The FDA a state Attorney General, or others could object tostrictly regulates marketing, labeling, advertising and promotion of products that are placed on the positioning of our consumer product as a conventional food rather than a dietary supplement. The FDA issued a guidance document in 2014 objecting tomarket. Drugs may be promoted only for the marketing of dietary supplements in the form of conventional beverages. The guidance explains that FDA will consider such factors as the labelingapproved indications and advertising, product name, product packaging, serving size and recommended daily intake, recommendations and directions for use, marketing practices, and composition when determining whether a product is lawfully marketed as a conventional food. We believe we have designed each of these elements in a way that is appropriate for a conventional food, but cannot rule out the possibility that the FDA or another party could take the position that the product must be regulated as a dietary supplement, requiring changes to the label and potentially to the formulation.

In order to market any product outside of the products it regulates, including powersUnited States, we would need to issue a public "warning letter" to a company, to quarantinecomply with numerous and prohibit the salevarying regulatory requirements of products deemed adulterated or misbranded, to publicize information about illegal products, to request a voluntary recall of illegal products from the market, to request that the Department of Justice initiate a seizure action, an injunction action or a criminal prosecution in U.S. courts,other countries and to seek disgorgement from a federal court of all proceeds received from the sale of products deemed misbranded or adulterated.

Some countries and we expect these distributors will be independent contractors that we do not control.

The federal Anti-Kickback Statute makes it illegal for any person or entity, including a prescription drug manufacturer or a party acting on its behalf to knowingly and willfully, directly or indirectly, solicit, receive, offer, or pay any remuneration in cash or in kind that is intended to induce or reward the referral of business, including the purchase, order, or lease of any, drug candidatesitem or service for which payment may be made under a federal healthcare program, such as Medicare or Medicaid. The term “remuneration” has been broadly interpreted to include anything of value. The Anti-Kickback Statute has been interpreted to apply to arrangements between pharmaceutical manufacturers on one hand and prescribers, purchasers, formulary managers and beneficiaries on the other.

If our operations are found to be in violation of any drug products for whichof such laws or any other governmental regulations that apply to us, we receive regulatory approval for commercial sale will dependmay be subject to penalties, including, without limitation, administrative, civil and criminal penalties, damages, fines, disgorgement, contractual damages, reputational harm, diminished profits and future earnings, the curtailment or restructuring of our operations, exclusion from participation in part on the availability of coverage and adequate reimbursement from third-party payors. Third-party payors include government payor programs at the federal and state levels, including Medicarehealthcare programs and Medicaid, managed care organizations, private health insurers and other organizations. The process for determining whether a payor will provide coverage for a drug product may be

In the United States and foreign jurisdictions, there have been a number of legislative and regulatory changes to the healthcare system that could affect our future results of operations. In particular, thereThere have been and continue to be a number of initiatives at the United States federal and state levels that seek to reduce healthcare costs.

In March 2010, then President Obama signed into lawparticular, the Patient Protection and Affordable Care Act, as amended, by(the ACA) has had, and is expected to continue to have, a significant impact on the Health Care and Education Reconciliation Act, collectively,healthcare industry. The ACA was designed to expand coverage for the ACA, a sweeping law intended to,

uninsured while at the same time containing overall healthcare costs, among other things, broaden accessobjectives. With regard to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against fraud and abuse, add new transparency requirements for healthcare and health insurance industries, impose new taxes and fees on the health industry and impose additional health policy reforms. Amongpharmaceutical products, among other things, the ACA revisesrevised the definition of "average“average manufacturer price"price” for calculating and reporting Medicaid drug rebates on outpatient prescription drug prices which could increase the amount of Medicaid drug rebates to states once the provision is effective. Further, the law imposesand imposed a significant annual fee on companies that manufacture or import certain branded prescription drug products. There have been judicial and Congressional challengesIt is unclear how efforts to certain aspects of the ACA. Since January 2017, President Trump has signed two Executive Orders designed to delay the implementation of any certain provisions ofmodify or challenge the ACA or otherwise circumvent some of the requirements for health insurance mandated by the ACA. Concurrently, Congress has considered legislation that would repealits implementing regulations, or repealportions thereof, will affect our business. Additional legislative and replace all or part of the ACA. While Congress has not passed comprehensive repeal legislation, two bills affecting the implementation of certain taxes underregulatory changes, and further judicial challenges, related to the ACA remain possible. Any such changes or challenges could have been enacted. The Tax Cutsa material adverse effect on our industry generally and Jobs Act of 2017 includes a provision repealing, effectiveon our ability to successfully commercialize our product candidates.

Additionally, in January 1, 2019, the tax-based shared responsibility payment imposed by the ACA on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate”. Additionally, on January 22, 2018, President Trump signed

Moreover, the recently enacted Drug Supply Chain Security Act, enacted in 2013, imposes new obligations on manufacturers of pharmaceutical products, among others, related to product tracking and tracing, which is beingwill be phased in over several years.years beginning in 2016. Among the requirements of this new legislation, manufacturers will be required to provide certain information regarding the drug product to individuals and entities to which product ownership is transferred, label drug product with a product identifier, and keep certain records regarding the drug product. The transfer of information to subsequent product owners by manufacturers will eventually be required to be done electronically. Manufacturers will also be required to verify that purchasers of the manufacturers'manufacturers’ products are appropriately licensed. Further, under this new legislation, manufacturers will have drug product investigation, quarantine, disposition, and notification responsibilities related to counterfeit, diverted, stolen, and intentionally adulterated products, as well as products that are the subject of fraudulent transactions or which are otherwise unfit for distribution such that they would be reasonably likely to result in serious health consequences or death.

It is possible that the ACA, as currently enacted or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and,as may be amended in some cases, designed to encourage importation fromthe future, as well as other countries and bulk purchasing.

On September 5, 2023, we were notified (the Notice) by Nasdaq Stock Market, LLC (Nasdaq) that on September 1, 2023, the average closing price of our common stock over the prior 30 consecutive trading days had fallen below $1.00 per share, which is the minimum average closing price required to maintain listing on Nasdaq under Nasdaq Listing Rule 5550(a)(2) (the Minimum Bid Requirement). Nasdaq’s notice had no immediate effect on the listing or trading of our common stock. Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), we are provided an initial compliance period of 180 calendar days to regain compliance with the Minimum Bid Requirement. To regain compliance, the closing bid price of our common stock must meet or exceed $1.00 per share for a minimum of 10 consecutive business days prior to the deadline. If we do not achieve compliance with the Minimum Bid Requirement within 180 calendar days, we may be eligible for an additional 180 calendar days to regain compliance. To qualify, we would be required to meet the continued listing requirement for market value of publicly held shares and all other Nasdaq initial listing standards, with the exception of the Minimum Bid Requirement, and provide written notice of our intention to cure the minimum bid price deficiency during the second compliance period.

We have no products approved for commercialization and have never generated any revenue. Our ability to generate revenue and achieve profitability depends on our ability, alone or with strategic collaborators, to successfully complete the development of, and obtain the regulatory and marketing approvals necessary to commercialize one or more of our product candidates. We do not anticipate generating revenue from product sales for the foreseeable future. Our ability to generate future revenue from product sales depends heavily on our success in many areas, including but not limited to:

Even if one or more of the product candidates that we develop is approved for commercial sale, we would need to incur significant costs associated with commercializing any approved product candidate. Portions of our current pipeline of product candidates have been in-licensed from third parties, which make the commercial sale of such in-

We have primarily raised capital through equity financings and these raises caused significant dilution to stockholders who owned our intellectual property or product candidates.

We have also historically received funds from state and federal government grants for research and development including CPRIT. The grants have been, and any future government grants and contracts we may havereceive may be, subject to significantly delay, scale back or discontinue the development or commercialization of one or more ofrisks and contingencies set forth below under the risk factor titled “Reliance on government funding for our product candidates or sell or license some of our assets. If we raise additional funds through the issuance of additional debt or equity securities, it could result in dilutionprograms may add uncertainty to our existing stockholders, increased fixed payment obligationsresearch and these securities may have rights seniorcommercialization efforts with respect to those of our common stock. If we incur indebtedness, we could become subjectprograms that are tied to covenantssuch funding and may impose requirements that would restrict our operations and potentially impair our competitiveness, such as limitations onlimit our ability to incur additional debt, limitations on our abilitytake specified actions, increase the costs of commercialization and production of product candidates developed under those programs and subject us to acquire, sell or license intellectual property rightspotential financial penalties, which could materially and other operating restrictions that could adversely impact our ability to conduct our business. Any of these events could significantly harmaffect our business, financial condition and prospects.results of operations.” Although we might apply for government contracts and grants in the future, we cannot assure you that we will be successful in obtaining additional grants for any product candidates or programs. Failure to receive additional government grants in the future may substantially harm our business.

The scientific discoveries that have formed the basis for our efforts to discover and develop our product candidates are relatively recent. The scientific evidence to support the feasibility of developing drugs based on these discoveries is both preliminary and limited. The successful development of therapeutic products will require solving a number of issues. In addition, any drug product candidatecandidates that we decide to develop will receive regulatory approval or be successfully commercialized.

Further, our focus on epigenetic enzyme technology for developing product candidates as opposed to multiple, more proven technologies for drug development has increased the risk associated with nocturnal leg cramps did not show a statistically significant effect on the pre-specified endpoints.our business. We will need to determine the most appropriate dosage level and delivery mechanism for any drug product candidate. If we are not able to develop drugidentify and successfully implement an alternative product development strategy due to our previous investments in current product candidates. In addition, work by other companies pursuing similar technologies may encounter setbacks and difficulties that regulators and investors may attribute to our product candidates, thatwhether appropriate or not.

We, the FDA, other regulatory authorities outside the United States, or an IRB may suspend a clinical trial or the IRB or ethics committee of an institution in which a clinical trial is being conducted, may suspend or terminate our clinical trials at any time due to a number of factors,for various reasons, including if it appears that we or our collaborators are failing to conduct a trial in accordance with regulatory requirements or our clinical protocol, inspection of the clinical trial operationsis exposing participants to unacceptable health risks or trial siteif the FDA or one or more other regulatory authorities outside the United States find deficiencies in our IND or similar application outside the United States or the conduct of the trial. Delays, including delays caused by the above factors, can be costly and could negatively affect our ability to complete a clinical trial.

We cannot give any assurance that we will be able to resolve any future clinical holds imposed by the FDA or other regulatory authorities resulting inoutside of the imposition ofUnited States, or any delay caused by manufacturing failures or other factors described above or any other factors, on a clinical hold, unforeseen safety issuestimely basis or adverse side effects, failure to demonstrate a benefit from using a drug, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial. Therefore, we cannot predict with any certainty the schedule for commencement and completion of future clinical trials.at all. If we experience delays in the commencement or completion of any ofare not able to successfully initiate and complete clinical trials, we will not be able to obtain regulatory approval and will not be able to commercialize our product candidates.

Undesirable side effects caused by our drug product candidates could cause us, clinical trial sitesan IRB or ethics committee, or regulatory authorities to interrupt, delay, or haltterminate clinical trials and couldor even if approved, result in a restrictive label or delay regulatory approval by the delayFDA or denial of regulatory approval. None of the subjects in the studies ofcomparable foreign authorities and potential product liability claims.

In addition, to date our drug product candidates have reported any treatment related seriousbeen studied in only a very limited number of patients. Our understanding of the relationship between our product candidates and these events, as well as our understanding of adverse events or SAEs. However, therereported in future clinical trials of other product candidates, may change, and additional unexpected adverse events may be observed. There is no guarantee that subjects insevere side effects will not be identified through ongoing clinical trials of our futureproduct candidates. Undesirable side effects and negative results for other indications may negatively impact the development and potential for approval of our product candidates for their proposed indications. In addition, the side effect profile of pharmaceutical drugs cannot be fully established based on preapproval clinical trials involving a limited number of patients. Routine review and analysis of post-marketing safety surveillance and clinical trials will not experience SAEs. Any sideprovide additional information, for example, potential evidence of rare, population-specific or long-term adverse reactions, and may adversely affect the commercialization of the product, and even lead to the suspension or revocation of product marketing authorization. Specifically, as a result of concerns regarding the potential teratogenic and abortifacient effects could affect subject recruitment orof SP-2577, pregnant women were excluded from the ability of enrolled subjects to complete clinical trials or result in potential product liability claims, which may harm our business, financial condition and prospects significantly.conducted studies.

Further, ifIf we or others identify undesirable side effects caused by our drug product candidates either before or consumer products,after receipt of marketing approval, a number of potentially significant negative consequences could result, including:including but not limited to:

Any of these events could prevent us from achieving or maintaining market acceptance of the affected druga product candidate, even if approved, and could substantially increasesignificantly harm or cause the costscomplete failure of commercializingour business, results of operations, and prospects.

Even if we or investigators enroll a sufficient number of eligible patients to initiate our clinical trials, we or they may be unable to maintain participation of these patients throughout the course of the clinical trial as wellrequired by the clinical trial protocol, in which event we may be unable to use the research results from those patients. If we or investigators have difficulty enrolling and maintaining the enrollment of a sufficient number of patients to conduct clinical trials, we won’t receive the necessary data from the clinical trial which would have a material adverse effect on our business.

We may seek a breakthrough therapy designation from the FDA for some of our product candidates that reach the regulatory review process. A breakthrough therapy is defined as costsa drug or biological product that is intended, alone or in combination with one or more other drugs, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the drug or biological product may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. For drugs or biological products that have been designated as breakthrough therapies, interaction and communication between the FDA and the sponsor of the trial can help to identify the most efficient path for clinical development while minimizing the number of patients placed in ineffective control regimens. Drugs designated as breakthrough therapies by the FDA could also be eligible for accelerated approval.

Our product candidates and the activities associated with HOTSHOT.their development and commercialization, including their design, research, testing, manufacture, safety, efficacy, recordkeeping, labeling, packaging, storage, approval, advertising, promotion, sale and distribution, are subject to comprehensive regulation by the FDA and other regulatory agencies in the United States and foreign jurisdictions. Failure to obtain marketing approval for our product candidates will prevent us from commercializing them in those markets.

Any regulatory approvals that we receive for our drug product candidates may be subject to significant restrictionslimitations on the approved indicated uses for which the product candidate may be marketed or impose ongoingto the conditions of approval, or contain requirements for potentially costly

In addition, manufacturers of drug products and their facilities are subject to payment of user fees and periodic inspections by the FDA and other regulatory authorities for compliance with current good manufacturing practices, or cGMP. If we or a regulatory agency discoverdiscovers previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facility where or the processes by which the product is manufactured, or ifdisagrees with the promotion, marketing or labeling of a product, the regulatory agency may impose restrictions on that product or us, including requiring withdrawal of the product from the market. If we or our third-party manufacturers fail to comply with applicable regulatory requirements, a regulatory agency may:or enforcement authority may, among other things:

Any government investigation of alleged violations of law couldwould be expected to require us to expend significant time and resources in response and could generate negativeadverse publicity. The occurrence of any event or penalty described above may inhibit our ability to commercialize our products and generate revenue. In addition, regulatory policies may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our product candidates. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained, which would adversely affect our business, prospects and ability to achieve or sustain profitability.

In addition, other legislative changes have been proposed and adopted since ACA was enacted. In August 2011, the President signed into law the Budget Control Act of 2011, which, among other things, created the Joint Select Committee on Deficit Reduction to recommend proposals in spending reductions to Congress. The Joint Select Committee on Deficit Reduction did not achieve its targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, triggering the legislation's automatic reductions to several government programs. These reductions include aggregate reductions to Medicare payments to providers of up to 2% per fiscal year, which went into effect in April 2013 and will remain in effect through 2025 unless additional Congressional action is taken. In January 2013, then President Obama signed into law the American Taxpayer Relief Act of 2012, which, among other things, reduced Medicare payments to several providers and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. These new laws may result in additional reductions in Medicare and other healthcare funding, which could have a material adverse effect on our customers and accordingly, our financial operations. Further, under the recently enacted Drug Quality and Security Act, drug manufacturers will be subject to product identification, tracing and verification requirements, among other requirements, that are designed to improve the detection and removal of counterfeit, stolen, contaminated or otherwise potentially harmful drugs from the U.S. drug supply chain. These requirements will be phased in over several years and compliance with this new law will likely increase the costs of the manufacture and distribution of drug products, which could have an adverse effect on our financial condition. Further, there has been increasing legislative and enforcement interest in the United States with respect to specialty drug pricing practices. Specifically, atsince the federal level there have been several recent U.S. Congressional inquiriesACA was enacted and proposed bills designed to, among other things, bring more transparency to drug pricing, review the relationship between pricingwe expect that additional state and manufacturer patient programs, reduce the cost of drugs under Medicare, and reform government program reimbursement methodologies for drugs. Congress and the Trump administration have each indicated that it will continue to seek new legislative and/or administrative measures to control drug costs. At the state level, legislatures are increasingly passing legislation and implementing 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.

OurIf we obtain FDA approval for any of our product candidates and begin commercializing those products in the United States, our operations are, and will continue tomay be directly, and indirectly, through our customers, subject to various statefederal and federalstate fraud and abuse laws, including, without limitation, the federal Anti-Kickback Statute, andthe federal False Claims Act.Act, and federal and state transparency laws and regulations. These laws may impact, among other things, our clinical research, and proposed sales, marketing, and education programs. In addition, we may be subject to patient privacy regulation by both the federal government and the states in which we conduct our business. These laws, which are described in further detail in Government Regulation and Product Approvals – Other Healthcare Laws include:

Risks Related to Our Business Operations and Industry

Presently, we have rights to the intellectual property, through licenses from third parties and under patents and patent applications that we own, to modulate only a subset of the known epigenetic enzyme targets. Because our programs may involve a range of targets, including targets that require the use of proprietary rights held by third parties, the growth of our business may depend in part on our ability to manageacquire, in-license or use these proprietary rights. In addition, our product candidates may require specific formulations to work effectively and efficiently and these rights may be held by others. We may be unable to acquire or in-license any compositions, methods of use, processes 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.

We rely or will rely upon a combination of patents, trade secret protection, and confidentiality agreements to protect the intellectual property related to our technologies and product candidates. Our success depends in large part on our and our failurelicensors’ ability to accomplish anyobtain regulatory exclusivity and maintain patent and other intellectual property protection in the United States and in other countries with respect to our proprietary technology and products.

We have sought to protect our proprietary position by filing patent applications in the United States and abroad related to our product candidates that are important to our business. This process is expensive and time consuming, and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. It is also possible that we will fail to identify patentable aspects of them couldour research and development output before it is too late to obtain patent protection.

The patent position of biotechnology and pharmaceutical companies generally is highly uncertain and involves complex legal and factual questions for which legal principles remain unsolved. The patent applications that we own or in-licenses may fail to result in issued patents with claims that cover our product candidates in the United States or in other foreign countries. There is no assurance that all potentially relevant prior art relating to our patents and patent applications has been found, which can invalidate a patent or prevent usa patent from issuing from a pending patent application. Even if patents do successfully growingissue, and even if such patents cover our company.

If we cannot obtain orand maintain adequateeffective protection of exclusivity from our regulatory efforts and intellectual property rights, including patent protection or data exclusivity, for our product candidates, we may not be able to successfully marketcompete effectively and our products.business and results of operations would be harmed.

Patents have a limited term. In the United States, the statutory expiration of a patent is generally 20 years after it is filed. Although various extensions may be available, the life of a patent, and other technologies. We will onlythe protection it affords, is limited. Even if patents covering our product candidates are obtained, once the patent life has expired for a product candidate, we may be ableopen to protect these technologiescompetition from generic medications. In addition, upon issuance in the United States any patent term can be adjusted based on specified delays caused by the applicant(s) or the U.S. Patent and products from unauthorized use by third parties toTrademark Office (USPTO).

As is the case with other biotechnology companies, our business, results of operationssuccess is heavily dependent on patents and financial condition.

Our patent portfolio contains claims of various types and scope, including chemically modified mimics, as well as methods of medical treatment. The presence of varying claims in our patent portfolio significantly reduces, but may not eliminate, our exposure to potential validity challenges under Myriad or future judicial decisions. However, it is not yet clear what, if any, impact this recent Supreme Court precedent,decision or future decisions will have on the operation of our business.

For our U.S. patent applications containing a claim not entitled to priority before March 16, 2013, there is a greater level of uncertainty in the patent law. On September 16, 2011, the Leahy-Smith America Invents Act (the Leahy-Smith Act) was signed into law. The Leahy-Smith Act includes a number of significant changes to U.S. patent law. These include provisions that affect the way patent applications will be prosecuted and may also affect patent litigation. The USPTO has promulgated regulations and developed procedures to govern administration of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act, and in particular, the first to file provisions, did not come into effect until March 16, 2013. Accordingly, it is unclear tonot yet clear what, extent naturally occurringif any, impact the Leahy-Smith Act will have on the operation of our business. However, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material must be transformed in order to become eligible for patentability. Any future decisionsadverse effect on our business, financial condition or results of operations.

An important change introduced by the Supreme Court,Leahy-Smith Act is that, as of March 16, 2013, the United States transitioned to a “first-to-file” system for deciding which party should be granted a patent when two or more patent applications are filed by another governing bodydifferent parties claiming the same invention. Under such change, a third party that files a patent application in the USPTO after that date, but before we could, may be awarded a patent covering an invention of our even if we had made the invention before it was made by the third party. This will require us to be cognizant going forward of the time from invention to filing of a patent application. Furthermore, our ability to obtain and

Among some of the other changes introduced by the Leahy-Smith Act are changes that limit where a patentee may file a patent infringement suit and new procedures providing opportunities for third parties to challenge any issued patent in the USPTO. Included in these new procedures is a process known as Inter Partes Review (IPR), which has been generally used by many third parties over the past two years to invalidate patents. The IPR process is not limited to patents filed after the Leahy-Smith Act was enacted, and would therefore be available to a third party seeking to invalidate any of our U.S. patents, even those issued before March 16, 2013. Because of a lower evidentiary standard in USPTO proceedings compared to the evidentiary standard in U.S. federal court necessary to invalidate a patent claim, a third party could potentially provide evidence in a jurisdiction whereUSPTO proceeding sufficient for the USPTO to hold a claim invalid even though the same evidence would be insufficient to invalidate the claim if first presented in a district court action. Accordingly, a third party may attempt to use the USPTO procedures to invalidate our patent claims that would not have been invalidated if first challenged by the third party as a defendant in a district court action.

In addition to the diminishment, and potentially the complete loss, of patent protection afforded by patents, we rely on trade secret protection and confidentiality agreements to protect proprietary know-how that is not patentable or that we elect not to patent, processes for which patents are difficult to enforce and any other elements of our products.product candidate discovery and development processes that involve proprietary know-how, information or technology that is not covered by patents. However, trade secrets can be difficult to protect. We seek to protect our proprietary technology and processes, in part, by entering into confidentiality agreements with our employees, consultants, scientific advisors, and contractors. We also seeks to preserve the integrity and confidentiality of our data and trade secrets by maintaining physical security of our premises and physical and electronic security of our information technology systems. While we have confidence in these individuals, organizations and systems, agreements or security measures may be breached, and we may not have adequate remedies for any breach. In addition, our trade secrets may otherwise become known or be independently discovered by competitors.

It is a substantial amount of litigation, both withinalso possible that we have failed to identify relevant third-party patents or applications. For example, applications filed before November 29, 2000 and applications filed after that date that will not be filed outside the United States remain confidential until patents issue. Moreover, it is difficult for industry participants, including us, to identify all third-party patent rights that may be relevant to our product candidates and technologies because patent searching is imperfect due to differences in terminology among patents, incomplete databases and the difficulty in assessing the meaning of patent claims. We may fail to identify relevant patents or patent applications or may identify pending patent applications of potential interest but incorrectly predict the likelihood that such patent applications may issue with claims of relevance to our technology. In addition, we may be unaware of one or more issued patents that would be infringed by the manufacture, sale or use of a current or future product candidate, or we may incorrectly conclude that a third-party patent is invalid, unenforceable or not infringed by our activities. Additionally, pending patent applications that have been published can, subject to specified limitations, be later amended in a manner that could cover our technologies, our product candidates or the use of our product candidates.

There have been many lawsuits and other proceedings involving patent and other intellectual property rights in the biotechnology and pharmaceutical industries, including patent infringement lawsuits, interferences, oppositions, and reexamination proceedings before the USPTO.USPTO and corresponding foreign patent offices. Numerous U.S. and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which we and our collaborators are developing drug product candidates. As the biotechnology and pharmaceutical industries expand and more patents are issued, the risk increases that our drug product candidates may be subject to third-party claims of infringement of the patent infringement.

Parties making claims against uswe may request and/or obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize one or more of our drug product candidates. Defense of these claims, regardless of their merit, would subject us toinvolve substantial litigation expense and would be a substantial diversion of employee resources from our business. In the event of a successful claim of infringement against us, we may have to pay substantial damages, including treble damages and attorneys'attorneys’ fees for willful infringement, pay royalties, redesign our infringing products or obtain one or more licenses from third parties, pay royalties or redesign our infringing products or manufacturing processes, which may be impossible and in any case wouldor require substantial time and monetary expenditure.

We currently have rights to the intellectual property, through licenses from third parties and under patents that we do not own, to advance our research, manufacture clinical studydevelop and trial supplies or to facilitate commercialization ofcommercialize our product candidates. Because our programs may require the use of proprietary rights held by third parties, the growth of our business will likely depend in part on our ability to maintain in effect these proprietary rights. Any termination of license agreements with third parties with respect to our product candidates would be expected to negatively impact our business prospects.

We may fail to obtain any of these licenses at a reasonable cost or on reasonable terms, if at all. In that event, we would be unable to further developacquire or in-license any compositions, methods of use, processes, or other third-party intellectual property rights from third parties that we identify as necessary for our product candidates.

We cannot provide any assurancesare a party to intellectual property licenses and supply agreements that third-party patentsare important to our business and may enter into additional license agreements in the future. Our existing agreements impose, and we expect that future license agreements will impose on us, various diligence, milestone payment, royalty, purchasing, and other obligations. If we fail to comply with our obligations under these agreements, or we are subject to a bankruptcy, our agreements may be subject to termination by the licensor, in which event we would not be enforced against ourable to develop, manufacture, or market products which could result in either an injunction prohibiting our salescovered by the license or with respectsubject to our sales, an obligation on our part to pay royalties or other forms of compensation to third parties.supply commitments.

Competitors may infringe our patents or the resourcespatents of management, and the outcome of any such litigation would be highly uncertain.our licensors. If we or one of our future collaborationlicensing partners were to initiate legal proceedings against a third party to enforce a patent covering theone of our product candidate,candidates, the defendant could counterclaim that the patent covering our asserted patentproduct candidate is invalid and/or unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness, written description, clarity or non-enablement. Patents maynon- enablement. Grounds for an unenforceability assertion could be unenforceable ifan allegation that someone connected with prosecution of the patent withheld relevant information from the USPTO, or made a misleading statement, during prosecution. The outcomes of proceedings involvingoutcome following legal assertions of invalidity and unenforceability areis unpredictable.

It is possible that prior art exists of which we and the patent examiner were unaware during prosecution, which could render our patents invalid. Moreover, it is also possible that existing prior art of which we are aware, but which we do not believe is relevant to our currentInterference proceedings provoked by third parties or future patents, could nevertheless be determined to render our patents invalid. If a defendant were to prevail on a legal assertion of invalidity and/brought by us or unenforceability of our patents covering one of our product candidates, we would lose at least part, and perhaps all, of the patent protection on such product candidate. Such a loss of patent protection would harm our business. Moreover, our competitors, some of whom may have substantially greater intellectual property portfolios and resources than we do, could counterclaim in any suit to enforce our patents that we infringe their intellectual property.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, or other proceedings, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation or other proceedings. In addition, during the course of this kind of litigation or proceedings, therelitigation. There could also be public announcements of the results of hearings, motions, or other interim proceedings or developmentsdevelopments. If securities analysts or public access to related documents. If investors perceive these results to be negative, the market price for our common shares could be significantly harmed.

We employ individuals who were previously employed at universities or other biotechnology or pharmaceutical companies, including our competitors or potential competitors. Although we have written agreements and makes every effort to ensure that our employees, consultants, and independent contractors do not use the proprietary information or intellectual property rights of others in their work for us, we may in the future be subject to any claims that our employees, consultants, or independent contractors have wrongfully used or disclosed confidential information of third parties. Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel, which could adversely impact our business. Even if we are an important element of the success of our consumer brandsuccessful in defending against such claims, litigation could result in substantial costs and products. We have obtainedbe a trademark for the HOTSHOT namedistraction to management and other marks associated with our consumer brand. There canemployees.

Filing, prosecuting, and defending patents on product candidates in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States can be less extensive than those in the United States. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop our own products and may also export infringing products to territories where we have patent protection, but enforcement is not as strong as that in the United States. These products may compete with our products and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of some countries, particularly some developing countries, do not favor the enforcement of patents, trade secrets, and other intellectual property protection, particularly those relating to biotechnology products, which could make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our proprietary rights generally. Proceedings to enforce our patent rights in foreign jurisdictions, whether or not successful, could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a mannersignificant commercial advantage from the intellectual property that projects lesser qualitywe develop or carries a negative connotation, our brand image could be materially adversely affected.license.

If any of our relationships with these third-parties terminate, we may not be able to enter into arrangements with alternative third parties in a timely manner or do so on commercially reasonable terms. In addition, third parties may not prioritize our clinical trials relative to those of other customers and any turnover in personnel or delays in the allocation of third party employees may negatively affect our clinical trials. If third parties do not successfully carry out their contractual duties or obligations or meet expected deadlines, our clinical trials may be delayed or terminated and we may not be able to meet our current plans with respect to our product candidates. CROs, in particular, may also involve higher costs than anticipated, which could negatively affect our financial resultscondition and operations.

In addition, we do not currently have, nor do we currently plan to establish the capability to manufacture product candidates for use in the conduct of our clinical trials, and we lack the resources and the capability to manufacture any of our product candidates on a clinical or prevent fraud. Ascommercial scale without the use of third-party manufacturers. We plan to rely on third-party manufacturers and their responsibilities will include purchasing from third-party suppliers the materials necessary to produce our product candidates for our clinical trials and regulatory approval. There are expected to be a result, stockholders could lose confidence in our financiallimited number of suppliers for the active ingredients and other public reporting,materials that we expect to use to manufacture our product candidates, and we may not be able to identify alternative suppliers to prevent a possible disruption of the manufacture of our product candidates for our clinical trials, and, if approved, ultimately for commercial sale. Although we generally do not expect to begin a clinical trial unless we believe we have a sufficient supply of a product candidate to complete the trial, any significant delay or discontinuity in the supply of a product candidate, or the active ingredient or other material components in the manufacture of the product candidate could delay completion of our clinical trials and potential timing for regulatory approval of our product candidates, which would harm our business and the trading priceresults of operations.

In addition, our reliance on third-party manufacturers exposes us to provide reliable financial reportsthe following additional risks:

Each of these risks could delay our clinical trials, the approval, if any of our product candidates by the FDA or the commercialization of our product candidates or result in higher costs or deprive us of potential product revenue. In addition, anywe rely on third parties to perform release testing by uson our product candidates prior to delivery to patients. If these tests are not appropriately conducted and test data are not reliable, patients could be put at risk of serious harm and could result in connectionproduct liability suits.

The terms of certain of our outstanding warrants to compliance initiatives.

Sales of a substantial number of our shares of common stock in the public markets, or the perception that such sales could occur, including from the exercise of warrants or sales of common stock issuable thereunder, could cause the market price of our shares of common stock to decline and could impair our ability to raise capital through the sale of additional equity securities. A substantial number of shares of common stock are being offered by this prospectus. We are unable tocannot predict the number of these shares that might be sold nor the effect that future sales mayof our shares of common stock, including shares issuable upon the exercise of warrants, would have on the prevailing market price of our shares of common stock.

Certain holdersAt the present time, we intend to use available funds to finance our operations. Accordingly, while payment of dividends rests within the discretion of our securitiesboard of directors, we have no intention of paying any such dividends in the foreseeable future. Any return to investors is expected to come, if at all, only from potential increases in the price of our common stock.

Our ability to execute our business plan and maintain operations depends on the continued and uninterrupted performance of our information technology systems. Information technology systems are entitledvulnerable to rights with respectrisks and damages from a variety of sources, including telecommunications or network failures, malicious human acts and natural disasters. Moreover, despite network security and back-up measures, some of our and our vendors’ servers are potentially vulnerable to physical or electronic break-ins, including cyber-attacks, computer viruses and similar disruptive problems. These events could lead to the registrationunauthorized access, disclosure and use of non-public information which in turn could lead to operational difficulties and liabilities.

The techniques used by criminal elements to attack computer systems are sophisticated, change frequently and may originate from less regulated and remote areas of the world. As a result, we may not be able to address these techniques proactively or implement adequate preventative measures. If our computer systems are compromised, we could be subject to fines, damages, litigation and enforcement actions, and we could lose trade secrets, the occurrence of which could harm our business. Despite precautionary measures to prevent unanticipated problems that could affect our information technology systems, sustained or repeated system failures that interrupt our ability to generate and maintain data could adversely affect our ability to operate our business. In addition, a data security breach could distract management or other key personnel from performing their shares under the Securities Actprimary operational duties.