement of our licensed patents or defense of any claims asserting the invalidity of these patents and even if we are permitted to pursue such enforcement or defense, we will require the cooperation of our licensors. We cannot be certain that our licensors will allocate sufficient resources or prioritize their or our enforcement of such patents or defense of such claims to protect our interests in the licensed patents. Even if we are not a party to these legal actions, an adverse outcome could harm our business because it might prevent us from continuing to license intellectual property that we may need to operate our business.
Patent terms may be inadequate to protect our competitive position on our product and product candidates for a commercially meaningful length of time.
Patents have a limited lifespan. In the United States, if all maintenance fees are timely paid, the natural expiration of a patent is generally 20 years from its effective U.S. non-provisional filing date. Various extensions may be available, but the life of a patent, and the protection it affords, is limited. Even if patents covering our product and product candidates are obtained, once the patents have expired, we may be open to competition from competitive products. Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. As a result, our patent portfolio may not provide us with sufficient duration of rights to exclude others from commercializing products similar or identical to ours.
We may not be successful in obtaining or maintaining necessary third-party intellectual property rights for our development pipeline through acquisitions and in-licenses.
Presently we have rights to intellectual property under an exclusive worldwide license from the University of Michigan for all therapeutic indications for ziftomenib (the API in KOMZIFTI) and other compounds in our menin-KMT2A program. Because our programs may involve additional product candidates that may require the use of proprietary rights held by third parties, the growth of our business may depend in part on our ability to acquire, in-license or use these proprietary rights. Additionally, a companion diagnostic may require that we or a third-party collaborator developing the diagnostic acquire proprietary rights held by third parties, which may not be available. We may be unable to acquire or in-license any compositions, methods of use, or other third-party intellectual property rights from third parties that we identify. The licensing and acquisition of third-party intellectual property rights is a competitive area, and a number of more established companies are also pursuing strategies to license or acquire third-party intellectual property rights that we may consider attractive. These established companies may have a competitive advantage over us due to their size, cash resources and greater clinical development and commercialization capabilities.
For example, we may collaborate with U.S. and foreign academic and other research institutions to accelerate our discovery and preclinical development work under written agreements with these institutions. Typically, these institutions provide us with an option to negotiate a license to any of the institution’s rights in technology resulting from the collaboration. Regardless of such right of first negotiation for intellectual property, we may be unable to negotiate a license within the specified time frame or under terms that are acceptable to us. If we are unable to do so, the institution may offer the intellectual property rights to other parties, potentially blocking our ability to pursue our program.
In addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us. We also may be unable to license or acquire third-party intellectual property rights on terms that would allow us to make an appropriate return on our investment. If we are unable to successfully obtain rights to required third-party intellectual property rights, our business, financial condition and prospects for growth could suffer.
If we are unable to maintain the confidentiality of our trade secrets or other confidential information, our business and competitive position would be harmed.
In addition to seeking patents for some of our technology, product and product candidates, we also rely on trade secrets, including unpatented know-how, technology and other proprietary information, to maintain our competitive position. We seek to protect these trade secrets, in part, by entering into non-disclosure and confidentiality agreements with parties who have access to them, such as our employees, corporate collaborators, outside scientific collaborators, contract manufacturers, consultants, advisors and other third parties. We seek to protect our confidential proprietary information, in part, by entering into confidentiality and invention or patent assignment agreements with our employees and consultants; however, we cannot be certain that such agreements have been entered into with all relevant parties. Moreover, to the extent we enter into such agreements, any of these parties may breach the agreements and disclose our proprietary information, including our trade secrets, to third parties, and we may not be able to obtain adequate remedies for such breaches. Enforcing a claim that a party illegallydisclosed or misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, some courts inside and outside the United States are less willing or unwilling to protect trade secrets. If any of our trade secrets were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent the competitor, or those to whom the competitor communicates the trade secrets, from using that technology or information to compete with us. If any of our trade secrets were to be disclosed to or independently developed by a competitor, our competitive position would be harmed.
If we breach any of the agreements under which we license from third parties the development and/or commercialization rights to our product candidates, we could lose license rights that are important to our business and our operations could be materially harmed.
We have in-licensed rights related to ziftomenib (the API in KOMZIFTI) and other compounds in our menin-KMT2A program from the University of Michigan. As a result, our current business plans are dependent upon our satisfaction of certain conditions for the maintenance of the University of Michigan license agreement and the rights we license under that agreement and our other in-license agreements. The University of Michigan license agreement provides that we are subject to diligence obligations relating to the commercialization and development of ziftomenib, milestone payments, royalty payments and other obligations. If we fail to comply with any of the conditions or obligations or otherwise breach the terms of our license agreement with the University of Michigan or any of our other license agreements or license agreements we may enter into on which our business or product candidates are dependent, University of Michigan or other licensors may have the right to terminate the applicable agreement in whole or in part and thereby extinguish our rights to the licensed technology and intellectual property and/or any rights we have acquired to develop and commercialize certain product candidates. The loss of the rights licensed to us under our license agreement with University of Michigan or our other license agreements or any future license agreement that we may enter granting us rights on which our business or product candidates are dependent, could hinder or eliminate our ability to further develop and commercialize the applicable product candidates and would materially harm our business, prospects, financial condition and results of operations.
Disputes may arise regarding intellectual property subject to, and any of our rights and obligations under, any license or other strategic agreement, including:
the scope of rights granted under the license agreement and other interpretation-related issues;
the extent to which our technology and processes infringe, misappropriate or violate the intellectual property of the licensor that is not subject to the license agreement;
our diligence obligations under the license agreement and what activities satisfy those diligence obligations;
the sublicensing of patent and other rights to third parties under any such agreement or collaborative relationships;
the inventorship and ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our partners; and
the priority of invention of patented technology.
In addition, the agreements under which we license intellectual property or technology to or from third parties are complex, and certain provisions in such agreements may be susceptible to multiple interpretations. The resolution of any contract interpretation disagreement that may arise could narrow what we believe to be the scope of our rights to the relevant intellectual property or technology or increase what we believe to be our financial or other obligations under the relevant agreement, either of which could have a material adverse effect on our business, financial condition, results of operations and prospects. Moreover, if disputes over intellectual property that we have licensed prevent or impair our ability to maintain our current licensing arrangements on commercially acceptable terms, we may be unable to successfully develop and commercialize the affected product or product candidates.
The patent applications of pharmaceutical and biotechnology companies involve highly complex legal and factual questions, which, if determined adversely to us, could negatively impact our patent position.
The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complex legal and factual questions and has in recent years been the subject of much litigation. In addition, the laws of foreign countries may not protect our rights to the same extent as the laws of the United States. Certain inventions that are patentable in the United States may not be patentable in other countries and vice versa. Further, our ability to enforce our patent rights in foreign jurisdictions may not be as effective as in the United States. For example, some foreign countries, such as India and China, may not allow or enforce patents for methods of treating the human body. Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all. Therefore, we cannot know with certainty whether we or our licensors were the first to make the inventions claimed in our owned or licensed patents or pending patent applications, or that we or our licensors were the first to file for patent protection of such inventions. As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights are highly uncertain. Our pending and future patent applications may not result in patents being issued which protect our technology or products, in whole or in part, or which effectively prevent others from commercializing competitive technologies and products. Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of our patents or narrow the scope of our patent protection or eliminate our patent protection completely.
Moreover, we may be subject to a third-party preissuance submission of prior art to the U.S. PTO or third-party preissuance observations to the European Patent Office, or EPO, or become involved in patent office post-grant proceedings, such as opposition, derivation, reexamination, inter partes review, or post-grant review proceedings, challenging our patent rights or the patent rights of others. An adverse determination in any such submission or proceeding, or in litigation, could reduce the scope of, or invalidate, our patent rights, allow third parties to commercialize our technology or products and compete directly with us, without payment to us, or result in our inability to manufacture or commercialize products without infringing third-party patent rights. In addition, threats to the duration, breadth or strength of protection provided by our patents and patent applications is threatened could dissuade companies from collaborating with us to license, develop or commercialize current or future products and product candidates.
Even if our owned and licensed patent applications issue as patents, they may not issue in a form that will provide us with any meaningful protection, prevent competitors from competing with us or otherwise provide us with any competitive advantage. Even if our owned and licensed patents might provide such protection or competitive advantage, we may not have the resources to effectively enforce our rights under such patents, which can be expensive and time-consuming. Further, our competitors may be able to circumvent our owned or licensed patents by developing similar or alternative technologies or products in a non-infringing manner.
The issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and our owned and licensed patents may be challenged in courts or patent offices in the United States and abroad. Such challenges may result in loss of exclusivity or freedom to operate or in patent claims being narrowed, invalidated or held unenforceable, in whole or in part, which could limit our ability to stop others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection of our technology and products. Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. As a result, our owned and licensed patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours.
Changes in U.S. patent law, or laws in other countries, could diminish the value of patents in general, thereby impairing our ability to protect our product and product candidates.
As is the case with other pharmaceutical companies, our success depends heavily on intellectual property, particularly patents. Obtaining and enforcing patents in the pharmaceutical industry involve a high degree of technological and legal complexity. Therefore, obtaining and enforcing pharmaceutical patents is costly, time consuming and inherently uncertain. Changes in either the patent laws or in the interpretations of patent laws in the United States and other countries may diminish the value of our intellectual property and may increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of issued patents. We cannot predict the breadth of claims that may be allowed or enforced in our patents or in third-party patents. In addition, Congress or other foreign legislative bodies may pass patent reform legislation that is unfavorable to us.
For instance, under the Unitary Patent Court system that has been implemented in Europe, patent applicants have the option, upon grant of a patent by the EPO, of electing grant of a Unitary Patent, which will be subject to the jurisdiction of the Unified Patent Court, or UPC. This is a significant change in European patent practice. As the UPC is a new court system, there is limited precedent for the court, increasing the uncertainty of any litigation.
Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.
Periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on patents and/or applications are due to be paid to the U.S. PTO and various governmental patent agencies outside of the United States in several stages over the lifetime of the patents and/or applications. We have systems in place to remind us to pay these fees, and we employ an outside annuity provider firm and/or rely on our outside counsel to pay the fees due to patent agencies. The U.S. PTO and various non-U.S. governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. We employ reputable law firms and other professionals to help us comply, and in many cases, an inadvertentlapse can be cured by payment of a late fee or by other means in accordance with the applicable rules. However, there are situations in which non-compliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such an event, our competitors might be able to enter the market and this circumstance would have a material adverse effect on our business.
We may become involved in lawsuits to protect or enforce our patents or other intellectual property, which could be expensive, time consuming and unsuccessful.
Because competition in our industry is intense, competitors may infringe or otherwise violate our issued patents, patents of our licensors or other intellectual property. To counter infringement or unauthorized use, we may be required to file infringementclaims, which can be expensive and time-consuming to pursue. Any claims we assert against perceived infringers could provoke these parties to assert counterclaimsagainst us alleging that we infringe their patents. In addition, in a patent infringement proceeding, a court may decide that a patent of ours is invalid or unenforceable, in whole or in part, construe the patent’s claims narrowly or refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question. An adverse result in any litigation proceeding could put one or more of our patents at risk of being invalidated or interpreted narrowly. We may also elect to enter into license agreements in order to settle patent infringementclaims or to resolvedisputes prior to litigation, and any such license agreements may require us to pay royalties and other fees that could be significant. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure.
Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the outcome of which would be uncertain and could have a material adverse effect on the success of our business.
Our commercial success depends upon our ability, and the ability of our collaborators, to develop, manufacture, market and sell our product and product candidates and use our proprietary technologies without infringing the proprietary rights of third parties. There is considerable intellectual property litigation in the biotechnology and pharmaceutical industries. We may become party to, or threatened with, future adversarial proceedings or litigation regarding intellectual property rights with respect to our products and technology, including derivation, reexamination, inter partes review, post-grant review or interference proceedings before the U.S. PTO. Third parties may assert infringementclaimsagainst us based on existing patents or patents that may be granted in the future.
If we are found to infringe a third party’s intellectual property rights, we could be required to obtain a license from such third party to continue developing and marketing our products and technology. However, we may not be able to obtain any required license on commercially reasonable terms or at all. Even if we were able to obtain a license, it could be non-exclusive, thereby giving our competitors access to the same technologies licensed to us. We could be forced, including by court order, to cease commercializing the infringing technology or product. In addition, we could be found liable for monetary damages, including treble damages and attorneys’ fees if we are found to have willfullyinfringed a patent. A finding of infringement could prevent us from commercializing our product or product candidates or force us to cease some of our business operations, which could materially harm our business. Claims that we have misappropriated the confidential information or trade secrets of third parties could have a similar negative impact on our business.
Intellectual property discovered through government-funded programs may be subject to federal regulations such as “march-in” rights, certain reporting requirements and a preference for use of U.S.-based manufacturing companies. Compliance with such regulations may limit our exclusive rights and limit our ability to contract with non-U.S. manufacturers.
Although we do not currently own issued patents or pending patent applications that have been generated through the use of U.S. government funding, our exclusive license from the University of Michigan pertaining to compounds unrelated to ziftomenib includes intellectual property rights that have been generated through the use of U.S. government funding or grants, and we may acquire or license additional intellectual property rights from one or more entities that have been generated through the use of U.S. government funding or grants. Pursuant to the Bayh-Dole Act of 1980, the U.S. government has certain rights in inventions developed with government funding. These U.S. government rights include a non-exclusive, non-transferable, irrevocable worldwide license to use inventions for any governmental purpose. In addition, the U.S. government has the right, under certain limited circumstances, to require us to grant exclusive, partially exclusive, or non-exclusive licenses to any of these inventions to a third party if it determines that: (1) adequate steps have not been taken to commercialize the invention; (2) government action is necessary to meet public health or safety needs; or (3) government action is necessary to meet requirements for public use under federal regulations (also referred to as “march-in rights”). If the U.S. government exercised its march-in rights in our intellectual property rights generated through the use of U.S. government funding or grants, we could be forced to license or sublicense intellectual property developed by us or that we license on terms unfavorable to us, and there can be no assurance that we would receive compensation from the U.S. government for the exercise of such rights. The U.S. government also has the right to take title to these inventions if the grant recipient fails to disclose the invention to the government or fails to file an application to register the intellectual property within specified time limits. Intellectual property generated under a government funded program is also subject to certain reporting requirements, compliance with which may require us to expend substantial resources. In addition, the U.S. government requires that any products embodying any of these inventions or produced through the use of any of these inventions be manufactured substantially in the United States. This preference for U.S. industry may be waived by the federal agency that provided the funding if the owner or assignee of the intellectual property can show that reasonable but unsuccessful efforts have been made to grant licenses on similar terms to potential licensees that would be likely to manufacture substantially in the United States or that under the circumstances domestic manufacture is not commercially feasible. This preference for U.S. industry may limit our ability to contract with non-U.S. product manufacturers for products covered by such intellectual property.
We may not be able to protect our intellectual property rights throughout the world.
Geo-political actions in the United States and in foreign countries could increase the uncertainties and costs surrounding the prosecution or maintenance of our patent applications or those of any current or future licensors and the maintenance, enforcement or defense of our issued patents or those of any current or future licensors. For example, the U.S. and foreign government actions related to Russia’s invasion of Ukraine may limit or prevent filing, prosecution, and maintenance of patent applications in Russia. Government actions may also prevent maintenance of issued patents in Russia. These actions could result in abandonment or lapse of our patents or patent applications, resulting in partial or complete loss of patent rights in Russia. In addition, a decree was adopted by the Russian government in March 2022, allowing Russian companies and individuals to exploitinventions owned by patentees from the United States without consent or compensation. Consequently, we would not be able to prevent third parties from practicing our inventions in Russia or from selling or importing products made using our inventions in and into Russia. Accordingly, our competitive position may be impaired, and our business, financial condition, results of operations and prospects may be adversely affected.
Risks Related to Employee Matters, Managing Growth and Macroeconomic Conditions
We are highly dependent on our Chief Executive Officer. Our future success depends on our ability to retain key executives and to attract, retain and motivate qualified personnel.
We are highly dependent on the expertise of Troy E. Wilson, Ph.D., J.D., our President and Chief Executive Officer, as well as the other principal members of our management, scientific, clinical and commercial teams. Although we have entered into employment letter agreements with our executive officers, each of them may terminate their employment with us at any time. We do not maintain “key person” insurance for any of our executives or other employees.
Retaining qualified scientific, clinical, manufacturing and commercial personnel will also be critical to our success. The loss of the services of our executive officers or other key employees could impede the achievement of our research, development and commercialization objectives and seriouslyharm our ability to successfully implement our business strategy. Furthermore, replacing executive officers and key employees, and recruiting additional key employees, may be difficult and may take an extended period of time because of the limited number of individuals in our industry with the breadth of skills and experience required to successfully develop, gain regulatory approval of and commercialize products. Competition to hire from this limited pool is intense, and we may be unable to hire, train, retain or motivate these key personnel on acceptable terms given the competition among numerous pharmaceutical and biotechnology companies for similar personnel. We also experience competition for the hiring of scientific and clinical personnel from universities and research institutions. In addition, we rely on consultants and advisors, including scientific and clinical advisors, to assist us in formulating our discovery, development and commercialization strategy. Our consultants and advisors may be employed by employers other than us and may have commitments under consulting or advisory contracts with other entities that may limit their availability to us. If we are unable to continue to attract and retain high quality personnel, our ability to pursue our growth strategy will be limited.
We have expanded our development, regulatory, operations, medical affairs, and commercial capabilities, and as a result, we may encounter difficulties in managing our growth, which could disrupt our operations.
We have experienced significant growth in the number of our employees and the scope of our operations, particularly in the areas of development, manufacturing and supply chain, regulatory affairs, operations, medical affairs, and commercialization. To manage our growth, we must continue to implement and improve our managerial, operational and financial systems and recruit and train additional qualified personnel. The expansion of our operations may lead to significant costs and may divert our management and business development resources. Any inability to effectively manage growth could delay the execution of our business plans, disrupt our operations, or result in operational mistakes or shortcomings, loss of business opportunities, loss of employees and reduced productivity among remaining employees.
Unfavorable global economic conditions could adversely affect our business, financial condition or results of operations.
Our results of operations could be adversely affected by general conditions in the global economy and in the global financial markets. From time to time, including as a result of global pandemics, bank failures, actual or perceived changes in interest rates, current or future tariffs, and economic inflation, global financial markets have experienced volatility and uncertainty. A severe or prolonged economic downturn could result in a variety of risks to our business, including our ability to raise additional capital when needed on acceptable terms, if at all. A weak or declining economy could also strain our suppliers, possibly resulting in supply disruption. Any of the foregoing could harm our business and we cannot anticipate all of the ways in which the current economic climate and financial market conditions could adversely impact our business.
If our information technology systems, or those of third parties with whom we work, or our data are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; and other adverse consequences.
In the ordinary course of our business, we and the third parties with whom we work process sensitive data, including personal data (such as health-related data), and, as a result, we and the third parties with whom we work face a variety of evolving threats that could cause security incidents.
Cyberattacks, malicious internet-based activity, online and offline fraud, and other similar activities threaten the confidentiality, integrity, and availability of our sensitive data and information technology systems, and those of the third parties with whom we work. Such threats are prevalent and continue to rise, are increasingly difficult to detect, and come from a variety of sources, including traditional computer “hackers,” threat actors, “hacktivists,” organized criminalthreat actors, personnel (such as through theft or misuse), sophisticated nation-states, and nation-state-supported actors. Some actors now engage and are expected to continue to engage in cyber-attacks, including without limitation nation-state actors for geopolitical reasons and in conjunction with military conflicts and defense activities. During times of war and other major conflicts, we and the third parties with whom we work may be vulnerable to a heightened risk of these attacks, including retaliatory cyber-attacks, that could materially disrupt our systems and operations, supply chain and ability to produce and develop our products or services.
We and the third parties with whom we work are subject to a variety of evolving threats, including but not limited to social-engineering attacks (including through deep fakes, which may be increasingly more difficult to identify as fake, and phishing attacks), malicious code (such as viruses and worms), malware (including as a result of advanced persistentthreat intrusions), denial-of-service attacks, credential stuffing, credential harvesting, personnel misconduct or error, ransomware attacks, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data or other information technology assets, adware, attacks enhanced or facilitated by AI, telecommunications failures, earthquakes, fires, floods, and other similar threats.
It may be difficult and/or costly to detect, investigate, mitigate, contain, and remediate a security incident. Our efforts to do so may not be successful. Actions taken by us or the third parties with whom we work to detect, investigate, mitigate, contain, and remediate a security incident could result in outages, data losses, and disruptions of our business. Threat actors may also gain access to other networks and systems after a compromise of one of our networks and systems. For example, threat actors may use an initial compromise of one part of our environment to gain access to other parts of our environment, or leverage a compromise of our networks or systems to gain access to the networks or systems of third parties with whom we work, such as through phishing or supply chain attacks. In particular, severe ransomware attacks are becoming increasingly prevalent and can lead to significant interruptions in our operations, ability to produce and develop our products or services, loss of sensitive data and income, reputational harm, and diversion of funds. Extortion payments may alleviate the negative impact of a ransomware attack, but we may be unwilling or unable to make such payments due to, for example, applicable laws or regulations prohibiting such payments.
In addition, our reliance on third parties could introduce new cybersecurity risks and vulnerabilities, including supply-chain attacks, and other threats to our business operations. We rely on third parties and technologies to operate critical business systems to process sensitive data in a variety of contexts, including, without limitation, information technology systems, cloud-based infrastructure, applications, websites, data center facilities, encryption and authentication technology, employee email, content delivery to customers, and other functions. We also rely on third parties to provide other products, services, parts, or otherwise to operate our business. Our business, including our ability to manufacture drug products and conduct clinical trials, therefore depends on the continuous, effective, reliable and secure operation of our information technology resources. Our ability to monitor these third parties’ information security practices is limited, and these third parties may not have adequate information security measures in place. If the third parties with whom we work experience a security incident or other interruption, as they have in the past and may in the future, we could experience adverse consequences. While we may be entitled to damages if these third parties fail to satisfy their privacy or security-related obligations to us, any award may be insufficient to cover our damages, or we may be unable to recover such award. Similarly, supply-chain attacks have increased in frequency and severity, and we cannot guarantee that third parties’ infrastructure in our supply chain or that of the third parties with whom we work have not been compromised.
Remote work has increased risks to our information technology systems and data, as our employees utilize network connections, computers, and devices outside our premises or network, including working at home, while in transit and in public locations. Additionally, future or past business transactions (such as acquisitions or integrations) could expose us to additional cybersecurity risks and vulnerabilities, as our systems could be negatively affected by vulnerabilities present in acquired or integrated entities’ systems and technologies. Furthermore, we may discover security issues that were not found during due diligence of such acquired or integrated entities, and it may be difficult to integrate companies into our information technology environment and security program.
While we have implemented security measures designed to protect against security incidents, there can be no assurance that these measures will be effective. We take steps designed to detect, mitigate, and remediate vulnerabilities in our information systems (such as our hardware and/or software, including that of third parties with whom we work). We may not, however, detect and remediate all such vulnerabilities including on a timely basis. Further, we may experience delays in developing and deploying remedial measures and patches designed to address identified vulnerabilities. Vulnerabilities could be exploited and result in a security incident.
Any of the previously identified or similar threats could cause a security incident or other interruption that could result in unauthorized, unlawful, or accidental acquisition, modification, destruction, loss, alteration, encryption, disclosure of, or access to our sensitive data or our information technology systems, or those of the third parties with whom we work. A security incident or other interruption could disrupt our ability (and that of third parties with whom we work) to provide our products.
We have in the past and may in the future expend significant resources or modify our business activities (including our clinical trial activities) to try to protect against security incidents. Additionally, certain data privacy and security obligations require us to implement and maintain specific security measures designed to protect our information technology systems and sensitive data. Applicable data privacy and security obligations may require us to notify relevant stakeholders, including affected individuals, customers, regulators, and investors, of security incidents, or to implement other requirements, such as providing credit monitoring. Such disclosures and compliance with such requirements are costly, and the disclosure or the failure to comply with such requirements could lead to adverse consequences.
We (or third parties with whom we work) have in the past experienced, and may in the future experience or be perceived to have experienced, a security incident. For example, in July 2024, we were notified of a cybersecurity incident experienced by a former clinical trial service provider. The incident was investigated by our Incident Review Team and evaluated by our Materiality Assessment Team, which concluded that the incident was not material to our business. Adverse consequences of a security incident may include government enforcement actions (for example, investigations, fines, penalties, audits, and inspections); additional reporting requirements and/or oversight; restrictions on processing sensitive data (including personal data); litigation (including class claims); indemnification obligations; negative publicity; reputational harm; monetary fund diversions; diversion of management attention, interruptions in our operations (including availability of data); financial loss; and other similar harms. Security incidents and attendant consequences may prevent patients from participating, or cause patients to cease participation, in our clinical trials, and negatively impact our ability to grow and operate our business.
Additionally, our contracts may not contain limitations of liability, and even where they do, there can be no assurance that limitations of liability in our contracts are sufficient to protect us from liabilities, damages, or claims related to our data privacy and security obligations. Furthermore, we cannot be sure that our insurance coverage will be adequate or sufficient to protect us from or to mitigate liabilities arising out of our privacy and security practices, that such coverage will continue to be available on commercially reasonable terms or at all, or that such coverage will pay future claims.
In addition to experiencing a security incident, third parties may gather, collect, or infer sensitive data about us from public sources, data brokers, or other means that reveals competitively sensitive details about our organization and could be used to undermine our competitive advantage or market position. Additionally, our sensitive data could be leaked, disclosed, or revealed as a result of or in connection with our employees’, personnel’s, or vendors’ use of generative AI technologies.
Our business and operations would suffer in the event of system failures.
Despite the implementation of security measures, our internal computer systems and those of our CROs, collaborators and third parties on whom we rely are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. W e are increasingly dependent upon our technology systems to operate our business and our ability to effectively manage our business depends on the security, reliability and adequacy of our technology systems and data, which includes use of cloud technologies.
Interruptions in our operations due to system failures, accidents, security breaches or other events could result in a material disruption of our drug development programs and commercialization efforts. For example, the loss of clinical trial data from completed or ongoing or planned clinical trials could result in delays in our regulatory approval efforts and we may incur substantial costs to attempt to recover or reproduce the data. If any disruption or security breach resulted in a loss of or damage to our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability and/or the further development of our product candidates or commercialization of our product could be delayed.
Actual or threatened public health epidemics or outbreaks may adversely impact our industry, including our clinical trials, our supply chain, our liquidity and access to capital markets and our business development activities.
The extent to which future pandemics may impact our clinical trials, our supply chain, our access to capital and our business development activities, will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the timing and duration of future pandemics, the transmissibility and severity of illness caused by future pandemics, the efforts by governments and businesses to contain the spread of future pandemics, business closures or business disruptions and the impact on the economy and capital markets.
Our operations are vulnerable to interruption by natural disasters, power loss, terrorist activity and other events beyond our control, the occurrence of which could materially harm our business.
Businesses located in California have, in the past, been subject to electrical blackouts as a result of a shortage of available electrical power, and any future blackouts could disrupt our operations. We are vulnerable to a major earthquake, wildfire and other natural disasters. We do not carry any business interruption insurance that would compensate us for actual losses from interruption of our business that may occur, and any losses or damages incurred by us could cause our business to materially suffer.
International trade policies, including tariffs, sanctions and trade barriers, may adversely affect our business, financial condition, results of operations and prospects.
We operate 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 United States and the countries in which we conduct our 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 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 our business, results of operations, financial condition and prospects.
In April 2025, the Bureau of Industry and Security, U.S. Department of Commerce, initiated an investigation to determine whether pharmaceutical ingredients, including finished drug product, manufactured outside the United States pose a national security risk and should be subject to additional tariffs. We do not own or operate facilities for the manufacture of our product or product candidates and we currently have no plans to build our own clinical or commercial scale manufacturing capabilities. We rely, and expect to continue to rely, on third parties, including manufacturers and suppliers located in China, for the manufacture of commercial supplies of KOMZIFTI and clinical supplies of ziftomenib and darlifarnib for preclinical and clinical testing. In addition, we rely on specialized laboratory equipment, supplies, materials, and precursor compounds, all or part of which we believe may be ultimately sourced from multiple countries outside the United States, to advance our research and development efforts.
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 our supply chain complexity and could also potentially disrupt our existing supply chain. Unlike consumer goods, pharmaceuticals face unique regulatory constraints that make rapid supply chain adjustments particularly difficult and costly. Trade restrictions affecting the import of materials necessary for clinical trials could result in delays to our development timelines. Increased development costs and extended development timelines could place us at a competitive disadvantage compared to companies operating in regions with more favorable trade relationships and could reduce investor confidence, negatively impacting our ability to secure additional financing on favorable terms or at all. In addition, developments in trade and other regulations may restrict our ability to work with partners in China, thereby potentially disrupting our supply chain. Tariffs and trade restrictions could hinder our ability to establish cost-effective commercial production and distribution capabilities, negatively impacting our growth prospects.
The complexity of announced or future tariffs may also increase the risk that we or our 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 our 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 us from doing business directly or indirectly in or with certain countries or parties and may impose additional costs and complexity to our business.
Trade disputes, tariffs, restrictions and other political tensions between the United States and other countries may also exacerbateunfavorable 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 our business, financial condition and prospects. While we actively monitor 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 our 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 described elsewhere in this Annual Report.
Risks Related to Ownership of our Common Stock
Our stock price may fluctuate significantly and you may have difficulty selling your shares based on current trading volumes of our stock.
Our common stock has been listed on the Nasdaq Global Select Market, or Nasdaq, under the symbol “KURA” since November 5, 2015. The high and low price per share of our common stock as reported by Nasdaq during the period from November 5, 2015 through December 31, 2025, were $43.00 and $2.50, respectively. We cannot predict the extent to which investor interest in our company will sustain an active trading market on Nasdaq or any other exchange in the future. We have several stockholders, including affiliated stockholders, who hold substantial blocks of our stock. Sales of large numbers of shares by any of our large stockholders could adversely affect our trading price, particularly given our small historic trading volumes. If stockholders holding shares of our common stock sell, indicate an intention to sell, or if it is perceived that they will sell, substantial amounts of their common stock in the public market, the trading price of our common stock could decline. Moreover, if an active trading market is not sustained or if the volume of trading is limited, holders of our common stock may have difficulty selling their shares.
The price of our common stock may be volatile and may be influenced by numerous factors, some of which are beyond our control.
The market for our common stock could fluctuate substantially due to a variety of factors, some of which may be beyond our control. In addition to the factors discussed in this “Risk Factors” section and elsewhere in this Annual Report, these factors include:
our ability to successfully commercialize KOMZIFTI and any other product candidates that receive marketing approval;
failure to meet or exceed any financial guidance or expectations regarding KOMZIFTI and any development milestones that we may provide to the public;
failure to meet or exceed the estimates and projections of the investment community;
the product candidates we seek to pursue, and our ability to obtain rights to develop, commercialize and market those product candidates;
our decision to initiate a clinical trial, not to initiate a clinical trial or to terminate an existing clinical trial;
actual or anticipated adverse results or delays in our clinical trials;
changes in the structure of healthcare payment systems;
unanticipatedserious safety concerns related to the use of KOMZIFTI or any of our product candidates;
adverse regulatory decisions;
additions or departures of key scientific or management personnel;
changes in laws or regulations applicable to our product or product candidates, including without limitation clinical trial requirements for approvals;
disputes or other developments relating to patents and other proprietary rights and our ability to obtain patent protection for our product and product candidates;
our dependence on third parties, including CROs as well as our partners that produce companion diagnostic products;
actual or anticipated variations in quarterly operating results, liquidity or other indicators of our financial condition;
overall performance of the equity markets and other factors that may be unrelated to our operating performance or the operating performance of our competitors, including changes in market valuations of similar companies;
market conditions or trends in the biotechnology and biopharmaceutical industries;
introduction of new products offered by us or our competitors;
announcements of significant acquisitions, strategic partnerships, joint ventures or capital commitments by us or our competitors;
our ability to maintain an adequate rate of growth and manage such growth;
issuances of debt or equity securities;
sales of our common stock by us or our stockholders in the future, or the perception that such sales could occur;
trading volume of our common stock;
ineffectiveness of our internal control over financial reporting or disclosure controls and procedures;
general political and economic conditions;
effects of natural or man-made catastrophic events; and
other events or factors, many of which are beyond our control.
In addition, the stock market in general, and the stocks of small-cap biotechnology companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies, including as a result of global pandemics, bank failures, actual or perceived changes in interest rates, current or future tariffs, and economic inflation. Broad market and industry factors may negatively affect the market price of our common stock, regardless of our actual operating performance. These events may also lead to securities litigation, which can be expensive and time-consuming to defend, regardless of the merit or outcome. The realization of any of the above risks or any of a broad range of other risks, including those described in these “Risk Factors,” could have a dramatic and material adverse impact on the market price of our common stock.
We have broad discretion in the use of our cash and may not use our cash effectively, which could adversely affect our results of operations.
Our management has broad discretion in the application of our cash resources. Because of the number and variability of factors that will determine our use of our cash resources, our management might not apply our cash in ways that ultimately increase the value of our common stock. The failure by our management to apply our cash effectively could harm our business. Pending their use, we may invest our cash in short-term, investment-grade, interest-bearing securities. These investments may not yield a favorable return to our stockholders. If we do not invest or apply our cash in ways that enhance stockholder value, we may fail to achieve expected financial results, which could cause our stock price to decline.
FINRA sales practice requirements may limit a stockholder’s ability to buy and sell our stock.
The Financial Industry Regulatory Authority, or FINRA, has adopted rules requiring that, in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative or low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA has indicated its belief that there is a high probability that speculative or low-priced securities will not be suitable for at least some customers. If these FINRA requirements are applicable to us or our securities, they may make it more difficult for broker-dealers to recommend that at least some of their customers buy our common stock, which may limit the ability of our stockholders to buy and sell our common stock and could have an adverse effect on the market for and price of our common stock.
The resale of shares covered by our effective shelf registration statements could adversely affect the market price of our common stock in the public market, which result would in turn negatively affect our ability to raise additional equity capital.
The sale, or availability for sale, of our common stock in the public market may adversely affect the prevailing market price of our common stock and may impair our ability to raise additional capital by selling equity or equity-linked securities. We have filed shelf registration statements with the SEC, which have been declared effective, to register the resale of certain shares of our common stock. The shelf registration statements permit the resale of such shares at any time, subject to restrictions under applicable law. The resale of a significant number of shares of our common stock in the public market could adversely affect the market price for our common stock and make it more difficult for you to sell shares of our common stock at times and prices that you feel are appropriate. Furthermore, we expect that, because there are a large number of shares registered pursuant to the shelf registration statements, the selling stockholders named in such registration statements will continue to offer shares covered by such shelf registration statements for a significant period of time, the precise duration of which cannot be predicted. Accordingly, the adverse market and price pressures resulting from an offering pursuant to the shelf registration statements may continue for an extended period of time and continued negative pressure on the market price of our common stock could have a material adverse effect on our ability to raise additional equity capital.
We will incur increased costs and demands upon management as a result of complying with the laws and regulations affecting public companies, which could harm our operating results.
As a public company, we have incurred and will incur significant legal, accounting and other expenses, including costs associated with public company reporting requirements. We also have incurred and will incur costs associated with current corporate governance requirements, including requirements under Section 404 and other provisions of the Sarbanes-Oxley Act of 2002, or Sarbanes-Oxley Act, as well as rules implemented by the SEC or Nasdaq or any other stock exchange or inter-dealer quotations system on which our common stock may be listed in the future. The expenses incurred by public companies for reporting and corporate governance purposes have increased dramatically in recent years.
If we fail to maintain proper and effective internal controls, our ability to produce accurate and timely financial statements could be impaired, which could harm our operating results, our ability to operate our business and investors’ views of us.
We are required to comply with certain aspects of Section 404 of the Sarbanes-Oxley Act. Section 404 of the Sarbanes-Oxley Act requires public companies to, among other things, conduct an annual review and evaluation of their internal controls over financial reporting. Ensuring that we have adequate internal financial and accounting controls and procedures in place so that we can produce accurate financial statements on a timely basis is a costly and time-consuming effort that requires frequent evaluation. Our failure to maintain the effectiveness of our internal controls in accordance with the requirements of the Sarbanes-Oxley Act could have a material adverse effect on our business. We could lose investor confidence in the accuracy and completeness of our financial reports, which could have an adverse effect on the price of our common stock. In addition, if our efforts to comply with new or changed laws, regulations and standards differ from the activities intended by regulatory or governing bodies, regulatory authorities may initiate legal proceedings against us and our business may be harmed.
We are a “smaller reporting company” and any decision on our part to comply only with certain reduced reporting and disclosure requirements applicable to smaller reporting companies could make our common stock less attractive to investors.
We are a “smaller reporting company” under applicable securities regulations, and for as long as we continue to be a “smaller reporting company,” we may choose to take advantage of reduced reporting and disclosure requirements applicable to smaller reporting companies including, but not limited to, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, only being required to provide two years of audited financial statements in periodic reports and not being required to have our independent registered public accounting firm audit our internal control over financial reporting under 404(b) of the Sarbanes-Oxley Act (for so long as we are also a “non-accelerated filer”, which we will be for 2026). We cannot predict if investors will find our common stock less attractive if we choose to rely on these reduced reporting and disclosure requirements. If some investors find our common stock less attractive as a result of any choices to reduce future disclosure, there may be a less active trading market for our common stock and our stock price may be more volatile.
Future sales and issuances of our common stock or rights to purchase or acquire common stock, including pursuant to our equity incentive plans, outstanding stock options, restricted stock units, performance-based restricted stock units, warrants, pre-funded warrants or otherwise, could result in dilution to the percentage ownership of our stockholders and could cause our stock price to fall.
We expect that significant additional capital will be needed in the future to continue our planned operations. To raise capital, we may sell common stock, convertible securities or other equity securities in one or more transactions at prices and in a manner we determine from time to time.
If we sell common stock, convertible securities or other equity securities in more than one transaction, investors in a prior transaction may be materially diluted by subsequent sales. Additionally, any such sales may result in material dilution to our existing stockholders, and new investors could gain rights, preferences and privileges senior to those of holders of our common stock. Further, any future sales of our common stock by us or resales of our common stock by our existing stockholders or the perception that such sales could occur could cause the market price of our common stock to decline. In November 2023, we entered into the ATM Facility, under which we may offer and sell, from time to time, at our sole discretion, shares of our common stock having an aggregate offering price of up to $150.0 million. We have not sold any shares of our common stock under the ATM Facility.
Pursuant to our Amended and Restated 2014 Equity Incentive Plan, or 2014 Plan, we are authorized to grant equity awards consisting of shares of our common stock to our employees, directors and consultants. As of December 31, 2025, we had 8,373,981 shares of common stock available for grant under the 2014 Plan, options to purchase up to an aggregate of 13,408,557 shares of common stock outstanding, 1,461,879 unvested restricted stock units outstanding and 824,433 unvested performance-based restricted stock units outstanding. Also, pursuant to our 2023 Inducement Option Plan, as amended, or Inducement Plan, we are authorized to grant nonstatutory stock options to individuals that were not previously our employees or directors (or following a bona fide period of non-employment), as an inducement material to the individuals’ entry into employment with us, pursuant to Nasdaq Listing Rule 5635(c)(4). As of December 31, 2025, we had 869,550 shares of common stock available for grant under the Inducement Plan and options to purchase up to an aggregate of 2,380,450 shares of common stock outstanding.
In addition, we may grant or provide for the grant of rights to purchase shares of our common stock pursuant to our 2015 Employee Stock Purchase Plan, or ESPP. As of December 31, 2025, we had 327,697 shares of common stock reserved for future issuance under the ESPP.
Further, as of December 31, 2025, (i) warrants to purchase up to (a) 33,988 shares of our common stock at an exercise price of $3.31 per share and (b) 26,078 shares of our common stock at an exercise price of $14.38 per share and (ii) pre-funded warrants to purchase up to 416,850 shares of our common stock at an exercise price of $0.0001 per share were outstanding.
Any future grants of options, restricted stock units, performance-based restricted stock units, warrants, pre-funded warrants or other securities exercisable or convertible into our common stock, or the exercise or conversion of such shares, and any sales of such shares in the market, could have an adverse effect on the market price of our common stock.
Anti-takeover provisions under our charter documents and Delaware law could delay or prevent a change of control which could limit the market price of our common stock and may prevent or frustrate attempts by our stockholders to replace or remove our current management.
Our amended and restated certificate of incorporation, as amended, or Certificate of Incorporation, and amended and restated bylaws, or Bylaws, contain provisions that could delay or prevent a change of control of our company or changes in our board of directors that our stockholders might consider favorable. Some of these provisions include:
a prohibition on stockholder action through written consent, which requires that all stockholder actions be taken at a meeting of our stockholders;
a requirement that special meetings of stockholders be called only by the chairperson of the board of directors, the chief executive officer, or by a majority of the total number of authorized directors;
advance notice requirements for stockholder proposals and nominations for election to our board of directors;
division of our board of directors into three classes;
a requirement that no member of our board of directors may be removed from office by our stockholders except for cause and, in addition to any other vote required by law, upon the approval of not less than a majority of all outstanding shares of our voting stock then entitled to vote in the election of directors;
a requirement of approval of not less than 66 2 ⁄ 3 % of all outstanding shares of our voting stock to amend any Bylaws by stockholder action or to amend specific provisions of our Certificate of Incorporation;
the authority of the board of directors to issue preferred stock on terms determined by the board of directors without stockholder approval and which preferred stock may include rights superior to the rights of the holders of common stock; and
a requirement that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of violation of any duty owed by any of our current or former directors or officers to us or our stockholders, (iii) any action asserting a claim against us or any current or former director or officer arising pursuant to any provision of the Delaware General Corporation Law or our Certificate of Incorporation or Bylaws, (iv) any action seeking to interpret, apply, enforce or determine the validity of our Certificate of Incorporation or Bylaws, (v) any action asserting a claim as to which the Delaware General Corporation Law confers jurisdiction on the Court of Chancery, and (vi) any action asserting a claim against us or any current or former director or officer governed by the internal affairs doctrine or relating to our internal affairs, unless for any such action the designation of the Court of Chancery as the sole and exclusive forum would violate applicable law, in which case the United States District Court for the District of Delaware will be the sole and exclusive forum. Further, unless we agree to an alternative forum, the federal district courts of the United States of America will be the exclusive forum for any actions or proceedings arising under the Securities Act.
In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which may prohibit certain business combinations with stockholders owning 15% or more of our outstanding voting stock. These anti-takeover provisions and other provisions in our Certificate of Incorporation and Bylaws could make it more difficult for stockholders or potential acquirers to obtain control of our board of directors or initiate actions that are opposed by the then-current board of directors and could also delay or impede a merger, tender offer or proxy contest involving our company. These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing or cause us to take other corporate actions you desire. Any delay or prevention of a change of control transaction or changes in our board of directors could cause the market price of our common stock to decline.
Our charter documents provide that the Court of Chancery of the State of Delaware will be the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Our Certificate of Incorporation and Bylaws provide that the Court of Chancery of the State of Delaware is the exclusive forum for the following types of actions or proceedings under Delaware statutory or common law:
any derivative action or proceeding brought on our behalf;
any action asserting a claim of violation of any duty owed by any of our current or former directors or officers to us or our stockholders;
any action asserting a claim against us or any current or former director or officer arising pursuant to any provision of the Delaware General Corporation Law or our Certificate of Incorporation or Bylaws;
any action seeking to interpret, apply, enforce or determine the validity of our Certificate of Incorporation or Bylaws;
any action asserting a claim as to which the Delaware General Corporation Law confers jurisdiction on the Court of Chancery; and
any action asserting a claim against us or any current or former director or officer governed by the internal affairs doctrine or relating to our internal affairs, unless for any such action the designation of the Court of Chancery as the sole and exclusive forum would violate applicable law, in which case the United States District Court for the District of Delaware will be the sole and exclusive forum.
Further, unless we agree to an alternative forum, the federal district courts of the United States of America will be the exclusive forum for any actions or proceedings arising under the Securities Act.
These exclusive forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees, which may discourage lawsuits against us and our directors, officers and other employees. If a court were to find the exclusive-forum provisions in our Certificate of Incorporation and Bylaws to be inapplicable or unenforceable in an action, we may incur further significant additional costs associated with resolving the dispute in other jurisdictions, all of which could seriouslyharm our business.
Changes in tax laws or regulations that are applied adversely to us or our customers may have a material adverse effect on our business, cash flow, financial condition or results of operations.
New income, sales, use or other tax laws, statutes, rules, regulations or ordinances could be enacted at any time, which could affect the tax treatment of our domestic and foreign earnings. Any new taxes could adversely affect our domestic and international business operations, and our business and financial performance. Further, existing tax laws, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to us. The OBBBA enacted in 2025, the IRA enacted in 2022, the Coronavirus Aid, Relief, and Economic Security Act enacted in 2020, and legislation informally titled the Tax Cuts and Jobs Act enacted in 2017, made significant changes to the U.S. tax laws. For example, the Tax Cuts and Jobs Act required taxpayers to capitalize and amortize U.S.-based and non-U.S.-based research and experimental, or R&E, expenditures over five and fifteen years, respectively. The OBBBA restored the deductibility of domestic R&E expenditures in the year incurred for tax years beginning after December 31, 2024, but retained the capitalization and amortization requirement for foreign R&E expenditures. Future guidance from the Internal Revenue Service and other tax authorities with respect to any legislation may affect us, and certain aspects of such legislation could be repealed or modified or sunset in future years. In addition, it is uncertain if and to what extent various states will conform to federal tax laws. Future tax reform legislation could have a material impact on the value of our deferred tax assets, could result in significant one-time charges, and could increase our future U.S. tax expense.
Our ability to use net operating loss carryforwards and certain other tax attributes to offset future taxable income or taxes may be limited.
Under current law, federal net operating losses incurred in tax years beginning after December 31, 2017, may be carried forward indefinitely, but the deductibility of such federal net operating loss carryforwards in a year is limited to 80% of taxable income in such year. In addition, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50% change in its equity ownership value over a three-year period, the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change income or taxes may be limited. We have experienced an ownership change in the past and we may also experience additional ownership changes in the future as a result of subsequent shifts in our stock ownership, some of which may be outside of our control. If an ownership change occurs and our ability to use our net operating loss carryforwards is materially limited, it would harm our future operating results by effectively increasing our future tax obligations. In addition, at the state level, there may be periods during which the use of net operating loss carryforwards is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed. For example, in June 2024, California Senate Bill 167, or SB 167, was enacted into law. SB 167 provides for a three-year suspension of net operating losses under the California Personal Income Tax and Corporation Tax and a three-year cap on the use of business incentive tax credits to offset no more than $5 million of tax per year. As a result, if we earn net taxable income, we may be unable to use all or a material portion of our state net operating loss carryforwards and other tax attributes, which could potentially result in increased future tax liability to us and adversely affect our future cash flows.
We do not intend to pay cash dividends on our capital stock in the foreseeable future.
We have never declared or paid any dividends on our common stock and do not anticipate paying any dividends in the foreseeable future. Any payment of cash dividends in the future would depend on our financial condition, contractual restrictions, including under our term loan facility, solvency tests imposed by applicable corporate laws, results of operations, anticipated cash requirements and other factors and will be at the discretion of our board of directors. Our stockholders should not expect that we will ever pay cash or other dividends on our outstanding capital stock.
General Risk Factors
If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about us, our business or our market, our stock price and trading volume could decline.
The trading market for our common stock depends in part on the research and reports that securities or industry analysts publish about us or our business. If one or more of the analysts who cover us downgrade our common stock or publish inaccurate or unfavorable research about our business, our common stock price would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our common stock could decrease, which might cause our common stock price and trading volume to decline.
Our business could be negatively affected as a result of actions of activist stockholders, and such activism could impact the trading value of our securities.
Stockholders may, from time to time, engage in proxy solicitations or advance stockholder proposals, or otherwise attempt to effect changes and assert influence on our board of directors and management. Activist campaigns that contest or conflict with our strategic direction or seek changes in the composition of our board of directors could have an adverse effect on our operating results and financial condition. A proxy contest would require us to incur significant legal and advisory fees, proxy solicitation expenses and administrative and associated costs and require significant time and attention by our board of directors and management, diverting their attention from the pursuit of our business strategy. Any perceived uncertainties as to our future direction and control, our ability to execute on our strategy, or changes to the composition of our board of directors or senior management team arising from a proxy contest could lead to the perception of a change in the direction of our business or instability which may result in the loss of potential business opportunities, make it more difficult to pursue our strategic initiatives, or limit our ability to attract and retain qualified personnel and business partners, any of which could adversely affect our business and operating results. If individuals are ultimately elected to our board of directors with a specific agenda, it may adversely affect our ability to effectively implement our business strategy and create additional value for our stockholders. We may choose to initiate, or may become subject to, litigation as a result of the proxy contest or matters arising from the proxy contest, which would serve as a further distraction to our board of directors and management and would require us to incur significant additional costs. In addition, actions such as those described above could cause significant fluctuations in our stock price based upon temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects of our business.
Securities class action litigation could divert our management’s attention and harm our business and could subject us to significant liabilities.
The stock markets have from time to time experienced significant price and volume fluctuations that have affected the market prices for the equity securities of life sciences and biotechnology companies. These broad market fluctuations may cause the market price of our common stock to decline. In the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities. This risk is especially relevant for us because biotechnology and biopharma companies have experienced significant stock price volatility in recent years. Even if we are successful in defendingclaims that may be brought in the future, such litigation could result in substantial costs and may be a distraction to our management and may lead to an unfavorable outcome that could adversely impact our financial condition and prospects.
Our employees, independent contractors, principal investigators, consultants, vendors, distributors and CROs may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.
We are exposed to the risk that our employees, independent contractors, principal investigators, consultants, vendors, distributors and CROs may engage in fraudulent or other illegal activity. Misconduct by these parties could include intentional, reckless and/or negligent conduct or unauthorized activities that violate FDA regulations, including those laws that require the reporting of true, complete and accurate information to the FDA, manufacturing standards, federal and state healthcare fraud and abuse laws and regulations, and laws that require the true, complete and accurate reporting of financial information or data. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Misconduct by our employees and other third parties may also include the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and seriousharm to our reputation. We have adopted a Code of Business Conduct and Ethics, but it is not always possible to identify and determisconduct by our employees and other third parties, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant civil and criminalpenalties, damages, fines, the curtailment or restructuring of our operations, the exclusion from participation in federal and state healthcare programs and imprisonment.
We are subject to U.S. and certain foreign export and import controls, sanctions, embargoes, anti-corruption laws and anti-money laundering laws and regulations. Compliance with these legal standards could impair our ability to compete in domestic and international markets. We can face criminal liability and other serious consequences for violations, which can harm our business.
We are subject to export control and import laws and regulations, including the U.S. Export Administration Regulations, U.S. Customs regulations, and various economic and trade sanctions regulations administered by the U.S. Treasury Department’s Office of Foreign Assets Controls, and anti-corruption and anti-money laundering laws and regulations, including the Foreign Corrupt Practices Act, or FCPA, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act, the USA PATRIOT Act, and other state and national anti-bribery and anti-money laundering laws in the countries in which we conduct activities. Export controls and trade sanctions laws and regulations may restrict or prohibit altogether the provision, sale, or supply of our products to certain governments, persons, entities, countries, and territories, including those that are the target of comprehensive sanctions or an embargo. Anti-corruption laws are interpreted broadly and prohibit companies and their employees, agents, clinical research organizations, contractors and other collaborators and partners from authorizing, promising, offering, providing, soliciting or receiving, directly or indirectly, improper payments or anything else of value to recipients in the public or private sector. The FCPA also requires public companies to make and keep books and records that accurately and fairly reflect the transactions of the corporation and to devise and maintain an adequate system of internal accounting controls. We have direct or indirect interactions with officials and employees of government agencies or government-affiliated hospitals, universities and other organizations, including those involved in our clinical trials outside of the United States. We can be held liable for the corrupt or other illegal activities of our employees, agents, clinical research organizations, contractors and other collaborators and partners, even if we do not explicitly authorize or have actual knowledge of such activities. Any violations of the laws and regulations described above may result in substantial civil and criminalfines and penalties, imprisonment, the loss of export or import privileges, debarment, tax reassessments, breach of contract and fraudlitigation, reputational harm, and other consequences.
Item 1B. Unresolve d Staff Comments.
None.
Item 1C. Cybersecurity.
Risk Management and Strategy
We have implemented and maintain various information security processes designed to identify, assess and manage material risks from cybersecurity threats to our critical computer networks, third party hosted services, communications systems, hardware and software, and our critical data, including intellectual property, confidential information that is proprietary, strategic, financial, or competitive in nature, information related to our clinical trials and preclinical studies and information of our employees, or Information Systems and Data.
Our Information Technology, or IT, department identifies and assesses risks from cybersecurity threats by monitoring and evaluating our threat environment using various methods including, for example, manual and automated tools, subscribing to and analyzing reports and services that identify cybersecurity threats and threat actors, evaluating threats that are reported to us, using external intelligence feeds, engaging in internal and external audits, and engaging third parties to conduct threat assessments.
Depending on the environment, we implement and maintain various technical, physical, and organizational measures, processes, standards and policies designed to manage and mitigate material risks from cybersecurity threats to our Information Systems and Data, including, for example, a disaster recover/business continuity plan and information security policy, encrypting certain data, data segmentation, network security controls, access and physical security controls, asset management, tracking and disposal, systems monitoring, employee training, maintaining cyber insurance and using third party threat detection software.
Our assessment and management of material risks from cybersecurity threats are integrated into our overall risk management processes. The head of our IT department , who has more than 25 years of experience in IT and more than 15 years of experience in cybersecurity for public companies, reports to our Chief Operating Officer and works with management to prioritize our risk management processes and mitigate cybersecurity threats that are more likely to lead to a material impact to our business. We have established an Incident Review Team, which consists of representatives of our Finance, IT and Legal departments, to investigate, evaluate and respond to cybersecurity incidents. The Incident Review Team is responsible for escalating confirmed cybersecurity incidents to a Materiality Assessment Team, consisting of members of management. The Materiality Assessment Team is responsible for reporting cybersecurity incidents to the audit committee of the board of directors , as appropriate based upon the nature of the incident (or series of incidents).
We use third-party service providers to assist us from time to time to identify, assess, and manage material risks from cybersecurity threats, including for example threat intelligence service providers, cybersecurity software, and darkweb monitoring services. We also use third-party service providers to perform a variety of functions throughout our business, such as application providers, hosting companies, CROs and contract manufacturing organizations. Depending on the nature of the services provided, the sensitivity of the Information Systems and Data at issue, the access to be provided to such Information Systems and Data, and the identity of the provider, our vendor due diligence involves different levels of assessment of systems and controls designed to help identify cybersecurity risks associated with a provider. In addition, we may impose contractual obligations related to cybersecurity on the provider.
For a description of the risks from cybersecurity threats that may materially affect us and how they may do so, see our risk factors under Part 1, Item 1A. Risk Factors in this Annual Report on Form 10-K, including “ If our information technology systems, or those of third parties with whom we work, or our data are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; and other adverse consequences . ”
Governance
Our cybersecurity risk assessment and management processes are implemented and maintained by certain company management, including the head of our IT department. The head of IT is responsible for integrating cybersecurity risk
considerations into our overall risk management strategy, helping prepare for cybersecurity incidents, approving cybersecurity processes, and reviewing security assessments and other security-related reports.
Our cybersecurity incident response policy is designed to escalate certain cybersecurity incidents to our Materiality Assessment Team, comprised of members of management. In addition, our cybersecurity incident response policy includes reporting to the audit committee of the board of directors for certain cybersecurity incidents.
Our board of directors addresses our cybersecurity risk management as part of its general oversight function. The board of directors’ audit committee is responsible for overseeing our cybersecurity risk management processes, including oversight and mitigation of risks from cybersecurity threats.
The audit committee receives regular reports from the head of our IT department concerning the measures we have taken to monitor and evaluate our cybersecurity threat environment and any cybersecurity incidents that have occurred.
We are a biopharmaceutical company committed to realizing the promise of precision medicines for the treatment of cancer. Since our founding in 2014, we have transformed from a research and development company to a fully-integrated commercial-stage organization with a diversified pipeline of product candidates. Our pipeline consists of small molecules designed to target cancer signaling pathways and address significant unmet needs in oncology and hematology.
Our Product and Pipeline
KOMZIFTI (ziftomenib)
On November 13, 2025, the FDA approved our NDA for ziftomenib, which is being marketed in the United States under the trade name KOMZIFTI, for the treatment of adults with relapsed or refractory AML with a susceptible NPM1 mutation who have no satisfactory alternative treatment options. KOMZIFTI is the first and only menin inhibitor approved by the FDA for once-daily oral administration. The FDA previously granted Breakthrough Therapy, Fast Track and Orphan Drug Designations as well as Priority Review to ziftomenib.
FDA approval of our NDA for KOMZIFTI was based upon positive data from our KOMET-001 trial, a global Phase 1/2 trial that evaluated KOMZIFTI’s safety and efficacy in 112 patients with relapsed or refractory NPM1-mutated AML.
We believe that KOMZIFTI is differentiated from other menin inhibitors on the four pillars of efficacy , safety , compatibility and simplicity , and our market research indicates that this differentiated profile aligns with the priorities of physicians, pharmacists and care teams who treat patients with AML as well as with third-party payors, including commercial insurers and government healthcare programs.
Efficacy : The rate of CR+CRh in the KOMET-001 trial was 21.4% (95% CI: 14.2, 30.2). The median duration of CR+CRh was five months (95% CI: 1.9, 8.1) and the median time to first response in patients who achieved a CR or CRh was 2.7 months (range: 0.9 to 15 months). 88% of patients who achieved CR or CRh did so within six months of initiating KOMZIFTI. These data from the Prescribing Information for KOMZIFTI are generally consistent with the full results of the KOMET-001 trial published in the Journal of Clinical Oncology in September 2025.
Safety : KOMZIFTI demonstrated a manageable safety profile in the KOMET-001 trial, with most reported adverse events being Grade 1 or Grade 2. The most common adverse reactions, including laboratory abnormalities, reported in 20% or more of patients were aspartate aminotransferase increased, infection without an identified pathogen, potassium decreased, albumin decreased, alanine aminotransferase increased, sodium decreased, creatinine increased, alkaline phosphatase increased, hemorrhage, diarrhea, nausea, fatigue, edema, bacterial infection, musculoskeletal pain, bilirubin increased, potassium increased, DS, pruritus, febrile neutropenia and transaminases increased. Notably, no Grade 4 or Grade 5 QTc interval prolongation was reported. 12% of patients experienced QTc interval prolongation of ≤ Grade 3 and, of the 70 patients 65 years of age or older, 10% experienced QTc interval prolongation of any cause.
The Prescribing Information for KOMZIFTI includes a Black Box warning for DS, a well-studied mechanism-based risk in drugs that restore differentiation, and clear dose-modification guidelines for physicians to follow when DS is
suspected. Unlike the other FDA-approved menin inhibitor, KOMZIFTI does not have Black Box warning for QTc interval prolongations or Torsades de Pointes.
Compatibility : In contrast with other therapies that require dose adjustments when co-administered with anti-infective medications or other strong or moderate CYP3A4 inhibitors or inducers, KOMZIFTI can be co-administered without dose modification, offering predictability to physicians and reducing complexity and risk.
Simplicity : KOMZIFTI is the first and only menin inhibitor approved by the FDA for once-daily oral administration. KOMZIFTI’s once-daily dosing is beneficial to patients who are often elderly and on several concomitant medications.
We initiated commercial sales of KOMZIFTI in the United States on November 21, 2025. Under the terms of the Kyowa License Agreement, we lead commercial strategy for and are responsible for manufacturing KOMZIFTI in the United States. We and Kyowa Kirin are jointly performing commercialization and medical affairs activities in accordance with a co-created U.S. territory commercialization plan and the Kyowa Co-Promotion Agreement. We record all U.S. sales of KOMZIFTI, and we and Kyowa Kirin share equally the profits and losses from the commercialization activities in the United States. Outside the United States, Kyowa Kirin is responsible for commercial strategy and for commercializing ziftomenib and booking sales.
On November 25, 2025, we announced that KOMZIFTI was added to the NCCN Guidelines® as a Category 2A recommended treatment option for adults with relapsed or refractory NPM1-mutated AML.
Following the FDA’s November 2025 approval of KOMZIFTI, we submitted patent information to our NDA regarding eight granted U.S. patents that claim the drug substance, drug product and/or methods of treatment for KOMZIFTI. These patents, which have been added to the Orange Book for KOMZIFTI, include two recently granted patents that share a base expiration date of July 16, 2044.
Market access decisions have enabled KOMZIFTI to be available to covered lives in the United States within the first 90 days after FDA approval. At least 80% of private payors have now established published coverage policies to cover KOMZIFTI for the indicated population, all aligned with the label with no additional restrictions. The timing of coverage decisions by payors, including many state Medicaid programs and private payors, have surpassed benchmarks. Among private payors, some published policies now require patients with relapsed or refractory NPM1-mutated AML to step through KOMZIFTI first before receiving other available menin inhibitors.
Menin Inhibitor Development Programs
Clinical Development of Ziftomenib in AML
Together with Kyowa Kirin, we are advancing the global clinical development of ziftomenib across the treatment continuum for AML, including in combinations with standards of care for AML and in patients with frontline and relapsed or refractory disease.
Ziftomenib Combinations with Standards of Care for AML
Newly Diagnosed AML
In September 2025, we initiated KOMET-017, a single protocol comprised of two independent, global, randomized, double-blind, placebo-controlled Phase 3 trials to evaluate ziftomenib in combination with both intensive and non-intensive regimens in patients with newly diagnosed NPM1-mutated or KMT2A-rearranged AML. The KOMET-017 protocol was informed by the clinical data and findings generated in our Phase 1 KOMET-007 trial. The single protocol design of KOMET-017 has streamlined the study start-up process, resulting in site activation at a pace that has exceeded our expectations. Patients have been dosed in both trials and enrollment continues to progress.
Combination with Non-Intensive Chemotherapy (Venetoclax/Azacitidine) in NPM1-Mutated AML
The registrational KOMET-017-NIC (Non-Intensive Chemotherapy) trial is evaluating the combination of ziftomenib with venetoclax plus azacitidine in patients with newly diagnosed NPM1-mutated AML who are unfit to receive intensive chemotherapy. The KOMET-017-NIC trial will assess CR and OS as dual-primary endpoints to support potential U.S. accelerated approval and full approval, respectively. Patients in this trial are randomized to receive ziftomenib or placebo, in combination with venetoclax and azacitidine.
We previously evaluated ziftomenib in combination with venetoclax and azacitidine in patients with newly diagnosed NPM1-mutated AML in the Phase 1 KOMET-007 trial, and we delivered an oral presentation of preliminary data from the Phase 1b expansion cohort evaluating this regimen at the 67 th ASH Annual Meeting in December 2025. As presented at ASH, 40 patients with newly diagnosed NPM1-mutated AML had been enrolled in the cohort as of the September 24, 2025 data cutoff date, 58% (23/40) of whom had an ECOG performance status of two and 37 of whom were response evaluable. High rates of durable morphologic complete responses (CRc 86%; CR 73%) were observed, with 68% of CRc responders having achieved molecular MRD negativity by central NGS.
As of the data cutoff for the ASH presentation, median duration of CR and median OS were not reached at median follow-up of 26.1 weeks (range 1.6–54.1). 68% of patients remained alive and on treatment or in long-term follow-up as of the data cutoff. The triplet combination was generally well tolerated, with a safety profile consistent with that reported for venetoclax and azacitidine alone. Rates of ziftomenib-related myelosuppression were low, and the median times to neutrophil and platelet recovery were also consistent with those expected for venetoclax and azacitidine alone. One case each of Grade 2 DS and Grade 3 investigator-assessed QTc prolongation were successfully managed without treatment discontinuation.
Combination with Intensive Chemotherapy (7+3) in NPM1-Mutated or KMT2A-Rearranged AML
The registrational KOMET-017-IC (Intensive Chemotherapy) trial is evaluating the combination of ziftomenib with induction chemotherapy (7+3) in patients with newly diagnosed NPM1-mutated or KMT2A-rearranged AML. Patients in this trial are randomized to receive ziftomenib or placebo in combination with standard induction, consolidation chemotherapy and post-consolidation maintenance. The KOMET-017-IC trial will assess MRD-negative CR and EFS as dual-primary endpoints to support potential U.S. accelerated approval and full approval, respectively. Based on our current assumptions, we anticipate topline results from the MRD-negative CR accelerated endpoint in the intensive chemotherapy setting in 2028.
We previously evaluated ziftomenib in combination with 7+3 in patients with newly diagnosed NPM1-mutated or KMT2A-rearranged adverse risk AML in the KOMET-007 trial. In June 2025, we presented positive data at the European Hematology Association Congress from the KOMET-007 Phase 1b cohort evaluating this regimen. Ziftomenib dosed once daily at 600 mg in combination with 7+3 demonstrated robust and evolving clinical activity in patients with newly diagnosed AML. Among 71 response-evaluable patients, 93% of patients with NPM1-mutated AML and 89% of patients with KMT2A-rearranged AML achieved a CRc at the time of data cutoff. A rate of CR-MRD negativity of 71% for patients with NPM1-mutated AML with a median time to MRD negativity of 4.7 weeks and a rate of CR-MRD negativity of 88% for patients with KMT2A-rearranged AML with a median time to MRD negativity of 4.4 weeks were observed. 96% of patients with NPM1-mutated AML and 88% of patients with KMT2A-rearranged AML remained alive and on study as of the data cutoff.
We expect to present updated data evaluating the combination of ziftomenib with 7+3 in newly diagnosed NPM1-mutated or KMT2A-rearranged AML from the KOMET-007 trial in the first half of 2026.
Combination with Intensive Chemotherapy (7+3) and Quizartinib in NPM1/FLT3-ITD Co-Mutated AML
In October 2025, we and Kyowa Kirin announced dosing of the first patient in a cohort of the KOMET-007 trial evaluating the safety, tolerability and activity of ziftomenib in combination with 7+3 plus quizartinib in patients with newly diagnosed NPM1/FLT3-ITD co-mutated AML. We expect to continue to advance the enrollment of patients in this cohort in 2026.
Relapsed or Refractory AML
Combination with Non-Intensive Chemotherapy (Venetoclax/Azacitidine) in NPM1-Mutated or KMT2A-Rearranged AML
We are evaluating ziftomenib in combination with venetoclax and azacitidine in patients with relapsed or refractory NPM1-mutated or KMT2A-rearranged AML in our Phase 1 KOMET-007 trial. At ASH in December 2025, we delivered an oral presentation of safety and clinical activity results from Phases 1a and 1b of this ongoing study. Of the 83 patients included in the dataset as of the September 24, 2025 data cutoff date, 80 were response evaluable and 58% (48/83) had received prior venetoclax.
Among the 51 patients with relapsed or refractory NPM1-mutated AML, the ORR was 65% and the CRc rate was 48%, with CRc median duration of 39.9 weeks. In venetoclax-naïve patients, the ORR was 83% and the CRc rate was 70%, compared with 48% and 28%, respectively, in venetoclax-exposed patients. Median OS was 54.9 weeks (95% CI 32.0–NE). 14 patients received HSCT, five proceeded to ziftomenib maintenance therapy, and five were pending maintenance at time of data cutoff.
Among the 32 patients with relapsed or refractory KMT2A-rearranged AML, the ORR was 41% and the CRc rate was 28%, with CRc median duration of 12.4 weeks. In venetoclax-naïve patients, the ORR was 70% and the CRc rate was 60%. Median OS was 21.1 weeks (95% CI 12.4–64.9). Two patients received HSCT and both proceeded to ziftomenib maintenance therapy.
The combination was generally well tolerated in both relapsed or refractory NPM1-mutated and relapsed or refractory KMT2A-rearranged AML. Rates of ziftomenib-related myelosuppression were low, with neutrophil and platelet recovery consistent with expectations for venetoclax and azacitidine alone. No ziftomenib-related QTc prolongation was reported. One Grade 3 DS case (in a patient with an NPM1 mutation) was successfully resolved with protocol-specified measures, and the patient resumed treatment with ziftomenib.
We have completed enrollment of patients with relapsed or refractory NPM1-mutated AML in the dose expansion cohort evaluating the combination of ziftomenib with venetoclax and azacitidine. We expect to present updated data from this cohort in the first half of 2026.
Combination with Gilteritinib in NPM1/FLT3 Co-Mutated AML
We are evaluating ziftomenib in combination with gilteritinib in patients with relapsed or refractory NPM1 and FLT3 co-mutated AML in our Phase 1 KOMET-008 trial. We have completed patient enrollment in the dose expansion portion of this cohort and anticipate presenting preliminary data in the second half of 2026.
Combination with FLAG-IDA or LDAC in NPM1-Mutated or KMT2A-Rearranged AML
We also are evaluating ziftomenib in combination with FLAG-IDA or LDAC in patients with relapsed or refractory NPM1-mutated or KMT2A-rearranged AML as part of our KOMET-008 trial.
Ziftomenib Monotherapy
While the FDA approval of KOMZIFTI marks the completion of our clinical evaluation of ziftomenib as a monotherapy for adult patients with relapsed or refractory NPM1-mutated AML, we continue to evaluate ziftomenib as a monotherapy in patients with non-NPM1-mutated and non-KMT2A-rearranged AML and in patients with KMT2A-rearranged ALL under the KOMET-001 protocol.
We are supporting an investigator-sponsored trial, and may initiate a company-sponsored trial, evaluating the ability of ziftomenib to improve outcomes when administered as a maintenance therapy to patients with NPM1-mutated or KMT2A-rearranged AML following HSCT.
In December 2023, we announced a clinical collaboration with BCU to evaluate ziftomenib in combination with chemotherapy in pediatric patients with relapsed or refractory KMT2A-rearranged, NUP98-rearranged or NPM1-mutated acute leukemia. Under the terms of the collaboration agreement, BCU serves as the coordinating sponsor of a Phase 1 trial of ziftomenib in pediatric patients with acute leukemias in North America, the Princess Máxima Center for Pediatric Oncology in Utrecht, Netherlands serves as the coordinating sponsor of the trial in Europe, and we supply BCU and the Princess Máxima Center with ziftomenib for the trial.
Finally, several investigator-sponsored clinical trials of ziftomenib in acute leukemias are either open for enrollment or in development, in addition to the clinical trials described above.
Clinical Development of Ziftomenib in Gastrointestinal Stromal Tumors
In April 2025, we dosed the first patients in a Phase 1 trial evaluating ziftomenib in combination with imatinib in patients with advanced GIST after imatinib failure, which we refer to as the KOMET-015 trial. We are advancing the combination in dose escalation and have reached a range of dose levels without observing dose-limiting toxicities.
Menin Inhibition in Diabetes
We continue to make progress toward multiple next-generation menin inhibitor drug candidates. We have nominated our first next-generation menin inhibitor, KO-7246, which we expect to advance into IND-enabling studies in diabetes and cardiometabolic diseases in 2026 with external investment or through a collaboration. We anticipate the publication of preclinical data on the use of menin inhibitors in diabetes in 2026. We also expect to advance preclinical development of an additional next-generation menin inhibitor development candidate for use in combination therapy for solid tumors in 2026.
Farnesyl Transferase Inhibitor Development Program
Darlifarnib
We are evaluating the safety, tolerability, pharmacokinetics, pharmacodynamics and preliminary antitumor activity of darlifarnib, our next-generation FTI, in a Phase 1 first-in-human trial, which we call the FIT-001 trial. The FIT-001 trial includes multiple cohorts to evaluate darlifarnib in combination with other targeted therapies in large solid tumor indications.
Darlifarnib in Combination with Cabozantinib in RCC
As part of our FIT-001 trial, we are evaluating darlifarnib in combination with cabozantinib in patients with ccRCC and patients with non-clear cell RCC. At the ESMO Congress in October 2025, we presented preliminary Phase 1a dose-escalation data demonstrating the combination’s manageable safety profile across multiple doses, including at the full label dose of cabozantinib. Antitumor activity was observed across all doses, including in patients with prior exposure to cabozantinib. As of the August 15, 2025 data cutoff date, the ORR was 33-50% in ccRCC, and 17-50% in patients with prior cabozantinib exposure, and the disease control rate was 80-100% in ccRCC. We initiated the Phase 1b dose expansion cohorts of darlifarnib and cabozantinib in patients with advanced RCC in February 2026. We expect to present updated Phase 1a dose-escalation data from the combination in the second half of 2026.
Darlifarnib in Combination with Adagrasib in NSCLC, CRC and PDAC
We are evaluating darlifarnib in combination with adagrasib in patients with KRAS G12C -mutated NSCLC, CRC and PDAC as part of our FIT-001 trial. Under the terms of a clinical collaboration agreement with Mirati, a wholly owned subsidiary of BMS, we sponsor the trial and Mirati supplies us with adagrasib, a KRAS G12C inhibitor, for use in the trial. We anticipate the presentation of preliminary clinical data from the dose escalation portion of the FIT-001 trial evaluating the combination of darlifarnib and adagrasib in the first half of 2026.
We plan to explore opportunities to evaluate additional indications and combination partners, such as novel PI3K alpha and RAS inhibitors, for darlifarnib in 2026.
Darlifarnib as a Monotherapy
Preliminary data from the FIT-001 trial evaluating darlifarnib as a monotherapy in RAS-altered advanced solid tumors were presented at ESMO in October 2025. The data presented at ESMO indicate that darlifarnib has a manageable safety and tolerability profile when administered at doses from 3 to 10 mg per day. Encouraging antitumor activity was observed in advanced HRAS-mutated solid tumors across multiple dose levels, demonstrating on-target activity and a broad therapeutic window.
Tipifarnib
Tipifarnib in Combination with Alpelisib in HNSCC
In 2021, we initiated a Phase 1/2 open-label, biomarker-defined cohort trial, called the KURRENT-HN trial, to evaluate the combination of tipifarnib and alpelisib, a PI3K alpha inhibitor, in patients with HNSCC whose tumors have HRAS overexpression and/or PIK3CA mutation and/or amplification. We completed the KURRENT-HN trial in the third quarter of 2025 and presented data from the trial at ESMO in October 2025. The combination of tipifarnib and alpelisib demonstrated a manageable safety profile in HNSCC patients across multiple doses. Robust antitumor activity was observed in heavily pretreated patients with relapsed or metastatic HNSCC with PIK3CA alterations. An ORR of 47% was observed at a daily dose of tipifarnib 1200 mg with alpelisib 250 mg.
Based on the data from the KURRENT-HN trial, we are evaluating data generation options for the combination of darlifarnib and a PI3K alpha inhibitor in HNSCC and other PI3K alpha-driven solid tumors.
Liquidity Overview
As of December 31, 2025, we had cash, cash equivalents and short-term investments of $667.2 million.
In November 2024, we entered into the Kyowa License Agreement to develop and commercialize globally ziftomenib for the treatment of patients with AML and other hematologic malignancies, which may be expanded into other oncology indications at the option of Kyowa Kirin, subject to certain conditions. In exchange for the licenses and rights granted to Kyowa Kirin to participate in the development and commercialization of ziftomenib, we received an upfront payment of $330.0 million and are eligible to receive up to an additional $693.0 million in development, regulatory and commercial milestone payments for the Field. As of December 31, 2025, $240.0 million in development milestone payments were achieved under the Kyowa License Agreement and $22.6 million of profit and loss sharing payments were received or expected to be received.
In January 2024, we completed a private placement in which we sold to certain institutional accredited investors an aggregate of 1,376,813 shares of our common stock at a purchase price of $17.25 per share and pre-funded warrants to purchase up to an aggregate of 7,318,886 shares of common stock at a purchase price of $17.2499 per pre-funded warrant (representing the $17.25 per share purchase price less the exercise price of $0.0001 per warrant share), or the Private Placement. Net proceeds from the Private Placement, after deducting expenses, were approximately $145.8 million. As of December 31, 2025, pre-funded warrants to purchase 6,902,036 of such shares of common stock from the Private Placement had been exercised and 416,850 remained outstanding.
In November 2023, we entered into a Sales Agreement with Leerink Partners LLC and Cantor Fitzgerald & Co., or the ATM Facility, under which we may offer and sell, from time to time, at our sole discretion, shares of our common stock having an aggregate offering price of up to $150.0 million. We have not sold any shares of our common stock under the ATM Facility.
In June 2023, we completed a public offering in which we sold an aggregate of 5,660,871 shares of common stock at a price of $11.50 per share as well as pre-funded warrants to purchase 3,034,782 shares of our common stock at a price of $11.4999 per pre-funded warrant (representing the $11.50 per share purchase price less the exercise price of $0.0001 per warrant share). Net proceeds from the public offering, after deducting underwriting discounts and commissions and offering expenses, were approximately $93.6 million. As of December 31, 2025, none of the pre-funded warrants from the public offering remained outstanding.
In November 2022, we entered into the Loan Agreement with the Lenders and Hercules, in its capacity as administrative agent and collateral agent for itself and the Lenders, providing for up to $125.0 million in a series of Term Loans. Under the terms of the Loan Agreement, we borrowed $10.0 million of an initial $25.0 million tranche of Term Loans. The remaining tranches of Term Loans expired without us drawing down such additional loans. The Term Loans have a maturity date of November 2, 2027, or the Maturity Date. Repayment of the Term Loans is interest only through May 1, 2027. After the interest-only payment period, borrowings under the Loan Agreement are repayable in monthly payments of principal and accrued interest until the Maturity Date. The per annum interest rate for the Term Loans is the greater of (i) the prime rate as reported in The Wall Street Journal minus 6.25% plus 8.65% and (ii) 8.65%. As of December 31, 2025, the interest rate on the Term Loans was 9.15%.
In November 2025, we began to generate revenues from product sales. Since our inception and prior to such product revenues, we have funded our operations primarily through equity and debt financings and payments received under the Kyowa License Agreement. We anticipate that we will require significant additional financing in the future to continue to fund our operations as discussed more fully below under the heading “Liquidity and Capital Resources.”
Financial Operations Overview
Product Revenue, Net
Our first commercial product, KOMZIFTI, was approved by the FDA for sale in the United States on November 13, 2025. In accordance with U.S. generally accepted accounting principles, we determine net product revenue for KOMZIFTI, with specific assumptions for variable consideration components including, but not limited to, trade discounts and allowances, co-pay assistance programs and payor rebates.
Revenue from Collaborations and Licenses
We generate revenue primarily through collaboration and license agreements, such as the Kyowa License Agreement. Such agreements may require us to deliver various rights and/or services, including intellectual property rights or licenses and
research, development and other services. Under such agreements, we are generally eligible to receive non-refundable upfront payments, funding for research, development and other services, milestone payments, and royalties.
Our collaboration agreements fall under the scope of Accounting Standards Codification, or ASC, Topic 808, Collaborative Arrangements, or Topic 808, when there is a joint operating activity and when both parties are active participants in the arrangement and are exposed to significant risks and rewards. For our arrangements under the scope of Topic 808, we evaluate each promised good or service that is distinct in accordance with ASC Topic 606, Revenue from Contracts with Customers, or Topic 606 (i.e., a unit of account), and apply Topic 606 to those units of account that are determined to be with a customer. For all other units of account that are not within the scope of other relevant accounting topics, we analogize to other authoritative accounting literature, such as Topic 606.
Topic 606 requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers under a five-step model: (i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when or as a performance obligation is satisfied.
In contracts where we have more than one promise to provide the customer with goods or services, each promise is evaluated to determine whether it is a distinct performance obligation based on whether (i) the customer can benefit from the good or service on its own or together with other resources that are readily available and (ii) the good or service is separately identifiable from other promises in the contract. The evaluation of whether a promised good or service is a distinct performance obligation may require significant judgment and is based on the facts and circumstances surrounding each contract and the nature of the promised goods and services within each contract.
We are required to make estimates of the transaction price, including variable consideration that is subject to a constraint. Amounts of variable consideration are included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur and when the uncertainty associated with the variable consideration is subsequently resolved. At the inception of arrangements that include variable consideration, we may be required to exercise significant judgment to estimate the amount of variable consideration to include in the transaction price. In making such estimates, we generally use the most likely method for milestone payments and the expected value method for other forms of variable consideration. The amount of variable consideration that is included in the transaction price is only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in future periods. Milestone payments that are not within our or the licensee’s control, such as regulatory approvals, are not included in the transaction price until those approvals are received. These estimates are re-assessed each reporting period and we adjust our estimate of the overall transaction price as necessary.
The consideration under the contract is allocated between the distinct performance obligations based on their respective relative stand-alone selling prices. The estimated stand-alone selling price of each performance obligation reflects our best estimate of what the selling price would be if the deliverable was regularly sold on a stand-alone basis and is determined by reference to market rates for the good or service when sold to others or by using an adjusted market assessment approach if the selling price on a stand-alone basis is not available. The determination of the stand-alone selling price often requires significant judgment. Our estimates of the stand-alone selling price for license-related performance obligations may include forecasted revenues and expenses, development timelines, reimbursement rates for personnel costs, discount rates and probabilities of technical, regulatory and commercial success. Our estimates of the stand-alone selling price for research and development or other service-related performance obligations generally include forecasting the expected costs of satisfying a performance obligation at market rates. We also exercise significant judgment in allocating variable consideration that relates specifically to our efforts to satisfy one or more, but not all, performance obligations and determining whether such allocation is consistent with the overall allocation objectives within Topic 606.
The consideration allocated to each distinct performance obligation is recognized as revenue when control is transferred to the customer for the related goods or services. For performance obligations satisfied over time, we determine the measure of progress that best represents the transfer of goods or services to the customer. Revenue is recognized by measuring the progress towards complete satisfaction of the performance obligation using an input-based measure. Estimating the progress of the performance obligation requires significant management estimates, such as forecasting costs necessary to satisfy the performance obligation.
Sales-based royalties received in connection with licenses of intellectual property are subject to a specific exception in Topic 606, whereby the consideration is not included in the transaction price and recognized in revenue until the customer’s subsequent sales or usages occur. We may also be entitled to cost-share reimbursements or may be required to share profits related to our collaboration and license agreements.
Cost of Product Sales
Cost of product sales consists primarily of direct and indirect costs related to the manufacture of KOMZIFTI for commercial sale, including internal manufacturing related staff costs, third-party manufacturing and packaging costs, raw material and component costs, freight-in and storage costs. Prior to the FDA approval of KOMZIFTI in November 2025, costs incurred for the manufacture of KOMZIFTI were recorded as research and development expenses, which resulted in zero-cost inventory. As a result, the cost of product sales related to KOMZIFTI will initially reflect a lower average per unit cost of materials, as previously expensed zero-cost inventory is utilized for commercial production and sold to customers. We expect the cost of product sales for KOMZIFTI to increase in relation to product revenues as we deplete these inventories.
Research and Development Expenses
We focus on the research and development of our pipeline programs. Our research and development expenses consist of costs associated with our research and development activities including salaries, benefits, share-based compensation and other personnel costs, clinical trial costs, manufacturing costs for non-commercial products, fees paid to external service providers and consultants, facilities costs and supplies, equipment and materials used in clinical and preclinical studies and research and development. All such costs are charged to research and development expense as incurred. Payments that we make in connection with in-licensed technology for a particular research and development project that have no alternative future uses in other research and development projects or otherwise and therefore, no separate economic values, are expensed as research and development costs at the time such costs are incurred. As of December 31, 2025, we had no in-licensed technologies that had alternative future uses in research and development projects or otherwise.
We cannot determine with certainty the timing of initiation, the duration or the completion costs of current or future preclinical studies and clinical trials of our product candidates. At this time, due to the inherently unpredictable nature of preclinical and clinical development, we are unable to estimate with any certainty the costs we will incur and the timelines we will require in the continued development of our product candidates and our other pipeline programs. Clinical and preclinical development timelines, the probability of success and development costs can differ materially from expectations. Our future research and development expenses will depend on the preclinical and clinical success of each product candidate that we develop, as well as ongoing assessments of the commercial potential of such product candidates. In addition, we cannot forecast which product candidates may be subject to future collaborations, when such arrangements will be secured, if at all, and to what degree such arrangements would affect our development plans and capital requirements.
Completion of clinical trials may take several years or more, and the length of time generally varies according to the type, complexity, novelty and intended use of a product candidate. The cost of clinical trials may vary significantly over the life of a project as a result of differences arising during clinical development, including, among others:
per patient clinical trial costs;
the number of clinical trials required for approval;
the number of sites included in the clinical trials;
the length of time required to enroll suitable patients;
the number of doses that patients receive;
the number of patients that participate in the clinical trials;
the drop-out or discontinuation rates of patients;
the duration of patient follow-up;
potential additional safety monitoring or other studies requested by regulatory agencies;
the number and complexity of analyses and tests performed during the clinical trial;
the phase of development of the product candidate; and
the efficacy and safety profile of the product candidate.
Selling, General and Administrative Expenses
Selling, general and administrative expenses consist primarily of salaries, benefits, share-based compensation and other personnel costs for employees in sales and marketing, executive, finance, business development and support functions. Other significant selling, general and administrative expenses include the costs associated with obtaining and maintaining our patent portfolio, professional services for audit, legal, sales and marketing, investor and public relations, director and officer insurance premiums, corporate activities and allocated facilities.
Other Income, Net
Other income, net consists primarily of interest income and interest expense.
Income Taxes
For the year ended December 31, 2025, we recorded no current federal tax provision, and a state tax provision of $0.3 million. For the year ended December 31, 2024, we recorded federal and state tax provisions of $1.8 million and $0.3 million, respectively. For the year ended December 31, 2023, we did not record a provision for income taxes due to a full valuation against our deferred taxes.
Results of Operations
Comparison of Fiscal Years Ended December 31, 2025 and 2024
The following table sets forth our results of operations for the years presented, in thousands:
Years Ended December 31,
Change
Product revenue, net
Collaboration revenue
Cost of product sales
Research and development expenses
Selling, general and administrative expenses
Other income, net
Product Revenue, net. We recognized product revenue, net, of $2.1 million for the year ended December 31, 2025 related to sales of KOMZIFTI in the United States, following FDA approval in November 2025. We generated no product revenue during the year ended December 31, 2024.
Collaboration Revenue. We recognized collaboration revenue of $65.4 million for the year ended December 31, 2025, $64.9 million of which related to the license granted and services performed under the Kyowa License Agreement, and $0.5 million related to services performed under the Kyowa Clinical Supply Agreement. We recognized collaboration revenue of $53.9 million for the year ended December 31, 2024 related to the license granted and services performed under the Kyowa License Agreement.
Research and Development Expenses . The following table illustrates the components of our research and development expenses for the years presented, in thousands:
Years Ended December 31,
Change
Ziftomenib-related costs
Darlifarnib-related costs
Tipifarnib-related costs
Discovery stage program-related costs
Personnel costs and other expenses
Share-based compensation expense
Total research and development expenses
The increase in ziftomenib-related research and development expenses for the year ended December 31, 2025 compared to 2024 was primarily due to increases in costs related to ziftomenib combination trials, including our registration-directed frontline clinical trials. The increase in darlifarnib-related research and development expenses for the year ended December 31, 2025 compared to 2024 was primarily due to increased costs related to our Phase 1 clinical trial. The increase in personnel costs and other expenses for the year ended December 31, 2025 compared to 2024 was primarily due to increases in headcount costs to support our ongoing clinical trials. We expect our research and development expenses to increase in future periods as we continue clinical development activities for our ziftomenib and darlifarnib programs.
Selling, General and Administrative Expenses . The increase in selling, general and administrative expenses for the year ended December 31, 2025 compared to 2024 was primarily due to increases in personnel costs, sales and marketing expenses, and non-cash share-based compensation expense. We expect our selling, general and administrative expenses to increase in future periods to support our planned increases in research and development and sales and marketing activities.
Other income, net . The increase in other income, net for the year ended December 31, 2025 compared to 2024 was primarily due to an increase in interest income.
Liquidity and Capital Resources
Since our inception, we have funded our operations primarily through equity and debt financings and payments received under the Kyowa License Agreement. We have devoted our resources to funding research and development programs, including discovery research, preclinical and clinical development activities and, more recently, to building out our commercial capabilities and infrastructure.
In November 2024, we entered into the Kyowa License Agreement to develop and commercialize globally ziftomenib for the treatment of patients with AML and other hematologic malignancies, which may be expanded into other oncology indications at the option of Kyowa Kirin, subject to certain conditions. In exchange for the licenses and rights granted to Kyowa Kirin to participate in the development and commercialization of ziftomenib, we received an upfront payment of $330.0 million and are eligible to receive up to an additional $693.0 million in development, regulatory and commercial milestone payments for the Field. As of December 31, 2025, $240.0 million in development milestone payments were achieved under the Kyowa License Agreement and $22.6 million of profit and loss sharing payments were received or expected to be received.
In January 2024, we completed the Private Placement in which we sold to certain institutional accredited investors an aggregate of 1,376,813 shares of our common stock at a purchase price of $17.25 per share and pre-funded warrants to purchase up to an aggregate of 7,318,886 shares of common stock at a purchase price of $17.2499 per pre-funded warrant (representing the $17.25 per share purchase price less the exercise price of $0.0001 per warrant share). Net proceeds from the Private Placement, after deducting expenses, were approximately $145.8 million. As of December 31, 2025, pre-funded warrants to purchase 6,902,036 of such shares of common stock from the Private Placement had been exercised and 416,850 remained outstanding.
In November 2023, we entered into the ATM Facility under which we may offer and sell, from time to time, at our sole discretion, shares of our common stock having an aggregate offering price of up to $150.0 million. We have not sold any shares of our common stock under the ATM Facility.
In June 2023, we completed a public offering in which we sold an aggregate of 5,660,871 shares of common stock at a price of $11.50 per share as well as pre-funded warrants to purchase 3,034,782 shares of our common stock at a price of $11.4999 per pre-funded warrant (representing the $11.50 per share purchase price less the exercise price of $0.0001 per warrant share). Net proceeds from the public offering, after deducting underwriting discounts and commissions and offering expenses, were approximately $93.6 million. As of December 31, 2025, none of the pre-funded warrants from the public offering remained outstanding.
In November 2022, we entered into the Loan Agreement with the Lenders and Hercules, in its capacity as administrative agent and collateral agent for itself and the Lenders, providing for up to $125.0 million in a series of Term Loans. Under the terms of the Loan Agreement, we borrowed $10.0 million of an initial $25.0 million tranche of Term Loans. The remaining tranches of Term Loans expired without us drawing down such additional loans. The Maturity Date for the Term Loans is November 2, 2027. Repayment of the Term Loans is interest only through May 1, 2027. After the interest-only payment period, borrowings under the Loan Agreement are repayable in monthly payments of principal and accrued interest until the Maturity Date. The per annum interest rate for the Term Loans is the greater of (i) the prime rate as reported in The Wall Street Journal minus 6.25% plus 8.65% and (ii) 8.65%. As of December 31, 2025, the interest rate on the Term Loans was 9.15%.
At our option, we may prepay all or any portion of the outstanding Term Loans at any time. We paid a facility charge of approximately $0.1 million upon closing and an additional approximately $0.2 million of facility charges in November 2023 due to the availability of the second tranche of the Term Loans. The Loan Agreement also contains an end of term fee in an amount equal to approximately $1.5 million (which is 6.05% of the maximum amount of the first tranche of loans), which is due and payable on the earliest to occur of (i) the Maturity Date, (ii) the date we prepay the outstanding loans in full, and (iii) the date that the secured obligations become due and payable. Our obligations under the Loan Agreement are secured by substantially all of our assets other than our intellectual property, but including proceeds from the sale, licensing or other disposition of our intellectual property. As part of the Loan Agreement, we are subject to certain negative covenants, which, among other things, prohibit us from selling, transferring, assigning, mortgaging, pledging, leasing, granting a security interest in or otherwise encumbering our intellectual property, subject to limited exceptions.
We have incurred operating losses and negative cash flows from operating activities since inception. As of December 31, 2025, we had an accumulated deficit of $1.2 billion. Although we have recorded product revenue related to KOMZIFTI, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution of KOMZIFTI and, following regulatory approval, other products containing ziftomenib, to the extent that such sales, marketing, manufacturing and distribution are not the responsibility of collaborators or potential collaborators. In addition, we expect our expenses to increase in connection with our ongoing activities, particularly as we continue the research and development of, continue and initiate clinical trials of, and seek marketing approval for, our product candidates. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce or eliminate our research and development programs or commercialization efforts.
As of December 31, 2025, we had cash, cash equivalents and short-term investments of $667.2 million. We believe that our cash, cash equivalents and short-term investments as of December 31, 2025 will be sufficient to fund our current operating plan into the fourth quarter of 2027. In addition, when combined with the anticipated $180.0 million in payments under the Kyowa License Agreement, we expect to have sufficient capital to advance our ziftomenib AML program through the first topline results from KOMET-017, anticipated in 2028. Our future capital requirements will depend on many factors, including:
the level of sales and market acceptance of KOMZIFTI;
the ability of KOMZIFTI to generate revenue;
the availability of coverage and adequate third-party reimbursement for KOMZIFTI;
the costs of product sales, medical affairs, marketing, manufacturing and distribution for KOMZIFTI;
the scope, progress, results and costs of drug discovery, preclinical development, laboratory testing and clinical trials for our product candidates;
the costs, timing and outcome of regulatory review of our product candidates;
the costs of fully developing our sales, marketing and distribution capabilities for our approved products;
the costs of securing and producing drug substance and drug product material for use in preclinical studies and clinical trials and for use as commercial supply;
the costs of securing manufacturing arrangements for development activities and commercial production;
the scope, prioritization and number of our research and development programs;
the extent to which we are obligated to reimburse, or entitled to reimbursement of, clinical trial costs under current or any future collaboration agreements;
the extent to which we acquire or in-license other product candidates and technologies;
the success of our current or future companion diagnostic test collaborations for companion diagnostic tests; and
the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims.
We are subject to all of the risks incident in the development and commercialization of new therapeutic products, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business. We may need substantial additional funding in connection with our continuing operations.
Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of stock offerings, debt financings, collaborations, strategic partnerships or licensing arrangements, such as the Kyowa License Agreement. Additional capital may not be available on reasonable terms, if at all. Subject to limited exceptions, our term loan facility also prohibits us from incurring indebtedness without the prior written consent of the Lenders. To the extent that we raise additional capital through the sale of stock or convertible debt securities, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing, if available, may involve agreements that include increased fixed payment obligations and covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, declaring dividends, selling or licensing intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. If we raise additional funds through collaborations, strategic partnerships or licensing arrangements with third parties, such as the Kyowa License Agreement, we may have to relinquishvaluable rights to our product candidates, other technologies, future revenue streams or research programs, or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds when needed, we may be unable to carry out our business plan. As a result, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and commercialize our product candidates even if we would otherwise prefer to develop and commercialize such product candidates ourselves, and our business, financial condition and results of operations would be materially adversely affected.
The following table provides a summary of our net cash flow activities for the years presented, in thousands:
Years Ended December 31,
Change
Net cash (used in) provided by operating activities
Net cash used in investing activities
Net cash provided by financing activities
Operating Activities . The decrease of $198.4 million in net cash provided by operating activities for the year ended December 31, 2025 compared to 2024 was primarily due to an increase of $104.7 million in net loss adjusted for $4.7 million in accretion of discount on short-term investments, and changes in operating assets and liabilities of $101.7 million, offset by an increase of $3.3 million in non-cash share-based compensation.
Investing Activities . The decrease of $88.5 million in net cash used in investing activities for the year ended December 31, 2025 compared to 2024 was primarily due to an increase of $197.2 million in maturities of short-term investments, offset by increases of $102.5 million in purchases of short-term investments and $6.2 million in purchases of property and equipment.
Financing Activities . Net cash provided by financing activities for the year ended December 31, 2025 related to proceeds of $1.8 million from the issuance of shares of common stock under our equity plans. Net cash provided by financing activities for the year ended December 31, 2024 primarily related to net proceeds of approximately $145.8 million from the sale of shares of our common stock and pre-funded warrants to purchase shares of our common stock in our Private Placement and proceeds of $8.6 million from the issuance of shares of common stock under our equity plans.
Contractual Obligations and Commitments
The following is a summary of our significant contractual obligations and commitments as of December 31, 2025, in thousands:
Payments Due by Period
Less than
More than
Total
1 Year
Years
Years
5 Years
Operating leases (1)
Long-term debt (2)
Interest payments on long-term debt (3)
Total
Future minimum lease payments under our operating leases in San Diego, California and Boston, Massachusetts.
Principal payments under our term loan facility.
Interest payments on our term loan facility. The per annum interest rate for the Term Loans is the greater of (i) the prime rate as reported in The Wall Street Journal minus 6.25% plus 8.65% and (ii) 8.65%. As of December 31, 2025, the interest rate on the Term Loans was 9.15%. In addition, an end of term fee will be due in an amount equal to approximately $1.5 million (which is 6.05% of the maximum amount of the first tranche of loans), payable on the earliest of the maturity date, acceleration or prepayment of the Term Loans.
We lease certain office and laboratory space under non-cancelable operating leases. The leases are also subject to additional variable charges for common area maintenance, property taxes, property insurance and other variable costs. See Note 9 in the Notes to Financial Statements of this Annual Report for additional detail related to our lease obligations.
We enter into short-term and cancellable agreements in the normal course of operations with clinical sites and CROs for clinical research studies, professional consultants and various third parties for preclinical research studies, clinical supply manufacturing and other services through purchase orders or other documentation. Such short-term agreements are generally outstanding for periods less than one year and are settled by cash payments upon delivery of goods and services. The nature of the work being conducted under these agreements is such that, in most cases, the services may be cancelled upon prior notice of 90 days or less. Payments due upon cancellation generally consist only of payments for services provided and expenses incurred, including non-cancellable obligations of our service providers, up to the date of cancellation. These payments are not included in the table of contractual obligations above.
Excluded from the table above are milestone and contractual payment obligations pursuant to our in-license agreements that are contingent upon the achievement of certain milestones or events if the amount and timing of such obligations are unknown or uncertain, including $9.8 million of sublicense fees incurred to date. We may be required to pay up to approximately $77.0 million in milestone payments, plus additional sales royalties and sublicense fees, in the event that regulatory and commercial milestones under the in-license agreements are achieved. Our in-license agreements are cancelable by us with written notice within 180 days or less.
Under the Kyowa License Agreement, we are responsible for funding the specified development activities included in the Development Plan that are planned to be conducted prior to the end of 2028, and we will share equally (50/50) with Kyowa Kirin all development costs for all other development activities in the United States included in the Development Plan (including the costs of future trials conducted under the Development Plan in the United States). We will share equally with Kyowa Kirin in any potential profits and losses arising from the commercialization of KOMZIFTI and any other approved products containing ziftomenib in the United States for the existing Field and, if Kyowa Kirin exercises its option to expand the licensed Field, the expanded Field.
Critical Accounting Policies and Management Estimates
The SEC defines critical accounting policies as those that are, in management’s view, important to the portrayal of our financial condition and results of operations and demanding of management’s judgment. Management’s discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements required estimates and judgments that affect the reported amounts of assets, liabilities, and expenses and the disclosure of contingent assets and liabilities in the financial statements. On an ongoing basis, we evaluate our estimates and judgments, including those related to revenue from product sales, collaborations and licenses, and clinical trial costs and accruals. We base our estimates on historical experience, known trends and events, and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
While our significant accounting policies are described in more detail in Note 2 in the Notes to Financial Statements of this Annual Report, we believe the following accounting policies are critical to the judgments and estimates used in the preparation of our financial statements.
Product Revenue, Net
We sell KOMZIFTI to specialty distributors and specialty pharmacies, our customers in the United States. Our customers subsequently resell KOMZIFTI to pharmacies, health care providers and patients. In accordance with ASC 606, we recognize net product revenues from sales when a customer obtains control of our products, which typically occurs upon delivery to the customer.
Revenues from product sales are recorded at the net sales price, or transaction price, which includes estimates of variable consideration that result from (a) invoice discounts for prompt payment and distribution service fees, (b) government rebates, chargebacks, discounts and fees, (c) product returns and (d) costs of co-pay assistance programs for patients. Reserves are established for the estimates of variable consideration based on the amounts earned or to be claimed on the related sales. The reserves are classified as reductions to accounts receivables, net if payable to a customer or accrued liabilities if payable to a third party. Where appropriate, we utilize the expected value method to determine the appropriate amount for estimates of variable consideration based on factors such as current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. The amount of variable consideration that is included in the transaction price is constrained and is included in net product revenues only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from our estimates. If actual results vary from our estimates, we recognize adjustments to net product revenue in the period in which changes in estimates become known.
Revenue from Collaborations and Licenses
Our collaboration agreements fall under the scope of Topic 808, when there is a joint operating activity and when both parties are active participants in the arrangement and are exposed to significant risks and rewards. For our arrangements under the scope of Topic 808, we evaluate each promised good or service that is distinct in accordance with Topic 606 (i.e., a unit of account) and apply Topic 606 to those units of account that are determined to be with a customer. For all other units of account that are not within the scope of other relevant accounting topics, we analogize to other authoritative accounting literature, such as Topic 606.
In applying Topic 808 and Topic 606, we are required to make estimates of the transaction price, including variable consideration that is subject to a constraint. Amounts of variable consideration are included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur and when the uncertainty associated with the variable consideration is subsequently resolved. At the inception of arrangements that include variable consideration, we may be required to exercise significant judgment to estimate the amount of variable consideration to include in the transaction price. In making such estimates, we generally use the most likely method for milestone payments and the expected value method for other forms of variable consideration. The amount of variable consideration that is included in the transaction price is only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in future periods. Milestone payments that are not within our or the licensee’s control, such as regulatory approvals, are not included in the transaction price until those approvals are received. These estimates are re-assessed each reporting period and we adjust our estimate of the overall transaction price as necessary.
The consideration under the contract is allocated between the distinct performance obligations based on their respective relative stand-alone selling prices. The estimated stand-alone selling price of each performance obligation reflects our best estimate of what the selling price would be if the deliverable was regularly sold on a stand-alone basis and is determined by reference to market rates for the good or service when sold to others or by using an adjusted market assessment approach if the selling price on a stand-alone basis is not available. The determination of the stand-alone selling price often requires significant judgment. Our estimates of the stand-alone selling price for license-related performance obligations may include forecasted revenues and expenses, development timelines, reimbursement rates for personnel costs, discount rates and probabilities of technical, regulatory and commercial success. Our estimates of the stand-alone selling price for research and development or other service-related performance obligations generally include forecasting the expected costs of satisfying a performance obligation at market rates. We also exercise significant judgment in allocating variable consideration that relates specifically to our efforts to satisfy one or more, but not all, performance obligations and determining whether such allocation is consistent with the overall allocation objectives within Topic 606.
Clinical Trial Costs and Accruals
We accrue clinical trial costs based on work performed. In determining the amount to accrue, we rely on estimates of total costs incurred based on enrollment, the completion of clinical trials and other events. We follow this method because we believe reasonably dependable estimates of the costs applicable to various stages of a clinical trial can be made. However, the actual costs and timing of clinical trials are highly uncertain, subject to risks and may change depending on a number of factors. Differences between the actual clinical trial costs and the estimated clinical trial costs that we have accrued in any prior period are recognized in the subsequent period in which the actual costs become known. Historically, our estimated accrued expenses have approximated actual expenses incurred; however, material differences could occur in the future.
Recently Adopted Accounting Pronouncements
See Note 2 in the Notes to Financial Statements of this Annual Report.
Item 7A. Quantitative and Qualitat ive Disclosures About Market Risk.
Interest Rate Risk
We hold certain financial instruments for which a change in prevailing interest rates may cause the principal amount of the short-term investments to fluctuate. Financial instruments that potentially subject us to significant concentrations of credit risk consist primarily of cash, cash equivalents and short-term investments. We invest our excess cash primarily in U.S. Treasury securities, money market funds and U.S. Agency bonds. The primary objectives of our investment activities are to ensure liquidity and to preserve principal while at the same time maximizing the income we receive from our short-term investments without significantly increasing risk. Additionally, we established guidelines regarding approved investments and maturities of investments, which are designed to maintain safety and liquidity. For our short-term investments, we do not believe that an increase or decrease in market rates would have a significant impact on the realized values or the statements of operations and comprehensive loss. We believe that should a 10.0% change in interest rates were to have occurred on December 31, 2025, this change would not have had a material effect on the fair value of our investment portfolio as of that date. Any changes would only be realized if we sold the investments prior to maturity.
We are also subject to interest expense fluctuations through our Term Loans which, as of December 31, 2025, bear interest at a rate equal to the greater of (i) the prime rate as reported in The Wall Street Journal minus 6.25% plus 8.65% and (ii) 8.65%, and are therefore exposed to changes in interest rates through their maturity date in November 2027. For interest expense, we do not believe that an increase or decrease in the interest rate would have a significant impact on the statements of operations and comprehensive loss. We believe that should a 10.0% change in the interest rate were to have occurred on December 31, 2025, this change would not have had a material effect on interest expense as of that date.
Inflation Risk
Inflation generally affects us by increasing our clinical trial costs. We do not believe that inflation has had a material effect on our business, financial condition or results of operations during the years ended December 31, 2025, 2024 or 2023.
Item 8. Financial Statement s and Supplementary Data.
The financial statements and supplementary data required pursuant to this item are included in Item 15 of this Annual Report and are presented beginning on page F-1.
