Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐

As of ~~August~~November 6, 2020, the registrant had ~~16,853,852~~19,878,852 shares of common stock, $0.001 par value per share, outstanding.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity ~~(Deficit)~~

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Deficit

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

89bio, Inc. (“89bio” or the “Company”) is a clinical-stage biopharmaceutical company focused on the development and commercialization of innovative therapies for the treatment of liver and cardio-metabolic diseases. The Company’s lead product candidate, BIO89-100, a specifically engineered glycoPEGylated analog of fibroblast growth factor 21, is currently being developed for the treatment of nonalcoholic steatohepatitis and for the treatment of severe hypertriglyceridemia.

89bio, Inc. was formed as a Delaware corporation on June 28, 2019, for the purpose of completing an initial public offering (“IPO”) and related transactions in order to carry on the business of 89Bio Ltd., which was incorporated in Israel in January 2018.

The Company completed an internal reorganization transaction in September 2019, pursuant to which 89Bio Ltd. became a wholly owned subsidiary of 89bio, Inc. (the “Reorganization”). As part of the Reorganization, all of the equity holders of 89Bio Ltd. exchanged 100% of the equity of 89Bio Ltd. for 100% of the equity of 89bio, Inc. The Reorganization was considered a transaction between entities under common control.

On November 13, 2019, 89bio, Inc. completed its IPO, pursuant to which it issued and sold an aggregate of 6,100,390 shares of common stock (inclusive of 795,703 shares pursuant to the underwriters’ option to purchase additional shares) at the IPO price of $16.00 per share, resulting in net proceeds of $87.7 million after deducting underwriting discounts and commissions of $6.8 million and other offering expenses of $3.1 million. Upon the closing of the IPO, the Company’s outstanding convertible preferred stock automatically converted into 7,077,366 shares of common stock of 89bio, Inc. based on a proportional adjustment to the conversion ratio of the convertible preferred stock on a 1-for-6.217 basis.

The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. To date, the Company has not generated revenues from its activities and has incurred substantial operating losses. Management expects the Company to continue to generate substantial operating losses for the foreseeable future until it completes development of its products and seeks regulatory approvals to market such products. The Company had cash, cash equivalents and short-term investments of ~~$73.9~~$219.2 million as of ~~June~~September 30, 2020. ~~Additionally, in~~

In July 2020, the Company ~~received~~completed an underwritten public offering of 3,047,040 shares of its common stock, including 397,440 shares sold pursuant to the underwriters’ exercise of their option to purchase additional shares, at the public offering price of $27.50. The Company raised a total of $83.8 million in gross proceeds from the offering, or approximately ~~$78.3~~$78.2 million in net proceeds ~~from~~after deducting underwriting discounts and commissions of $5.0 million and offering costs of approximately $0.6 million.

In September 2020, the Company completed an underwritten public offering of 3,025,000 shares of its common stock, ~~(see Note 10). Management expects to continue to fund its operations primarily through utilization~~at a public offering price of ~~its current financial resources and through additional raises of capital.~~

$28.00 per share. The Company ~~intends to raise such capital through~~raised a total of $84.7 million in gross proceeds from the ~~issuance~~offering, or approximately $79.5 million in net proceeds after deducting underwriting discounts and commissions of ~~additional equity financing and/or debt financing. However, if such financing is not available at adequate levels, the Company will need to reevaluate its operating plan~~$4.6 million and ~~may be required to delay the development~~offering costs of ~~its products.~~ approximately $0.6 million.

The Company expects that its cash, cash equivalents and short-term investments as of ~~June~~September 30, 2020, together with proceeds available from the Company’s term loan (see Note 6), ~~and proceeds from its July 2020 sale of common stock,~~ will be sufficient to fund operating expenses and capital expenditure requirements for a period of at least one year from the date these unaudited condensed consolidated financial statements are filed with the Securities and Exchange Commission (“SEC”).

The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) and applicable rules and regulations of the SEC regarding interim financial reporting.

The accompanying interim condensed consolidated financial statements are unaudited. The interim unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements as of and for the year ended December 31, 2019 and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s consolidated financial position, results of operations and comprehensive loss, and cash flows. The results of operations for the three and ~~six~~nine months ended ~~June~~September 30, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020 or for any other future annual or interim period. The condensed consolidated balance sheet as of December 31, 2019 was derived from the audited financial statements as of that date. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2019, which was filed with the SEC on March 18, 2020.

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of expenses during the reporting period. Significant estimates and assumptions made in the accompanying condensed consolidated financial statements include but are not limited to the fair value of stock options, the convertible preferred stock liability and certain accruals. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could differ from those estimates.

Investments have been classified as available-for-sale and are carried at estimated fair value as determined based upon quoted market prices or pricing models for similar securities. Management determines the appropriate classification of its investments in debt securities at the time of purchase. ~~Investments~~Generally, investments with original maturities beyond three months at the date of purchase ~~and which mature at or less than twelve months from the balance sheet date~~ are classified as ~~current.~~short-term because it is management’s intent to use the investments to fund current operations or to make them available for current operations.

Unrealized gains and losses are excluded from earnings and are reported as a component of comprehensive loss. The Company periodically evaluates whether declines in fair values of its ~~marketable~~available-for-sale securities below their book value are other-than-temporary. This evaluation consists of several qualitative and quantitative factors regarding the severity and duration of the unrealized loss as well as the Company’s ability and intent to hold the ~~marketable~~available-for-sale security until a forecasted recovery occurs. Additionally, the Company assesses whether it has plans to sell the security or it is more likely than not it will be required to sell any ~~marketable~~available-for-sale securities before recovery of its amortized cost basis. Realized gains and losses and declines in fair value judged to be other than temporary, if any, on ~~marketable~~available-for-sale securities are included in other expenses, ~~(income),~~ net. The cost of investments sold is based on the specific-identification method. There were no realized gains or losses on investments for the periods presented. Interest on ~~marketable~~available-for-sale securities is included in other expenses, ~~(income),~~ net and was not material for all periods presented.

Financial assets and liabilities are recorded at fair value on a recurring basis in the balance sheets. The carrying values of the Company’s financial assets and liabilities, including cash and cash equivalents, restricted cash, ~~short-term investments and~~ prepaid and other current assets, accounts payable, and accrued expenses approximate their fair values due to the short-term maturity of these instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. Assets and liabilities recorded at fair value are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels are directly related to the amount of subjectivity with the inputs to the valuation of these assets or liabilities as follows:

Level 1—Observable inputs such as unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;

Level 2—Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable inputs for similar assets or liabilities. These include quoted prices for identical or similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active;

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company considers all highly liquid investments purchased with original maturities of three months or less from the purchase date to be cash equivalents. Cash equivalents consist primarily of amounts invested in money market funds and commercial paper that are stated at fair value.

The freestanding instruments related to the commitment by the Series A convertible preferred stockholders to purchase and by the Company to sell its Series A convertible preferred stock in subsequent closings, contingent upon the achievement of certain developmental milestones and approval by the board of directors, at a fixed price per stock, were considered a liability (or an asset), measured at fair value as the shares underlying the rights contained liquidation preferences upon certain “deemed liquidation events” that were not solely within the Company’s control and which were considered in-substance contingent redemption features. The instruments were subject to revaluation at each balance sheet date until settlement or extinguishment, with revaluations recognized as either a component of other expenses, ~~(income),~~ net in the condensed consolidated statements of operations and comprehensive loss, or additional paid-in capital in the condensed consolidated balance sheets. Upon the completion of the Company’s IPO, the remaining shares of convertible preferred stock that were previously issuable under a subsequent closing were no longer issuable. Accordingly, the preferred stock liability was extinguished and because the transaction occurred between related parties, the resulting $25.6 million was accounted for as a capital contribution by the preferred stockholders.

IfDue to the ongoing COVID-19 pandemic, ~~continues to spread in the United States and worldwide,~~ the Company may experience disruptions that could negatively impact the Company’s growth, employee productivity and its ability to recruit and onboard new employees. The pandemic has disrupted and may ~~also~~continue to disrupt the Company’s business and delay its preclinical and clinical programs and timelines. ~~At this point, the~~The extent to which the COVID-19 pandemic may impact the Company’s future operating results and financial condition is uncertain.

The Company’s comprehensive loss is comprised of changes in unrealized gains (losses) on available-for-sale securities and foreign currency transaction adjustments, which were not material for all periods presented. Accordingly, the Company has not presented comprehensive loss separately from net loss on the condensed consolidated statements of operations and comprehensive loss.adjustments.

In August 2018, the FASB issued ASU No. 2018-13, Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement, which amends ASC 820, Fair Value Measurement. This ASU modifies the disclosure requirements for fair value measurements by removing, modifying, or adding certain disclosures. The Company adopted this standard effective from January 1, 2020, with the removed and modified disclosures adopted on a retrospective basis and the new disclosures adopted on a prospective basis. The standard did not have a material impact on the Company’s consolidated financial statements and related disclosures.

In February 2016, the FASB issued ASU 2016-02—Leases (“ASU 2016-02”), requiring the recognition of lease assets and liabilities on the balance sheet. The standard: (a) clarifies the definition of a lease; (b) requires a dual approach to lease classification similar to current lease classifications; and (c) causes lessees to recognize leases on the balance sheet as a lease liability with a corresponding right-of-use asset for leases with a lease-term of more than twelve months. The standard is effective for public entities for fiscal years beginning after December 15, 2018 and for nonpublic entities for fiscal years beginning after December 15, 2021. As an emerging growth company, ASU 2016-02 is effective for the Company for the year ending December 31, 2022 and interim periods within the year ending December 31, 2023. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify the accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. The new standard is effective for public entities for fiscal years beginning after December 15, 2020 and for nonpublic entities for fiscal years beginning after December 15, 2021. As an emerging growth company, ASU 2019-12 is effective for the Company for the year ending December 31, 2022 and interim periods within the year ending December 31, 2023. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

The following table presents the Company’s financial assets measured at fair value on a recurring basis by level within the fair value hierarchy as of ~~June~~September 30, 2020 (in thousands):

The following table summarizes the Company’s available-for-sale securities by contractual maturity as of September 30, 2020 (in thousands):

The Company’s convertible preferred stock liability represented a Level 3 financial liability measured at fair value on a recurring basis prior to its extinguishment asin the fourth quarter of ~~December 31,~~ 2019. Accordingly, there was no Level 3 financial liability outstanding during the ~~six~~nine months ended and as of ~~June~~September 30, 2020.

For the ~~six~~nine months ended ~~June~~September 30, 2019, changes in the fair value of the Company’s Level 3 financial liability were measured on a recurring basis as follows (in thousands):

The Company’s convertible preferred stock liability resulted from the initial sale of Series A convertible preferred stock where the investors committed to purchase additional shares of Series A convertible preferred stock in subsequent closings, contingent upon the achievement by the Company of certain development milestones and approval by the board of directors. The investors’ commitment to purchase and the Company’s commitment to sell shares of Series A convertible preferred stock represented a freestanding instrument accounted for at fair value and revalued at each reporting date. The Company estimated the fair value of this commitment using the Black-Scholes option-pricing model using the following assumptions:

Future minimum lease payments under the Company’s non-cancellable operating lease obligations as of ~~June~~September 30, 2020, are as follows (in thousands):

Rent expense was ~~$87,000~~$61,000 and ~~$33,000~~$48,000 for the three months ended ~~June~~September 30, 2020 and 2019, respectively. Rent expense was ~~$147,000~~$208,000 and ~~$60,000~~$108,000 for the ~~six~~nine months ended ~~June~~September 30, 2020 and 2019, respectively.

In April 2018, the Company concurrently entered into two Asset Transfer and License Agreements (the “Teva Agreements”) with Teva Pharmaceutical Industries Ltd (“Teva”) under which it acquired certain patents and intellectual property relating to two programs: (1) Teva’s glycoPEGylated FGF21 program, including the compound TEV-47948 (BIO89-100), a glycoPEGylated long-acting FGF21 and (2) Teva’s development program of small molecule inhibitors of Fatty Acid Synthase. Pursuant to the Teva Agreements, the Company paid Teva an initial nonrefundable upfront payment of $6.0 million and the Company could be obligated to pay Teva up to $67.5 million under each program, for a total of $135.0 million, upon the achievement of certain clinical development and commercial milestones. In addition, the Company is obligated to pay Teva tiered royalties at percentages in the low-to-mid single-digits on worldwide net sales on all products containing the Teva compounds.

The Teva Agreements can be terminated (i) by the Company without cause, after the first anniversary of the effective date, upon 120 days’ written notice to Teva, (ii) by either party, if the other party materially breaches any of its obligations under the Agreements and fails to cure such breach within 60 days after receiving notice thereof, or (iii) by either party, if a bankruptcy petition is filed against the other party and is not dismissed within 60 days. In addition, Teva can also terminate the agreement related to the Company’s glycoPEGylated FGF21 program in the event the Company, or any of its affiliates or sublicensees, challenges any of the Teva patents licensed to the Company, and the challenge is not withdrawn within 30 days of written notice from Teva.

During the three and ~~six~~nine months ended ~~June~~September 30, 2020 and 2019, there were no license payment expenses related to the Teva Agreements.

On April 7, 2020, the Company and certain of its subsidiaries entered into a Loan and Security Agreement (the “Loan Agreement”) with the lenders referred to therein (the “Lenders”), and Silicon Valley Bank, as collateral agent. The Loan Agreement provides for (i) a secured term A loan facility (the “Term A Loan Facility”) of up to $10.0 million and (ii) a secured term B loan facility (the “Term B Loan Facility”) of up to $5.0 million that is available upon the Company satisfying certain milestones. The Term A Loan Facility matures on November 1, 2022, provided, that if the Term B Loan Facility is funded, the facilities instead mature on September 1, 2023. The loans will bear interest at the greater of (i) 4.50% and (ii) the sum of (a) the Prime Rate as reported in The Wall Street Journal plus (b) 1.25%. As of ~~June~~September 30, 2020, the Company had not drawn any amount under the Loan Agreement.

In connection with the execution of the Loan Agreement, the Company agreed to issue the Lenders warrants to purchase shares of the Company’s common stock. On April 7, 2020, the Company issued Silicon Valley Bank a warrant to purchase 25,000 shares of the Company’s common stock with a warrant exercise price of $22.06 per share that ~~were~~is immediately ~~exercisable and expire on~~exercisable. The initial expiration date of April 7, ~~2030.~~2030 was changed to June 30, 2025 in connection with the July 2020 offering. The Company determined the fair value of the warrant at the issuance date by using the Black-Scholes option-pricing model with the following assumptions: risk-free interest rate of 0.75%, no dividends, expected volatility of 92.30% and expected term of 10.0 years. Upon issuance, the fair value allocated to the warrant of $0.6 million was recorded as a debt issuance cost and classified within other assets and met the requirements for equity classification within additional paid-in capital on the consolidated condensed balance sheets. An additional warrant to purchase 8,333 shares of the Company’s common stock will be issued in connection with the Term B Loan Facility, if funded, with the exercise price determined on the Company’s stock price at the time of issuance.

Additionally, the Company incurred $0.2 million in closing costs that were recorded as debt issuance costs and classified within other assets on the consolidated condensed balance sheets.

The deferred assets related to the debt issuance cost and warrant are recognized as interest expense over the duration of the Loan Agreement and are recorded within other expenses, ~~(income),~~ net on the condensed consolidated statements of operations and comprehensive loss. As of ~~June~~September 30, 2020, the remaining unamortized debt issuance costs classified within other assets on the consolidated condensed balance sheet is ~~$0.7~~$0.6 million.

In 2018, the Company’s board of directors adopted the 89Bio Ltd. 2018 Equity Incentive Plan (the “2018 Plan”). In connection with the Reorganization, in September 2019, the Company’s board of directors approved the 2019 Equity Incentive Plan (the “2019 Plan”), which became effective on September 17, 2019. From and after the effective date of the 2019 Plan, the Company will no longer be making any future awards under the 2018 Plan.

The Company initially reserved 2,844,193 shares of common stock for issuance under the 2019 Plan. In addition, the number of shares of common stock reserved for issuance under the 2019 Plan will automatically increase on the first day of January for a period of up to ten years, commencing on January 1, 2020, in an amount equal to 4% of the total number of shares of the Company’s capital stock outstanding on the immediately preceding December 31, or a lesser number of shares determined by the Company’s board of directors. As of ~~June~~September 30, 2020, there were ~~1,566,991~~1,506,991 shares of common stock available for issuance as future option grants under the 2019 Plan.

In October 2019, the Company adopted the 2019 Employee Stock Purchase Plan (“ESPP”), which became effective following the date of the IPO. The Company initially reserved 225,188 shares of common stock for purchase under the ESPP. The number of shares of common stock reserved for issuance under the ESPP will automatically increase on the first day of January for a period of up to ten years, in an amount equal to 1% of the total number of shares of the Company’s common stock outstanding on the immediately preceding December 31, or a lesser number of shares determined by the Company’s board of directors. Purchases will be accomplished through the participation of discrete offering periods and each offering is expected to be 6 months long. For each offering period, ESPP participants will purchase shares of common stock at a price per share equal to 85% of the lesser of the fair market value of the Company’s common stock on (1) the first trading day of the applicable offering period or (2) the last trading day of ~~each purchase period~~ the applicable offering period.

The first six month offering period ~~pursuant to~~under the ESPP commenced on January 1, 2020 and aended on June 30, 2020 and the second offering period commenced on July 1, 2020 and is expected to end on December 31, 2020. A total of 4,427 shares of common stock were purchased ~~in accordance with~~pursuant to the ESPP during the ~~six~~nine months ended ~~June~~September 30, 2020 for total proceeds of $75,000. As of ~~June~~September 30, 2020, there were 358,651 shares of common stock available for issuance under the ESPP.

The Company recorded share-based compensation for the periods indicated as follows (in thousands):

The fair value of option awards granted for the periods indicated was estimated at the date of grant using a Black-Scholes option-pricing model with the following assumptions:

The following table summarizes stock option activity for the ~~six~~nine months ended ~~June~~September 30, 2020:

In April 2018, the Company entered into the Series A Share Purchase Agreement (the “Series A SPA”), pursuant to which the investors committed to invest an aggregate amount of up to $60.0 million for the issuance of shares of Series A convertible preferred stock at a price of $1.00 per share in subsequent closings. Upon the completion of the Company’s IPO on November 13, 2019, there were 16,000,000 remaining shares of convertible preferred stock that were previously issuable that were no longer issuable. Accordingly, the preferred stock liability was extinguished and because the transaction occurred between related parties, the resulting $25.6 million was accounted for as a capital contribution by the preferred stockholders Additionally, immediately prior to the completion of the Company’s IPO, all outstanding shares of convertible preferred stock automatically converted into 7,077,366 shares of common stock and the related carrying value was reclassified to common stock and additional paid-in capital.

Basic net loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding for the period. Since the Company was in a loss position for all periods presented, diluted net loss per share is the same as basic net loss per share for all periods as the inclusion of all potential shares of common stock outstanding would have been anti-dilutive.

The following outstanding potentially dilutive common stock equivalents have been excluded from the calculation of diluted net loss per share for the periods presented due to their anti-dilutive effect:

The Company and the Series A preferred stockholders amended the Series A SPA on October 25, 2019, and the parties agreed that the Series A SPA would terminate upon consummation of the Company’s IPO. Upon the completion of the Company’s IPO on November 13, 2019, the 16,000,000 shares of convertible preferred stock that were issuable were no longer issuable. Accordingly, the preferred stock liability was extinguished and because the transaction occurred between related parties, the resulting $25.6 million was accounted for as a capital contribution by the preferred stockholders and recorded as part of additional paid-in capital in the condensed consolidated balance sheets (see Note 7).

On July 10, 2020, the Company completed an underwritten public offering of 3,047,040 shares of its common stock, including 397,440 shares sold pursuant to the underwriters’ exercise of their option to purchase additional shares, at a public offering price of $27.50 per share. The Company raised a total of $83.8 million in gross proceeds from the offering, or approximately $78.3 million in net proceeds after deducting underwriters’ discounts and commissions of $5.0 million and estimated offering cost of $0.5 million.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q and with our Annual Report on Form 10-K for the year ended December 31, 2019. Our actual results could differ materially from those described in or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the section titled “Risk Factors” included elsewhere in this Annual Report on Form 10-Q.

We are a clinical-stage biopharmaceutical company focused on the development and commercialization of innovative therapies for the treatment of liver and cardio-metabolic diseases. Our lead product candidate, BIO89-100, a specifically engineered glycoPEGylated analog of fibroblast growth factor 21 (“FGF21”), is currently being developed for the treatment of nonalcoholic steatohepatitis (“NASH”) and for the treatment of severe hypertriglyceridemia (“SHTG”). NASH is a severe form of nonalcoholic fatty liver disease (“NAFLD”), characterized by inflammation and fibrosis in the liver that can progress to cirrhosis, liver failure, hepatocellular carcinoma and death. There are currently no approved products for the treatment of NASH. FGF21 is a clinically-validated mechanism that has been shown in humans to reduce steatosis, improve the histological features of NASH and address cardio-metabolic dysregulation. We believe BIO89-100 may be a differentiated FGF21 therapy based on its robust and durable biological effects and a favorable safety and tolerability profile, as well as its potential for ~~a longer dosing interval.~~every two week dosing. Combining these characteristics with the ability to address the key liver pathologies in NASH, as well as the underlying metabolic dysregulation in NASH patients, BIO89-100 has the potential to become a ~~mainstay~~backbone of ~~NASH therapy.~~treatment in NASH. We successfully completed ~~a Phase 1a, first-in-human,~~ ~~single ascending dose (“~~SAD”) clinical trial with 58 healthy volunteers. The magnitude and significance of BIO89-100’s biological effects after a single dose on lipid parameters were robust and durable. In April 2020, we closed enrollment of our proof of concept (“POC”) Phase 1b/2a clinical trial in patients with NASH or patients with NAFLD and a high risk of NASH with 81 ~~patients enrolled. We expect to report topline data~~patients. All dose groups in the ~~late third quarter~~trial demonstrated statistically significant reductions in liver fat at week 13, with relative reduction of up to 60% versus baseline, and up to 70% versus placebo, as measured by magnetic resonance imaging—proton density fat factor (“MRI-PDFF”). Results were consistent across the ~~early fourth quarter~~sub-populations of ~~2020.~~ biopsy-confirmed NASH and phenotypic NASH (“PNASH”) patients enrolled in the trial. Baseline characteristics were similar across these sub-populations as were the reductions in liver fat. Specifically, a total of 23 patients (11 biopsy-confirmed NASH and 12 PNASH) were enrolled across the 18mg once weekly and the 18mg once every two weeks dose cohorts and received a MRI-PDFF at week 13. The reductions in absolute percentage of liver fat from baseline at week 13 were comparable across these sub-populations at 8.5% and 8.3% for biopsy-confirmed NASH and PNASH patients, respectively. The percentage of responders on MRI-PDFF and BIO89-100’s effect on reducing ALT and triglycerides were also similar across these sub-populations. BIO89-100 had a favorable safety and tolerability profile in this trial.

We ~~expect~~plan to initiate ~~our~~a Phase 2b trial as part of a potential Phase 2b/3 ~~clinical trial~~study in NASH patients ~~with NASH~~ in the first half of 2021. We plan to initiate, in parallel with the Phase 2b trial, a new paired-biopsy histology cohort as part of the Phase 1b/2a trial. We believe the new cohort will provide an early opportunity to demonstrate BIO89-100’s benefits on histology endpoints and is planned to start in the near term with results expected by the end of 2021. This new cohort will enroll approximately 20 patients with biopsy-confirmed NASH that will be treated for 20 weeks with 27mg of BIO89-100 once weekly.

We are also developing BIO89-100 for the treatment of SHTG, a condition identified by severely elevated levels of triglycerides (greater than or equal to 500 mg/dL), which is associated with an increased risk of NASH, cardiovascular events and acute pancreatitis. We ~~expect to initiate~~initiated our Phase 2 trial in SHTG patients in the third quarter of 2020 ~~subject to the external environment with respect to COVID-19 remaining conducive to executing the trial safely~~ and ~~effectively, and~~expect to report topline data in the second half of 2021. The Phase 2 trial in SHTG patients ~~will evaluate~~is evaluating the ability of BIO89-100 to reduce fasting plasma triglyceride levels compared to baseline levels. ~~In May 2020, the U.S. Food~~We also expect to initiate registrational trials in SHTG in 2022, pending positive data from our Phase 2 trial and ~~Drug Administration (“FDA”) cleared our Investigational New Drug application for SHTG.~~ discussions with regulatory authorities. We have adequate clinical supplies for our ongoing ~~Phase 1b/2a~~studies and we intend to have adequate clinical ~~trial in NASH patients and~~supplies for our planned ~~Phase 2 trial in SHTG patients.~~studies.

Based on ~~FDA~~U.S. Food and Drug Administration (“FDA”) guidance for the development of SHTG treatments, as well as the regulatory path followed by other companies that have successfully developed SHTG therapies, we believe that a combination of smaller clinical trials and shorter development timelines could mean that SHTG potentially represents a quicker path to market for BIO89-100. We believe BIO89-100 has the potential to address multiple drivers underlying metabolic dysregulation, which would make it an ideal candidate for selected liver and cardio-metabolic diseases.

We commenced operations in 2018 and have devoted substantially all of our resources to raising capital, acquiring our initial product candidate, identifying and developing BIO89-100, licensing certain related technology, conducting research and development activities, including preclinical studies and early clinical trials, and providing general and administrative support for these operations. Prior to our initial public offering (“IPO”), we had funded our operations primarily from the issuance and sale of capital stock. In November 2019, we completed our IPO pursuant to which we issued 6,100,390 shares of our common stock at a price of $16.00 per share. We received net proceeds of $87.7 million from the IPO.

On July 10, 2020, we completed an underwritten public offering of 3,047,040 shares of our common stock, including 397,440 shares sold pursuant to the underwriters’ exercise of their option to purchase additional shares, at a public offering price of $27.50 per share. We raised a total of $83.8 million in gross proceeds from the offering, or approximately ~~$78.3~~$78.2 million in net proceeds after deducting underwriters’ discounts and commissions of $5.0 million and ~~estimated~~ offering ~~cost~~costs of ~~$0.5~~approximately $0.6 million.

On September 21, 2020, we completed an underwritten public offering of 3,025,000 shares of our common stock, at a public offering price of $28.00 per share. We raised a total of $84.7 million in gross proceeds from the offering, or approximately $79.5 million in net proceeds after deducting underwriting discounts and commissions of $4.6 million and offering costs of approximately $0.6 million.

As of ~~June~~September 30, 2020, our cash, cash equivalents and short-term investments totaled ~~$73.9~~$219.2 million. Based on our current operating plan, we believe that our cash, cash equivalents and short-term investments together with the ~~net proceeds from the offering completed in July 2020 and~~ proceeds available under our term loan facility will be sufficient to meet our anticipated cash requirements through the second quarter of ~~2022.~~2023.

We have incurrednet lossessinceour inception. Our net losses for the three months ended ~~June~~September 30, 2020 and 2019 were ~~$11.8~~$14.6 million ~~$15.0~~and $18.7 million, respectively. Our net losses for the ~~six~~nine monthsended ~~June~~September 30, 2020 and 2019 were ~~$22.3~~$36.9 million and ~~$19.4~~$38.1 million, respectively. Asof ~~June~~September 30, 2020, wehad an accumulateddeficitof~~$95.9~~ $110.5 million.We expectto continueto incursignificantexpensesand increasingoperatinglossesas weadvance BIO89-100 and any futureproductcandidatesthrough clinicaltrials,seek regulatoryapprovalfor BIO89-100 and any futureproductcandidates,expand our clinical,regulatory,quality,manufacturingand commercialization capabilities,protectour intellectualproperty,preparefor and, if approved, proceedto commercializationof BIO89-100 and any futureproductcandidates,expand our generaland administrativesupportfunctions, includinghiringadditionalpersonnel,and incuradditionalcostsassociatedwith operatingas a publiccompany. Our net lossesmay fluctuatesignificantlyfromquarter-to-quarterand year-to-year,depending on the timingof our clinicaltrialsand our expenditureson otherresearchand developmentactivities.

We have never generated revenue and do not expect to generate revenue from product sales unless and until we successfully complete development and obtain regulatory approval for BIO89-100, which we expect will not be for at least several years, if ever. Accordingly, until such time as we can generate significant revenue from sales of BIO89-100, if ever, we expect to finance our cash needs through a combination of public or private equity offerings, debt financings or other capital sources, including potential collaborations, licenses and other similar arrangements. However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. Our failure to raise capital or enter into such other arrangements when needed would have a negative impact on our financial condition and could force us to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

The ongoing COVID-19 pandemic has resulted and may continue to result in significant disruptions to our clinical trials, including adverse effects on our development timelines, or other business operations. ~~In April 2020, we closed enrollment of our POC Phase 1b/2a clinical trial in patients with NASH or patients with NAFLD and a high risk of NASH with 81 patients (or 98% of patients) enrolled.~~ We ~~expect to initiate~~initiated our Phase 2 trial in SHTG patients in the third quarter of 2020, which could be impacted by delays as a result of COVID-19. We plan to initiate a Phase 2b trial as part of a potential Phase 2b/3 study in NASH patients in the first half of 2021, as well as a new paired-biopsy histology cohort as part of the Phase 1b/2a trial, subject to the external environment with respect to COVID-19 remaining conducive to executing the trial safely and effectively. We do not yet know the full extent of other potential delays, which could prevent or delay us from obtaining approval for BIO89-100. For more information regarding risks related to the ongoing COVID-19 pandemic, please see the risk factor entitled “The ongoing COVID-19 pandemic may result in significant disruptions to our clinical trials or other business operations, which could have a material adverse effect on our business.” in Part II. Item 1A of this Quarterly Report on Form 10-Q. To the extent the ongoing COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks set forth under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019 and this Quarterly Report on Form 10-Q.

Research and development expenses consist primarily of costs incurred for the development of our lead product candidate, BIO89-100. Our research and development expenses consist primarily of external costs related to preclinical and clinical development, including costs related to acquiring patents and intellectual property, expenses incurred under license agreements and agreements with contract research organizations and consultants, costs related to acquiring and manufacturing clinical trial materials, including under agreements with contract manufacturing organizations and other vendors, costs related to the preparation of regulatory submissions and expenses related to laboratory supplies and services, as well as personnel costs. Personnel costs consist of salaries, employee benefits and share-based compensation for individuals involved in research and development efforts.

We expense all research and development expenses in the periods in which they are incurred. We accrue for costs incurred as the services are being provided by monitoring the status of specific activities and the invoices received from our external service providers. We adjust our accrual as actual costs become known.

Payments associated with licensing agreements to acquire licenses to develop, use, manufacture and commercialize products that have not reached technological feasibility and do not have alternate commercial use are expensed as incurred. Where contingent milestone payments are due to third parties under research and development arrangements or license agreements, the milestone payment obligations are expensed when the milestone results are probable and estimable, which is generally upon achievement of milestones.

We expectour researchand developmentexpensesto increasesubstantiallyfor the foreseeablefutureas wecontinuethe developmentof BIO89-100 and continueto investin researchand developmentactivities.The processof conductingthe necessaryclinicalresearchto obtainregulatoryapprovalis costlyand timeconsuming, and the successfuldevelopmentof BIO89-100 and any futureproductcandidatesis highly uncertain.Tothe extentthatBIO89-100 continuesto advance into largerand laterstageclinical

trials, our expenses will increase substantially and may become more variable. The actual probability of success for BIO89-100 or any future product candidate may be affected by a variety of factors, including the safety and efficacy of our product candidates, investment in our clinical programs, manufacturing capability and competition with other products. As a result, we are unable to determine the timing of initiation, duration and completion costs of our research and development efforts or when and to what extent we will generate revenue from the commercialization and sale of BIO89-100 or any future product candidate.

Our future clinical development costs may vary significantly based on factors such as:

General and administrative expenses consist primarily of personnel costs, expenses for outside professional services, including legal, human resource, audit and accounting services, consulting costs and allocated facilities costs. Personnel and related costs consist of salaries, benefits and share-based compensation for personnel in executive, finance and other administrative functions. Facilities costs consist of rent and maintenance of facilities. We expect our general and administrative expenses to increase for the foreseeable future as we increase the size of our administrative function to support the growth of our business and support our continued research and development activities. We also anticipate increased expenses as a result of operating as a public company, including increased expenses related to audit, legal, regulatory and tax-related services associated with maintaining compliance with exchange listing and SEC requirements, director and officer insurance premiums and investor relations costs.

Other expenses (income), net primarily consists of the revaluation of our convertible preferred stock liability, prior to extinguishment upon our IPO.

The following table summarizes our results of operations for the periods presented (in thousands):

The following table summarizes the period-over-period changes in research and development expenses for the periods indicated (in thousands):

Research and development expenses increased by ~~$5.3~~$4.5 million, or ~~167%~~68%, to ~~$8.4~~$11.2 million for the three months ended ~~June~~September 30, 2020 from ~~$3.1~~$6.7 million for the three months ended ~~June~~September 30, 2019. The increase was primarily due to an increase of ~~$2.4~~$2.1 million in contract manufacturing costs as a result of the manufacture of additional supplies for our ongoing clinical trials, an increase of $1.6 million in clinical development costs as a result of our ongoing Phase 1b/2a study in NASH and the initiation of our Phase 2 trial in SHTG patients in the third quarter of 2020 and an increase of ~~$1.9 million in contract manufacturing costs, an increase of $0.6~~$1.0 million in personnel-related costs, including share-based compensation, due to increased ~~headcount and an~~headcount. The increase was partially offset by a decrease of ~~$0.4~~$0.2 million in preclinical costs and other ~~costs as we ramped up our operations.~~expenses.

General and administrative expenses increased by ~~$2.4~~$1.7 million, or ~~287%~~112%, to $3.2 million for the three months ended ~~June~~September 30, 2020 from ~~$0.8~~$1.5 million for the three months ended ~~June~~September 30, 2019. The increase was primarily due to an increase of ~~$1.1~~$1.2 million in personnel-related costs, including share-based compensation, driven by an increase in headcount, an increase of ~~$0.9~~$0.4 million in insurance related costs and an increase of $0.2 million in professional services including legal and accounting consulting service ~~fees and an~~fees. The increase was partially offset by a decrease of ~~$0.4~~$0.1 million in ~~insurance~~travel related ~~costs.~~expenses.

Other expenses, ~~(income),~~ net decreased by ~~$10.9~~$10.3 million to $~~98,000~~ ~~for the three months ended~~ ~~June 30, 2020 from $11.0~~0.2 million for the three months ended ~~June~~September 30, 2020 from $10.5 million for the three months ended September 30, 2019. The decrease was primarily due to the revaluation of our convertible preferred stock liability in the ~~second~~third quarter of 2019.

The following table summarizes our results of operations for the periods presented (in thousands):

The following table summarizes the period-over-period changes in research and development expenses for the periods indicated (in thousands):

Research and development expenses increased by ~~$8.7~~$13.2 million, or ~~117%~~94%, to ~~$16.2~~$27.4 million for the ~~six~~nine months ended ~~June~~September 30, 2020 from ~~$7.5~~$14.2 million for the ~~six~~nine months ended ~~June~~September 30, 2019. The increase was primarily due to an increase of ~~$5.3~~$6.9 million in clinical development costs as a result of our ongoing Phase 1b/2a study in NASH and the initiation of our Phase 2 trial in SHTG patients in the third quarter of 2020, an increase of ~~$1.4~~$3.1 million in contract manufacturing costs as a result of the manufacture of additional supplies for our ongoing clinical trials, an increase of $2.4 million in personnel-related costs, including share-based compensation, due to increased headcount and an increase of ~~$1.0~~$0.8 million in ~~contract manufacturing costs, an increase of $0.9 million in~~ preclinical ~~costs and other~~ costs as we ramped up our ~~operations and an increase of $0.1 million in other expenses.~~operations.

General and administrative expenses increased by ~~$4.8~~$6.5 million, or ~~354%~~226%, to ~~$6.2~~$9.4 million for the ~~six~~nine months ended ~~June~~September 30, 2020 from ~~$1.4~~$2.9 million for the ~~six~~nine months ended ~~June~~September 30, 2019. The increase was primarily due to an increase of ~~$2.0~~$3.1 million in personnel-related costs, including share-based compensation, driven by an increase in headcount, an increase of ~~$2.0~~$2.1 million in professional services including legal and accounting consulting service fees and an increase of $~~0.8~~1.3 million in insurance related costs. The increase was partially offset by a decrease of $0.1 million in travel related expenses.

Other expenses, ~~(income),~~ net decreased by ~~$10.6~~$20.9 million to $($~~59,000)~~ ~~for the six months ended~~ ~~June 30, 2020 from $10.5~~0.1 million for the ~~six~~nine months ended ~~June~~September 30, 2020 from $21.0 million for the nine months ended September 30, 2019. The decrease was primarily due to the revaluation of our convertible preferred stock liability in the ~~first six~~nine months ofended September 30, 2019.

To date, we have incurred significant net losses and negative cash flows from operations. As of ~~June~~September 30, 2020, we had available cash and cash equivalents and short-term investments of ~~$73.9~~$219.2 million and an accumulated deficit of ~~$95.9~~$110.5 million. Prior to our IPO, we funded our operations from the issuance and sale of capital stock. In connection with our IPO, we issued and sold an aggregate of 6,100,390 shares of common stock at a price of $16.00 per share. We received proceeds of $87.7 million, net of underwriting discounts and commissions and estimated offering costs.

On April 7, 2020, we entered into a secured term loan facility with an aggregate committed principal amount of up to $15.0 million. As of ~~June~~September 30, 2020, we had not drawn any amount under the term loan facility.

On July 10, 2020, we completed a public offering of 3,047,040 shares of our common stock, including 397,440 shares sold pursuant to the underwriters’ exercise of their option to purchase additional shares, at a public offering price of $27.50 per share. Upon completion of the offering, we received gross proceeds of $83.8 million, before deducting underwriting discounts and commissions and offering expenses.

On September 21, 2020, we completed an underwritten public offering of 3,025,000 shares of our common stock, at a public offering price of $28.00 per share. Upon completion of the offering, we received gross proceeds of $84.7 million, before deducting underwriting discounts and commissions and offering expenses.

Our primary use of cash is to fund operating expenses, which consist primarily of research and development expenditures related to our lead product candidate, BIO89-100. We plan to increase our research and development expenses substantially for the foreseeable future as we continue the clinical development of our current and future product candidates. At this time, due to the inherently unpredictable nature of clinical development, we cannot reasonably estimate the costs we will incur and the timelines that will be required to complete development, obtain marketing approval, and commercialize our current product candidate or any future product candidates. For the same reasons, we are also unable to predict when, if ever, we will generate revenue from product sales or our current or any future license agreements which we may enter into or whether, or when, if ever, we may achieve profitability. Clinical and preclinical development timelines, the probability of success, and development costs can differ materially from expectations. In addition, we cannot forecast the timing and amounts of milestone, royalty and other revenue from licensing activities, which future 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.

Based on our research and development plans, we expect that our existing cash, cash equivalents and short-term investments together with the ~~net proceeds from the offering completed in July 2020 and~~ proceeds available under our term loan facility, will be sufficient to fund our operations through the second quarter of ~~2022~~2023. However, our operating plans and other demands on our cash resources may change as a result of many factors, and we may seek additional funds sooner than planned. There can be no assurance that we will be successful in acquiring additional funding at levels sufficient to fund our operations or on terms favorable to us.

Our future funding requirements will depend on many factors, including the following:

We expect to continue to generate substantial operating losses for the foreseeable future as we expand our research and development activities. We will continue to fund our operations primarily through utilization of our current financial resources and through additional raises of capital to advance our current product candidate through clinical development, to develop, acquire or in-license other potential product candidates and to fund operations for the foreseeable future. However, there is no assurance that such funding will be available to us or that it will be obtained on terms favorable to us or will provide us with sufficient funds to meet our objectives. Any failure to raise capital as and when needed could have a negative impact on our financial condition and on our ability to pursue our business plans and strategies.

To the extent that we raise additional capital through partnerships or licensing arrangements with third parties, we may have to relinquish valuable rights to our product candidates, future revenue streams or research programs or to grant licenses on terms that may not be favorable to us. If we raise additional capital through public or private equity offerings, the ownership interest of our then-existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect our stockholders’ rights. If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we are unable to obtain adequate financing when needed, we may have to delay, reduce the scope of or suspend one or more of our clinical trials or preclinical studies, research and development programs or commercialization efforts or grant rights to develop and market our product candidates even if we would otherwise prefer to develop and market such product candidates ourselves.

The following table summarizes our cash flows for the periods presented (in thousands):

During the ~~six~~nine months ended ~~June~~September 30, 2020, net cash used in operating activities was ~~$19.3~~$32.2 million, which consisted of a net loss of ~~$22.3~~$36.9 million, partially offset by non-cash charges of ~~$1.5~~$2.8 million and a net change of ~~$1.5~~$1.9 million in our net operating assets and liabilities. The non-cash charges are primarily comprised of ~~$1.4~~$2.6 million in share-based compensation and ~~$0.1~~$0.2 million in amortization of debt issuance costs. The change in our operating assets and liabilities was primarily due to a ~~$0.9~~$3.3 million increase in accounts payable and accrued expenses as we grew our operations, offset in part by a ~~$0.6~~$1.4 million ~~decrease~~increase in prepaid and other current assets due to the timing of payments.

During the ~~six~~nine months ended ~~June~~September 30, 2019, net cash used in operating activities was ~~$8.1~~$14.3 million, which consisted of a net loss of ~~$19.4~~$38.1 million, partially offset by non-cash charges of ~~$10.6~~$21.2 million and a net change of ~~$0.7~~$2.6 million in our net operating assets and liabilities. The non-cash charges are primarily comprised of the revaluation of our convertible preferred ~~share~~stock liability of ~~$10.5~~$21.0 million and ~~$0.1~~$0.2 million in share-based compensation. The change in our operating assets and liabilities was primarily due to a ~~$1.3~~$2.9 million increase in accounts payable and accrued expenses as we grew our operations, offset in part by a ~~$0.5~~$0.3 million ~~decrease~~increase in ~~accounts payable~~other current assets due to the timing of payments.

During the ~~six~~nine months ended ~~June~~September 30, 2020, net cash used in investing activities was ~~$5.8~~$77.8 million, which consisted of ~~$5.7~~$78.7 million in purchases of available-for-sale securities and $0.1 million of purchases of property and ~~equipment.~~equipment, offset in part by $1.0 million of proceeds from maturities of available-for-sale securities.

During the ~~six~~nine months ended ~~June~~September 30, 2019, net cash used in investing activities consisted of purchases of ~~property and equipment.~~fixed assets.

During the ~~six~~nine months ended ~~June~~September 30, 2020 net cash used in financing activities was ~~$0.1~~$158.2 million, which consisted of ~~$0.2~~$158.3 million net proceeds from the issuance of ~~payment of debt issuance costs, offset in part by a~~common stock from our public offerings and $0.1 million proceeds from the issuance of common stock upon exercise of stock options and ESPP ~~purchases.~~purchases, offset in part by a $0.2 million of payment of debt issuance costs.

During the ~~six~~nine months ended ~~June~~September 30, 2019 net cash provided by financing activities was ~~$18.8~~$19.3 million, which consisted of net proceeds of $20.0 million from the issuance and sale of our convertible preferred ~~stock.~~stock, offset by payments of deferred offering costs of $0.7 million.

We are a smaller reporting company, as defined by Rule 12b-2 under the Securities and Exchange Act of 1934 and in Item 10(f)(1) of Regulation S-K, and are not required to provide the information under this item.

We have not entered into any off-balance sheet arrangements, as defined in the rules and regulations of the SEC, and do not have any holdings in variable interest entities.

There have been no significant changes in our critical accounting policies and estimates as compared to the critical accounting policies and estimates disclosed our Annual Report on Form 10-K for the year ended December 31, 2019, other than as provided in Note 2 to our condensed consolidated financial statements “Summary of Significant Accounting Policies.”

See Note 2 to our condensed consolidated financial statements for more information.

We are an “emerging growth company,” as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies.

We have elected to use this extended transition period to enable us to comply with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our consolidated financial statements and our interim condensed consolidated financial statements may not be comparable to companies that comply with new or revised accounting pronouncements.

As of ~~June~~September 30, 2020, our management, with the participation and supervision of our principal executive officer and our principal financial officer, evaluated our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost benefit relationship of possible controls and procedures. Based on this evaluation, our principal executive officer and our principal financial officer concluded that solely as a result of the material weaknesses in our internal control over financial reporting described below, our disclosure controls and procedures were not effective as of ~~June~~September 30, 2020 to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

During the audit of our consolidated financial statements for the period from January 18, 2018 (inception) to December 31, 2018, material weaknesses were identified in our internal control over financial reporting. A material weakness is a deficiency or combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis by the company’s internal controls. The material weaknesses that were identified related to the following:

In 2019, we implemented plans to remedy these material weaknesses and as of ~~June~~September 30, 2020 our remediation efforts were ongoing. While we believe that these efforts have improved and will continue to improve our internal control over financial reporting, remediation of the material weaknesses will require validation and testing of the design and operating effectiveness of internal controls over a sustained period of financial reporting cycles resulting in the reporting of these material weaknesses as of ~~June~~September 30, 2020. We have implemented and are in the process of implementing additional measures and risk assessment procedures designed to improve our disclosure controls and procedures and internal control over financial reporting to address the underlying causes of these material weaknesses, including the implementation of appropriate segregation of duties, formalization of accounting policies and controls, and implementation of accounting systems to automate manual processes. In 2019, we also hired our Chief Financial Officer, principal accounting officer and additional qualified accounting and finance personnel, formalized our hiring practices and engaged financial consultants to enable the implementation of internal controls over financial reporting. In April 2020, we added a financial expert to the audit committee of the board of directors and in June 2020, we appointed a new board member, who also serves as audit committee chair.

We cannot assure you that we have identified all, or that we will not in the future have additional, material weaknesses. Material weaknesses may still exist when we report on the effectiveness of our internal control over financial reporting as required by reporting requirements under Section 404 (“Section 404”) of the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”).

Other than the changes intended to remediate the material weaknesses noted above, no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the quarter ended ~~June~~September 30, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

We are currently not a party to any material legal proceedings. From time to time, we may become involved in legal proceedings arising in the ordinary course of our business. Regardless of outcome, litigation can have an adverse impact on us due to defense and settlement costs, diversion of management resources, negative publicity, reputational harm and other factors, and there can be no assurances that favorable outcomes will be obtained.

An investment in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below before deciding whether to make an investment decision with respect to shares of our common stock. You should also refer to the other information contained in this Quarterly Report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our unaudited condensed consolidated financial statements and related notes. Our business, financial condition, results of operations and prospects could be materially and adversely affected by any of these risks or uncertainties. In any such case, the trading price of our common stock could decline, and you could lose all or part of your investment. We caution you that the risks, uncertainties and other factors referred to below and elsewhere in this Quarterly Report on Form 10-Q may not contain all of the risks, uncertainties and other factors that may affect our future results and operations. Moreover, new risks will emerge from time to time. It is not possible for our management to predict all risks.

Investing in our common stock involves significant risks. You should carefully consider the risks described below before making a decision to invest in our common stock. If we are unable to successfully address these risks and challenges, our business, financial condition, results of operations, or prospects could be materially adversely affected. In such case, the trading price of our common stock would likely decline, and you may lose all or part of your investment. Below is a summary of some of the risks we face.

We are a clinical-stage biopharmaceutical company with a limited operating history and no products approved for commercial sale. We have incurred net losses since our inception, we expect to incur significant and increasing operating losses and we may never be profitable. Our stock is a highly speculative investment.

We are a clinical-stage biopharmaceutical company with a limited operating history that may make it difficult to evaluate the success of our business to date and to assess our future viability. We commenced operations in 2018, and to date, our operations have been limited to organizing and staffing our company, business planning, raising capital, acquiring our initial product candidate, BIO89-100 and licensing certain related technology, conducting research and development activities, including preclinical studies and early clinical trials, and providing general and administrative support for these operations. Investment in biopharmaceutical product development is highly speculative because it entails substantial upfront capital expenditures and significant risk that any potential product candidate will fail to demonstrate adequate effect and/ or an acceptable safety profile, gain regulatory approval and become commercially viable. We have no products approved for commercial sale, we have not generated any revenue from product sales to date and we continue to incur significant research and development and other expenses related to our ongoing operations. We have limited experience as a company conducting clinical trials and no experience as a company commercializing any products.

We are not profitable and have incurred net losses since our inception. As of ~~June~~September 30, 2020, we had an accumulated deficit of ~~$95.9~~$110.5 million. Consequently, predictions about our future success or viability may not be as accurate as they would be if we had a longer operating history or a history of successfully developing and commercializing pharmaceutical products. We have spent, and expect to continue to spend, significant resources to fund research and development of, and seek regulatory approvals for, BIO89-100 and any future product candidates. We expect to incur substantial and increasing operating losses over the next several years as our research, development, preclinical testing and clinical trial activities increase. As a result, our accumulated deficit will also increase significantly. We may encounter unforeseen expenses, difficulties, complications, delays, including delays resulting from the ongoing COVID-19 pandemic, and other unknown factors that may adversely affect our business. The size of our future net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate revenue. Our prior losses and expected future losses have had and will continue to have an adverse effect on our stockholders’ equity and working capital. The net losses we incur may fluctuate significantly from quarter-to-quarter such that a period-to-period comparison of our results of operations may not be a good indication of our future performance. Even if we eventually generate product revenue, we may never be profitable and, if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis.

BIO89-100 is in the early stages of development. To date, we have not generated any revenue from the licensing or commercialization of BIO89-100. We will not be able to generate product revenue unless and until BIO89-100 or any future product candidate, alone or with future partners, successfully completes clinical trials, receives regulatory approval and is successfully commercialized. As BIO89-100 is in the early stages of development, we do not expect to receive revenue from it for a number of years, if ever. Although we may seek to obtain revenue from collaboration or licensing agreements with third parties, we currently have no such agreements that could provide us with material, ongoing future revenue and we may never enter into any such agreements. Our ability to generate future product revenue from BIO89-100 or any future product candidates also depends on a number of additional factors, including our or our future partners’ ability to:

In addition, because of the numerous risks and uncertainties associated with pharmaceutical product development, including that our product candidates may not advance through development or achieve the endpoints of applicable clinical trials, we are unable to predict the timing or amount of increased expenses, or if or when we will achieve or maintain profitability. In addition, our expenses could increase beyond expectations if we decide, or are required by the FDA or comparable foreign regulatory authorities, to perform studies or trials in addition to those that we currently anticipate. Even if we complete the development and regulatory processes described above, we anticipate incurring significant costs associated with launching and commercializing these products.

Even if we generate revenue from the sale of any of our product candidates that may be approved, we may not become profitable and may need to obtain additional funding to continue operations. If we fail to become profitable or do not sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce our operations.

The ongoing COVID-19 pandemic has and may in the future result in significant disruptions to our clinical trials or other business operations, which could have a material adverse effect on our business.

Our business and its operations, including but not limited to our research and development activities, could be adversely affected by health epidemics in regions where we have business operations, and such health epidemics could cause significant disruption in the operations of third parties upon whom we rely. In December 2019, a novel strain of coronavirus, SARS-CoV-2, causing a disease referred to as COVID-19, was reported to have surfaced in Wuhan, China. Since then, COVID-19 has spread throughout the world, including to ~~other countries, including~~ the United States and has been declared a pandemic by the World Health Organization. In response to public health directives and orders related to COVID-19 and based on guidance from public health officials, we ~~are implementing~~have been and continue to implement work-from-home policies for our employees on an office-by-office basis. We currently have work-from-home policies in place for our employees in California and have reopened our offices in Israel. The effects of executive and similar government orders, shelter-in-place orders and our work-from-home policies may negatively impact our growth, including our ability to recruit and onboard new employees, and productivity, disrupt our business and delay our preclinical and clinical programs and timelines, the magnitude of which will depend, in part, on the length and severity of the restrictions and other limitations on our ability to conduct our business in the ordinary course. These and similar, and perhaps more severe, disruptions in our operations could negatively impact our business, operating results and financial condition.

Quarantines, shelter-in-place, executive and similar government orders, or the perception that such orders, shutdowns or other restrictions on the conduct of business operations could occur, related to COVID-19 or other infectious diseases, have impacted and may continue to impact personnel at third-party manufacturing facilities in the United States, Europe and other countries, or the availability or cost of materials we use or require to conduct our business, including product development, which would disrupt our supply chain. Furthermore, some of our manufacturers and suppliers are in Europe and may be impacted by port closures and other restrictions resulting from the COVID-19 pandemic, which may disrupt our supply chain or limit our ability to obtain sufficient materials for our drug products. In particular, Northway Biotechpharma (“BTPH”), our sole source supplier for BIO89-100, has ~~notified us that they expect to miss~~missed certain project deadlines for our manufacturing scale-up due to quarantine orders and ~~have~~has forecasted other delays due to COVID-19-related impacts on their suppliers; however, we do not expect delays to the overall timeline for the delivery of clinical supplies.

In addition, our clinical trials have been and may continue to be affected by the COVID-19 pandemic. For example, while we ~~originally intended to commence our~~initiated the Phase 2 trial of BIO89-100 for the treatment of SHTG in September 2020, and expect to report topline data in the ~~first~~second half of ~~2020, we now expect to initiate~~2021, our successful completion of the trial ~~in the third quarter of 2020, subject to~~will depend on the external environment with respect to COVID-19 remaining conducive to executing the trial safely and ~~effectively, and~~effectively. Similarly, while we expect to ~~report topline data~~initiate a Phase 2b trial of BIO89-100 as part of a potential Phase 2b/3 trail in NASH patients in the ~~second~~first half of ~~2021.~~2021, as well as a new paired-biopsy histology cohort as part of the Phase 1b/2a trial, we may be delayed in the initiation of such trials due to COVID-19 or the related government restrictions.

If COVID-19 continues to spread in the United States and elsewhere, we may experience additional disruptions that could severely impact our business, preclinical studies and clinical trials, including:

The spread of COVID-19, which has caused a broad impact globally, may materially affect us economically. While the potential economic impact brought by COVID-19, and the duration of such impact, may be difficult to assess or predict, the widespread pandemic has resulted in significant disruption of global financial markets, which could reduce our ability to access capital and negatively affect our future liquidity. In addition, a recession or market correction resulting from the spread of COVID-19 and related government orders and restrictions could materially affect our business and the value of our common stock.

The COVID-19 pandemic continues to evolve rapidly. The ultimate impact of the COVID-19 pandemic or a similar public health emergency is highly uncertain and subject to change. We do not yet know the full extent of potential delays or impacts on our business, our clinical trials, healthcare systems, or the global economy as a whole. However, any one or a combination of these events could have an adverse effect on the operation of and results from our clinical trials and on our other business operations, which could prevent or delay us from obtaining approval for BIO89-100.

We will require substantial additional capital to finance our operations, which may not be available to us on acceptable terms, or at all. As a result, we may not complete the development and commercialization of BIO89-100 or develop new product candidates.

As a clinical-stage biopharmaceutical company, our operations have consumed significant amounts of cash since our inception. We expect our research and development expenses to increase substantially in connection with our ongoing activities, particularly as we conduct our Phase 1b/2a clinical trial ~~and future clinical trials~~ ~~of BIO89-100 and seek regulatory approvals for BIO89-100.~~

We ~~believethatthenetproceedsfromour IPO,~~ ~~proceeds available from our line of credit pursuant to our Loan Agreement (as defined below) and the net proceeds from our underwritten public offering of common stock in July 2020,~~ ~~togetherwithourexistingcash,cashequivalents and short-term investments willfundourprojectedoperatingrequirementsinto the second quarter of 2022~~.~~Ourforecast~~ of ~~theperiod oftimethroughwhichourfinancialresourceswilladequatelysupportouroperations~~ ~~is a~~ ~~forward-lookingstatement andinvolvesrisksanduncertainties,andactualresultscouldvary~~ ~~as a~~ ~~result~~ ~~of a~~ ~~number~~ of ~~factors,includingthe factorsdiscussedelsewhere~~ in ~~this“RiskFactors”section.~~ We ~~havebasedthisestimate~~ on ~~assumptionsthatmay prove~~ ~~to be~~ ~~wrong,and~~we~~couldutilizeouravailablecapitalresourcessoonerthan~~we~~currentlyexpect.Ourfuture fundingrequirements,bothshortandlong-term,willdepend~~ on ~~manyfactors,including:~~

~~We will requireadditionalcapitalto discover,develop, obtainregulatoryapprovalfor and commercializeBIO89-100 and any futureproductcandidates. We do not have any committedexternalsourceof funds other than the unused portion of the line of credit available to us pursuant to the Loan Agreement.We expectto financefuturecash needs through publicor privateequityor debt offeringsor product collaborations.Additionalcapitalmay not be availablein sufficientamountsor on reasonableterms,if at all.If wedo not raiseadditionalcapital,~~we~~may not be able to expand our operationsor otherwisecapitalizeon our businessopportunities,our businessand financialconditionwill be negativelyimpactedand wemay need to:~~

Unstable market and economic conditions may have serious adverse consequences on our business and financial condition.

Global credit and financial markets have experienced extreme disruptions at various points over the last few decades, characterized by diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates and uncertainty about economic stability. If another such disruption in credit and financial markets and deterioration of confidence in economic conditions occurs, our business may be adversely affected. If the equity and credit markets were to deteriorate significantly in the future, it may make any necessary debt or equity financing more difficult to complete, more costly, and more dilutive. Failure to secure any necessary financing in a timely manner and on favorable terms could have a material adverse effect on our growth strategy, financial performance and share price and could require us to delay or abandon development or commercialization plans. In addition, there is a risk that one or more of our service providers, manufacturers or other partners would not survive or be able to meet their commitments to us under such circumstances, which could directly affect our ability to attain our operating goals on schedule and on budget.

Our Loan and Security Agreement with Silicon Valley Bank (the “Loan Agreement”) contains certain covenants that could adversely affect our operations and, if an event of default were to occur, we could be forced to repay any outstanding indebtedness sooner than planned and possibly at a time when we do not have sufficient capital to meet this obligation. The occurrence of any of these events could cause a significant adverse impact on our business, prospects and share price.

Pursuant to the Loan Agreement, we have pledged substantially all of our assets, other than our intellectual property rights, and have agreed that we may not sell or assign rights to our patents and other intellectual property without the prior consent of Silicon Valley Bank. Additionally, the Loan Agreement contains affirmative and negative covenants that, among other things, restrict our ability to:

These terms of the Loan Agreement could prevent us from taking certain actions without the consent of our lenders, which may limit our flexibility in operating our business and our ability to take actions that might be advantageous to us and our stockholders, placing us at a competitive disadvantage compared to our competitors who have less leverage and who therefore may be able to take advantage of opportunities that our leverage prevents us from exploiting.

The Loan Agreement also includes customary events of default, including, among other things, a change of control. Upon the occurrence and continuation of an event of default, all amounts due under the Loan Agreement become (in the case of a bankruptcy event), or may become (in the case of all other events of default and at the option of Silicon Valley Bank), immediately due and payable.

If an event of default under the Loan Agreement should occur, we could be required to immediately repay any outstanding indebtedness. If we are unable to repay such debt, the lenders would be able to foreclose on the secured collateral, including our cash accounts, and take other remedies permitted under the Loan Agreement. Even if we are able to repay any indebtedness on an event of default, the repayment of these sums may significantly reduce our working capital and impair our ability to operate as planned. The occurrence of any of these events could cause a significant adverse impact on our business and financial condition.

As a clinical-stage biopharmaceutical company, our operations have consumed significant amounts of cash since our inception. We expect our research and development expenses to increase substantially in connection with our ongoing activities, particularly as we conduct clinical trials of BIO89-100 and seek regulatory approvals for BIO89-100.

We believethat our existing cash, cash equivalents and short-term investments, including thenetproceedsfromour IPO, the net proceeds from our underwritten public offering of common stock in July 2020 and the net proceeds from our underwritten public offering of common stock in September 2020, together with the proceeds available from our line of credit pursuant to our Loan Agreement (as defined below), willfundourprojectedoperatingrequirementsinto the second quarter of 2023.Ourforecast of theperiod oftimethroughwhichourfinancialresourceswilladequatelysupportouroperations is a forward-lookingstatement andinvolvesrisksanduncertainties,andactualresultscouldvary as a result of a number of factors,includingthe factorsdiscussedelsewhere in this“RiskFactors”section. We havebasedthisestimate on assumptionsthatmay prove to be wrong,andwecouldutilizeouravailablecapitalresourcessoonerthanwecurrentlyexpect.Ourfuture fundingrequirements,bothshortandlong-term,willdepend on manyfactors,including:

We will requireadditionalcapitalto discover,develop, obtainregulatoryapprovalfor and commercializeBIO89-100 and any futureproductcandidates. We do not have any committedexternalsourceof funds other than the unused portion of the line of credit available to us pursuant to the Loan Agreement.We expectto financefuturecash needs through publicor privateequityor debt offeringsor product collaborations.Additionalcapitalmay not be availablein sufficientamountsor on reasonableterms,if at all.If wedo not raiseadditionalcapital,wemay not be able to expand our operationsor otherwisecapitalizeon our businessopportunities,our businessand financialconditionwill be negativelyimpactedand wemay need to:

In addition, if BIO89-100 receives approval and is commercialized, we will be required to make milestone and royalty payments to Teva Pharmaceutical Industries Ltd (“Teva”), from whom we acquired certain patents and intellectual property relating to BIO89-100, and from whom we licensed patents and know-how related to glycoPEGylation technology that is used in the manufacture of BIO89-100. For additional information regarding this license agreement, please see Note 5 to of our accompanying unaudited condensed consolidated financial statements.

We will need to raise additional funds to operate our business, but additional funds may not be available on acceptable terms, or at all. Any inability to raise required capital when needed could harm our liquidity, financial condition, business, operating results and prospects.

As of ~~June~~September 30, 2020, we had no revenue, an accumulated deficit of ~~$95.9~~$110.5 million and cash, cash equivalents and short-term investments of ~~$73.9~~$219.2 million. Based on our current operating plan, we believe that our existing cash, cash equivalents and short-term investments, ~~together with~~including the net proceeds from our IPO, the net proceeds ~~available~~ from our ~~line~~underwritten public offering of ~~credit pursuant to our Loan Agreement (as defined below)~~common stock in July 2020 and the net proceeds from our underwritten public offering of common stock in ~~July~~September 2020, together with the proceeds available from our line of credit pursuant to our Loan Agreement, will be sufficient to meet our anticipated cash requirements into the second quarter of ~~2022~~2023. However, to date, we have not generated revenues from our activities and have incurred substantial operating losses. We expect that we will continue to generate substantial operating losses for the foreseeable future until we complete development of BIO89-100 or our other product candidates and seek regulatory approvals to market such product candidates. We plan to continue to fund our operations primarily through utilization of our current financial resources and additional raises of capital. We may raise funds from our current investors as well as potential outside investors. We expect to finance future cash needs through public or private equity or debt offerings, the Loan Agreement or product collaborations. However, there is no assurance that such funding will be available to us or that it will be obtained on terms favorable to us or will provide us with sufficient funds to meet our objectives. Any failure to raise capital as and when needed could have a negative impact on our financial condition and on our ability to pursue our business plans and strategies.

Our business depends on the success of BIO89-100, our only product candidate under clinical development, which is in the early stages of clinical development and has not completed a pivotal trial. If we are unable to obtain regulatory approval for and successfully commercialize BIO89-100 or other future product candidates, or we experience significant delays in doing so, our business will be materially harmed.

To date, the primary focus of our product development has been BIO89-100 for the treatment of patients with NASH. Currently, BIO89-100 is our only product candidate under clinical development. This may make an investment in our company riskier than similar companies that have multiple product candidates in active development and that therefore may be able to better sustain a failure of a lead candidate. Successful continued development and ultimate regulatory approval of BIO89-100 for the treatment of NASH or other indications, including SHTG, is critical to the future success of our business. We have invested, and will continue to invest, a significant portion of our time and financial resources in the clinical development of BIO89-100. If we cannot successfully develop, obtain regulatory approval for and commercialize BIO89-100, we may not be able to continue our operations. The future regulatory and commercial success of BIO89-100 is subject to a number of risks, including the following:

29implementation of new, or changes to, guidance or interpretations from the FDA or comparable foreign authorities with respect to approval pathways for any product candidates we are pursuing, such as the draft guidance documents from the FDA and the European Medicines Agency for the development of NASH that were issued in 2018 and 2019;

•

implementation of new, or changes to, guidance or interpretations from the FDA or comparable foreign authorities with respect to approval pathways for any product candidates we are pursuing, such as the draft guidance documents from the FDA and the European Medicines Agency for the development of NASH that were issued in 2018 and 2019;

withdrawal of clinical trial sites from our clinical trials as a result of changing standards of care or the ineligibility of a site to participate in our clinical trials; or

changes in government regulations or administrative actions or lack of adequate funding to continue the clinical trials.

Our or our future collaborators’ inability to timely complete clinical development could result in additional costs to us as well as impair our ability to generate product revenue, continue development, commercialize BIO89-100 and any future product candidates, reach sales milestone payments and receive royalties on product sales. In addition, if we make changes to a product candidate, we may need to conduct additional nonclinical studies or clinical trials to bridge or demonstrate the comparability of our modified product candidate to earlier versions, which could delay our clinical development plan or marketing approval for our current product candidate and any future product candidates.

If we encounter difficulties in enrolling patients in our clinical trials, our clinical development activities could be delayed or otherwise adversely affected.

The timely completion of clinical trials largely depends on patient enrollment. We may encounter delays in enrolling, or be unable to enroll, a sufficient number of patients to complete any of our future clinical trials, and even once enrolled, we may be unable to retain a sufficient number of patients to complete any of our trials.

~~Furthermore, as a result of the inherent difficulties in diagnosing~~ ~~NASH,~~ which can currently only be definitively diagnosed through a liver biopsy, and the significant competition for recruiting NASH patients in clinical trials, we or our future collaborators may be unable to enroll the patients we need to complete clinical trials on a timely basis, or at all.

Many factors affect patient enrollment, including:

the size and nature of the patient population, which may be limited due to diagnostic ~~requirements;~~requirements and enrollment prerequisites;

the number and location of clinical sites;

competition with other companies for clinical sites or patients;

the availability and amount of any patient stipend;

the eligibility and exclusion criteria for the trial, including any potential requirement for a biopsy;

the design of the clinical trial;

inability to obtain and maintain patient consents;

regulatory requirements, if any;

significant adverse events or other side effects observed, if any;

risk that enrolled participants will drop out before completion; and

competing clinical trials and clinicians’ and patients’ perceptions as to the potential advantages of the drug being studied in relation to other available therapies (oral versus injectables, like BIO89-100), including any new drugs that may be approved for the indications we are investigating.

Furthermore, as a result of the inherent difficulties in diagnosing NASH, which can currently only be definitively diagnosed through a liver biopsy, and the significant competition for recruiting NASH patients in clinical trials, we or our future collaborators may be unable to enroll the patients we need to complete clinical trials on a timely basis, or at all.

In addition,our competitors,some of whom have significantlygreaterresourcesthan wedo, are conductingclinicaltrialsfor the sameindicationsand seek to enrollpatientsin theirstudiesthatmay otherwise be eligiblefor our clinicalstudiesor trials,which could lead to slow recruitmentand delaysin our clinical programs.Further,sincethe numberof qualifiedclinicalinvestigatorsis limited,weexpectto conduct some of our clinicaltrialsat the sameclinicaltrialsitesthatsome of our competitorsuse, which could furtherreducethe numberof patientswhoare availablefor our clinicaltrialsin thesesites.

Our inability to enroll a sufficient number of patients for our clinical trials would result in significant delays or may require us to abandon one or more clinical trials altogether. If we are unable to enroll a sufficient number of patients that will complete clinical testing, we will be unable to seek or gain marketing approval for BIO89-100 and any future product candidates and our business will be harmed. Even if we are able to enroll a sufficient number of patients in our clinical studies or trials, delays in patient enrollment may result in increased costs or may affect the timing or outcome of our clinical trials, which could prevent completion of these trials and adversely affect our ability to advance the development of BIO89-100 and any future product candidates.

We are ~~initially~~developingBIO89-100for the treatmentof NASH,anindicationfor whichthere are no approved products. This makes it difficultto predictthe timingandcostsof the clinicaldevelopmentof BIO89-100for the treatmentof NASH.

Our current research and development efforts are focused on developing BIO89-100 for the treatment of NASH, an indication for which there are no approved products. The regulatory approval process for novel product candidates such as BIO89-100 can be more expensive and take longer than for other, better known or extensively studied product candidates. As other companies are in later stages of clinical trials for their potential NASH therapies, we expect that the path for regulatory approval for NASH therapies may continue to evolve in the near term as these other companies refine their regulatory approval strategies and interact with regulatory authorities. Such evolution may impact our future clinical trial designs, including trial size and endpoints, in ways that we cannot predict today. Certain of our competitors have recently experienced regulatory setbacks for NASH therapies following communications from the FDA. We currently do not know the impact, if any, that these setbacks could have on the path for regulatory approval for NASH therapies generally or for BIO89-100. Our anticipated development costs would likely increase if development of BIO89-100 or any future product candidate is delayed because we are required by the FDA to perform studies or trials in addition to, or different from, those that we currently anticipate. Because of the numerous risks and uncertainties associated with pharmaceutical product development, we are unable to predict the timing or amount of any increase in our anticipated development costs.

BIO89-100 and any future product candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval or limit the commercial profile of an approved label.

Undesirable side effects caused by BIO89-100 or any future product candidates could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or other comparable foreign regulatory authorities. Additional clinical studies may be required to evaluate the safety profile of BIO89-100 or any future product candidates.

While no serious adverse events were reported in our Phase 1a clinical trial of BIO89-100, the following treatment-related adverse events were reported in at least two subjects in the treatment cohort: injection site reactions and headaches. As with other drugs, we have seen evidence of adverse effects in animal and human studies and it is possible that other adverse effects will become apparent in ongoing or future animal or human safety studies. As with any animal or human safety finding, to the extent that these adverse effects are determined to be clinically relevant, they could have a negative impact on our clinical program.

Future results of our trials could reveal a high and unacceptable severity and prevalence of side effects or unexpected characteristics. In such an event, we could suspend or terminate our trials or the FDA or comparable foreign regulatory authorities could order us to cease clinical trials or deny approval of BIO89-100 or any future product candidates for any or all targeted indications. Drug-related side effects could affect patient recruitment or the ability of enrolled subjects to complete the trial or result in potential product liability claims.

Any of these occurrences could materially and adversely affect our business, financial condition, results of operations and prospects.

It may be difficultto discernwhether certaineventsor symptomsobservedduring our clinicaltrialsor by patientsusing our approved productsare relatedto BIO89-100 or any futureproductcandidatesor approved productsor some otherfactor.Asa result,weand our developmentprogramsmay be negativelyaffectedeven if such eventsor symptomsare ultimatelydeterminedto be unlikelyrelatedto BIO89-100 or any futureproduct candidatesor approved products.We cannot assureyou thatadditionalor moresevereadverseside effects relatedto BIO89-100 or any futureproductcandidateswill not be observedin our clinicaltrialsor in the commercialsetting.Further,weexpectthatBIO89-100 will requiremultipleadministrationsvia subcutaneous injectionin the courseof a clinicaltrial,and thischronicadministrationincreasesthe riskthatour clinicaldrug developmentprogramsmay not uncover allpossibleadverseeventsthatmay eventuallybe experiencedby patientstreatedwith BIO89-100, such as rareadverseeventsor chance findingsthatmay only be detectedonce productcandidatesare administeredto more patientsor for greaterperiodsof time.If observed,such adverseside effectscould delay or precluderegulatoryapprovalof BIO89-100 or any futureproductcandidates,limit commercialuse or resultin the withdrawalof previouslygrantedmarketingapprovals.If weor othersidentify undesirableor unacceptableside effectscaused by BIO89-100 or any futureproductcandidatesor products:

we may be required to modify, suspend or terminate our clinical trials;

we may be required to modify or include additional dosage and administration instructions, warnings and precautions, contraindications, boxed warnings, limitations, restrictions or other statements in the product label for our approved products, or issue field alerts to physicians and pharmacies;

31we may be required to conduct costly additional clinical trials;

•

~~we may be required to conduct costly additional clinical trials;~~

we may be subject to limitations on how we may promote our approved products;

sales of our approved products may decrease significantly;

regulatory authorities may require us to take our approved products off the market;

we may be subject to regulatory investigations, government enforcement actions, litigation or product liability claims; and

our products may become less competitive or our reputation may suffer.

Any of these results could decrease or prevent any sales of our approved product or substantially increase the costs and expenses of commercializing and marketing our product.

We face substantial competition, which may result in others discovering, developing or commercializing competing products before or more successfully than us.

The biopharmaceutical industry is intensely competitive and subject to rapid innovation and significant technological advancements. We believe the key competitive factors that will affect the development and commercial success of BIO89-100 and any future product candidates are efficacy, safety and tolerability profile, reliability, convenience of dosing, price, the level of generic competition and reimbursement. Our competitors include multinational pharmaceutical companies, specialized biotechnology companies, universities and other research institutions. A number of biotechnology and pharmaceutical companies are pursuing the development or marketing of pharmaceuticals that target the same diseases that we are targeting. Certain of these companies have recently published positive data regarding their clinical trials, which may further increase the competition we face. Smaller or earlier-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large, established companies. Given the high incidence of NASH and SHTG, it is likely that the number of companies seeking to develop products and therapies for the treatment of liver and cardio-metabolic diseases, such as NASH and SHTG, will increase.

There are no currently approved therapies for the treatment of NASH. Although there are no approved therapies that specifically target the signaling pathways that BIO89-100 is designed to affect, there are numerous currently approved therapies for treating diseases other than NASH and some of these currently approved therapies may exert effects that could be similar to BIO89-100. Many of these approved drugs are well-established therapies or products and are widely accepted by physicians, patients and third-party payors. Some of these drugs are branded and subject to patent protection, and others are available on a generic basis. Insurers and other third-party payors may also encourage the use of generic products or specific branded products. We expect that if BIO89-100 or any future product candidates are approved, they will be priced at a significant premium over competitive generic products, including branded generic products. This may make it difficult for us to differentiate our products from currently approved therapies, which may adversely impact our business strategy. In addition, many companies are developing new therapeutics, and we cannot predict what the standard of care will be as BIO89-100 or any future product candidates progress through clinical development. In addition, to the extent BIO89-100 or any future product candidates are approved for cardio-metabolic indications, such as SHTG, the commercial success of our products will also depend on our ability to demonstrate benefits over the then-prevailing standard of care, including diet, exercise and lifestyle modifications.

Further,if BIO89-100 or any futureproductcandidatesare approved for the treatmentof SHTG,wewill competewith currentlyapproved therapiesand therapiesfurtheralong in development.Our competitorsboth in the United Statesand abroad includelarge,well-establishedpharmaceuticaland genericcompanieswith significantlygreatername recognition.Our competitorsmay be able to chargelower pricesthan wecan, which may adverselyaffectour marketacceptance.Many of thesecompetitorshave greaterresourcesthan wedo, includingfinancial,productdevelopment,marketing,personneland otherresources.Clinicaltrialsfor the treatmentof SHTGmay be relativelycostlyand timeconsuming. The requirementsfor approvalby the FDAandcomparableforeignregulatoryauthoritiesmay change over timeand thismay requirechanges to ongoing or futureclinicaltrialdesignsthatcould impacttimelinesand cost.

If our competitors market products that are more effective, safer or cheaper than our products or that reach the market sooner than our products, we may not achieve commercial success. In addition, the biopharmaceutical industry is characterized by rapid technological change. Because our research approach integrates many technologies, it may be difficult for us to stay abreast of the rapid changes in other technologies. If we fail to stay at the forefront of technological change, we may be unable to compete effectively.

Technological advances or products developed by our competitors may render our technologies, products or product candidates obsolete, less competitive or not economical.

Many of our competitorshave substantiallygreaterfinancial,technical,human and otherresourcesthan wedo and may be betterequipped to develop, manufactureand markettechnologicallysuperiorproducts.In addition,many of thesecompetitorshave significantlylongeroperatinghistoriesand greaterexperiencethan we have in undertakingnonclinicalstudiesand human clinicaltrialsof newpharmaceuticalproductsand in obtainingregulatoryapprovalsof human therapeuticproducts.Many of our competitorshave established distributionchannelsfor the commercializationof theirproducts,whereas wehave no such channelor capabilities.In addition,many competitorshave greatername recognitionand moreextensivecollaborative relationships.

As a result, our competitors may obtain regulatory approval of their products more rapidly than we do or may obtain patent protection or other intellectual property rights that limit our ability to develop or commercialize our product candidate or any future product candidates. Our competitors may also develop and succeed in obtaining approval for drugs that are more effective, more convenient, more widely used and less costly or have a better safety profile than our products and these competitors may also be more successful than we are in manufacturing and marketing their products. If we are unable to compete effectively against these companies, then we may not be able to commercialize our product candidate or any future product candidates or achieve a competitive position in the market. This would adversely affect our ability to generate revenue. Our competitors also compete with us in recruiting and retaining qualified scientific, management and commercial personnel, establishing clinical trial sites and enrolling patients for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs. Our inability to compete effectively in any of these aspects of our business could harm our business, financial condition, results of operations and prospects.

Lack of efficacy, adverse events or undesirable side effects may emerge in clinical trials conducted by third parties developing FGF product candidates, which could adversely affect our stock price, our ability to attract additional capital and our development program.

Lack of efficacy, adverse events or undesirable side effects may emerge in clinical trials conducted by third parties developing FGF product candidates like ours. For example, Bristol-Myers Squibb Company and Akero Therapeutics, Inc. are also developing FGF21 product candidates for the treatment of NASH. We have no control over their clinical trials or development program, and lack of efficacy, adverse events or undesirable side effects experienced by subjects in their clinical trials could adversely affect our stock price, our ability to attract additional capital and our development of BIO89-100 or even the viability of BIO89-100 as a product candidate, including by creating a negative perception of FGF therapeutics by healthcare providers or patients.

Interim, topline and preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.

From time to time, we may publicly disclose preliminary or topline data from our clinical trials, which are based on a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change following a more comprehensive review of the data related to the particular study or trial. We also make assumptions, estimations, calculations and conclusions as part of our analyses of data, and we may not have received or had the opportunity to fully and carefully evaluate all data. As a result, the topline results that we report may differ from future results of the same studies, or different conclusions or considerations may qualify such results, once additional data have been received and fully evaluated. Topline data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published. As a result, topline data should be viewed with caution until the final data are available. From time to time, we may also disclose interim data from our clinical trials. In addition, we may report interim analyses of only certain endpoints rather than all endpoints. Interim data from clinical trials that we may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available.

In addition,adversechanges between interimdata and finaldata could significantlyharmour business and prospects.Additionaldisclosureof interimdata by us or by our competitorsin the futurecould also resultin volatilityin the priceof our commonstock.Further,others,includingregulatoryagencies,may not acceptor agreewith our assumptions,estimates,calculations,conclusionsor analysesor may interpretor weigh the importanceof data differently,which could impactthe value of the particularprogram,the approvabilityor commercializationof the particularproductcandidateor productand our company in general.In addition,the informationwechoose to publiclydiscloseregardinga particularstudy or clinicaltrialis based on what is typicallyextensiveinformation,and you or othersmay not agreewith what wedetermineis the material or otherwiseappropriateinformationto includein our disclosure,and any informationwedeterminenot to disclosemay ultimatelybe deemedsignificantwith respectto futuredecisions,conclusions,views, activitiesor otherwiseregardinga particulardrug, drug candidateor our business.If the toplinedata thatwereportdiffer fromactualresults,or if others,includingregulatoryauthorities,disagreewith the conclusionsreached,our abilityto obtainapprovalfor, and commercialize,BIO89-100 or any futureproductcandidatesmay be harmed, which could harmour business,financialcondition,resultsof operationsand prospects.

We may encounter difficultiesin managing our growth, whichcould adverselyaffectour operations.

We are in the early stages of building the full management team and employee base that we anticipate we will need to complete the development BIO89-100 and other future product candidates. As of ~~June~~September 30, 2020, we had 2425 employees, some of whom are based in the United States and some of whom are based in Israel. As we advance our preclinical and clinical development programs for product candidates, seek regulatory approval in the United States and elsewhere and increase the number of ongoing product development programs, we anticipate that we will need to increase our product development, scientific and administrative headcount. We will also need to establish commercial capabilities in order to commercialize any product candidates that may be approved. Such an evolution may impact our strategic focus and our deployment and allocation of resources. Our management, personnel and systems may experience difficulty in adjusting to our growth and strategic focus.

Our ability to manage our operations and growth effectively depends upon the continual improvement of our procedures, reporting systems and operational, financial and management controls. We may not be able to implement administrative and operational improvements in an efficient or timely manner and may discover deficiencies in existing systems and controls. If we do not meet these challenges, we may be unable to execute our business strategies and may be forced to expend more resources than anticipated addressing these issues.

We may acquire additional technology and complementary businesses in the future. Acquisitions involve many risks, any of which could materially harm our business, including the diversion of management’s attention from core business concerns, failure to effectively exploit acquired technologies, failure to successfully integrate the acquired business or realize expected synergies or the loss of key employees from either our business or the acquired businesses.

In addition, in order to continue to meet our obligations as a public company and to support our anticipated long-term growth, we will need to increase our general and administrative capabilities. Our management, personnel and systems may not be adequate to support this future growth.

If we are unable to successfully manage our growth and the increased complexity of our operations, our business, financial position, results of operations and prospects may be materially and adversely affected.

We must attract and retain highly skilled employees in order to succeed. If we are not able to retain our current senior management team and our scientific advisors or continue to attract and retain qualified scientific, technical and business personnel, our business will suffer.

We may not be able to attract or retain qualified personnel and consultants due to the intense competition for such individuals in the biotechnology and pharmaceutical industries. If we are not able to attract and retain necessary personnel and consultants to accomplish our business objectives, we may experience constraints that will significantly impede the achievement of our development and commercial objectives, our ability to raise additional capital and our ability to implement our business strategy.

Our industryhas experienceda high rateof turnoverof managementpersonnelin recentyears.We are highly dependenton the development,regulatory,commercializationand businessdevelopmentexpertiseof the membersof our executiveteam,as well as otherkey employeesand consultants.If welose one or moreof our executiveofficersor otherkey employeesor consultants,our abilityto implementour businessstrategy successfullycould be seriouslyharmed.Anyof our executiveofficersor otherkey employeesor consultantsmay terminatetheiremploymentat any timeand replacingsuch individualsmay be difficultand time-consuming becauseof the limitednumberof individualsin our industrywith the necessarybreadthof skillsand experience. Competitionto hireand retainemployeesand consultantsfromthislimitedpool is intense,and wemay be unable to hire,train,retainor motivatesuch individuals.Additionally,wedo not currentlymaintain ~~“key~~“key person”life insuranceon the livesof our executivesor any of our employees.This lack of insurancemeansthatwemay not receiveadequatecompensationfor the loss of the servicesof theseindividuals.If weare unable to continueto attractand retainhigh-qualitypersonnel,the rateand successwith which wecan discoverand develop product candidatesand our businesswill be limited.

We have relied on, and expect to continue to rely on, third-party manufacturers to produce BIO89-100 or any future product candidates. Any failure by a third-party manufacturer to produce acceptable product candidates for us pursuant to our specifications and regulatory standards may delay or impair our ability to initiate or complete our clinical trials, obtain and maintain regulatory approvals or commercialize approved products.

The manufacturing of biologic drugs such as BIO89-100 is complex and the process of identifying the qualifying suppliers takes a significant investment of time and money. We do not own or operate manufacturing facilities for the production of clinical or commercial quantities of our product candidates, and we lack the resources and the capabilities to do so. As a result, we currently rely, and expect to rely for the foreseeable future, on third-party manufacturers to supply us with BIO89-100 and any future product candidates.

We currentlyhave a sole sourcerelationshipwith BTPH pursuantto which they supply us with BIO89-100. If thereshould be any disruptionin our supply arrangementwith BTPH, includingany adverseeventsaffectingBTPH,it could have a negativeeffecton the clinicaldevelopmentof BIO89-100 and otheroperationswhile wework to identifyand qualifyan alternatesupply source.

We do not have a long-term supply agreement with any third-party manufacturer. Reliance on third-party manufacturers entails risks to which we would not be subject if we manufacture product candidates or products ourselves. For example, if we do not maintain our key manufacturing relationships, we may fail to find replacement manufacturers or develop our own manufacturing capabilities in a timely manner or at all, which could delay or impair our ability to obtain regulatory approval for our products and substantially increase our costs or deplete profit margins, if any. If we do find replacement manufacturers, we may not be able to enter into agreements with them on terms and conditions favorable to us, and there could be a substantial delay before new facilities could be qualified and registered with the FDA and other comparable foreign regulatory authorities.

Even if we are able to establish agreements with third-party manufacturers, reliance on third-party manufacturers entails additional risks, including:

the possible failure of the third party to manufacture product candidates according to our schedule, or at all, including if our third-party contractors give greater priority to the supply of other products over our product candidates or otherwise do not satisfactorily perform according to the terms of the agreements between us and them;

the possible breach of the manufacturing agreement by the third party because of factors beyond our control (including a failure to manufacture product candidates in accordance with our product specifications);

the possible mislabeling of clinical supplies, potentially resulting in the wrong dose amounts being supplied or active drug or placebo not being properly identified;

the possibility of clinical supplies not being delivered to clinical sites on time, leading to clinical trial interruptions, or of drug supplies not being distributed to commercial vendors in a timely manner, resulting in lost sales;

the possible misappropriation of our proprietary information, including our trade secrets and know-how;

the possible termination or nonrenewal of the agreement by the third party at a time that is costly or inconvenient for us; and

reliance on the third party for regulatory compliance, quality assurance and safety and pharmacovigilance reporting.

Certainraw materialsnecessaryfor the manufactureof BIO89-100 under our currentmanufacturing process,such as reagentsthatare needed for the glycoPEGylation,are availableonly froma singlesupplier.In April 2018, weenteredinto a Reagent Supply and Technology TransferAgreementwith Teva under which Teva agreedto supply us severalreagentsrequiredfor the glycoPEGylationprocessuntilDecember31, 2022 and transferthe know-howrequiredfor our productionof thesereagents.We expectthe manufactureof these reagentswill be transferredto a newsupplierpriorto expirationof the agreementwith Teva. Anycomplications arisingunder our agreementwith Teva, with the subsequenttransferof know-howto us, or any difficulties securinga newsuppliercould considerablydelay the manufactureof BIO89-100. Anysignificantdelay in the acquisitionor decreasein the availabilityof theseraw materialsfromTeva or any newsuppliercould considerablydelay the manufactureof BIO89-100, which could adverselyimpactthe timingof any planned trials or the regulatoryapprovalsof BIO89-100.

The FDA and other comparable foreign regulatory authorities require manufacturers to register manufacturing facilities. The FDA and other comparable foreign regulatory authorities also inspect these facilities to confirm compliance with current good manufacturing practices (“cGMP”). Contract manufacturers may face manufacturing or quality control problems causing drug substance production and shipment delays or a situation where the contractor may not be able to maintain compliance with the applicable cGMP requirements. We may have little to no control regarding the occurrence of third-party manufacturer incidents. Any failure to comply with cGMP requirements or other FDA or comparable foreign regulatory requirements could adversely affect our clinical research activities and our ability to develop BIO89-100 or any future product candidates and market our products following approval. Our sole source supplier, BTPH, has not yet manufactured a commercial product, and as a result, has not been subject to inspection by the FDA and other comparable foreign regulatory authorities.

If BIO89-100 or any future product candidates are approved by the FDA or other comparable foreign regulatory authorities for commercial sale, we may need to manufacture such product candidate in larger quantities. We intend to use third-party manufacturers for commercial quantities of BIO89-100 to the extent we advance this product candidate and other product candidates. Our manufacturers may not be able to successfully increase the manufacturing capacity for any of our product candidates in a timely or efficient manner, or at all. If we are unable to successfully increase the manufacturing capacity for a product candidate, the regulatory approval or commercial launch of that product candidate may be delayed or there may be a shortage in the supply of the product candidate.

In addition,the operationsof our third-partymanufacturersmay be subjectto earthquakes,power shortages,telecommunicationsfailures,failuresor breachesof informationtechnologysystems,water shortages, floods,hurricanes,typhoons, fires,extremeweatherconditions,actual and threatened public health emergencies, including the ongoing COVID-19 pandemic,and othernaturalor man-madedisastersor businessinterruptions.Damage or extendedperiodsof interruptionto our facilitiesdue to fire,naturaldisaster,power loss, communicationsfailure,unauthorizedentryor othereventscould cause us to ceaseor delay developmentof some or allof our productcandidates.Our abilityto obtainclinicalsuppliesof our productcandidatescould be disruptedif the operationsof thesesuppliersare affectedby a man-madeor natural disasteror otherbusinessinterruption.

Our current and anticipated future dependence upon others for the manufacture of our product candidates may adversely affect our future profit margins and our ability to develop our product candidates and commercialize any products that receive regulatory approval on a timely basis.

In some cases,the technicalskillsor technologyrequiredto manufactureour productcandidatesmay be unique or proprietaryto the originalmanufacturer,wemay have difficultytransferringsuch skillsor technology to anotherthirdpartyand a feasiblealternativemany not exist.These factorswould increaseour relianceon such manufactureror requireus to obtaina licensefromsuch manufacturerin orderto have anotherthirdparty manufactureour productcandidates.If weare requiredto change manufacturersfor any reason,wewill be requiredto verifythatthe newmanufacturermaintainsfacilitiesand proceduresthatcomplywith quality standardsand with allapplicableregulationsand guidelines.For example,in the event thatweneed to switch our third-partymanufacturerof BIO89-100 fromBTPH,which is our sole manufacturingsourcefor BIO89-100, we anticipatethatthe complexityof the glycoPEGylationmanufacturingprocessmay materiallyimpactthe amount of timeit may take to securea replacementmanufacturer.The delaysassociatedwith the verificationof a new manufacturer, if weare able to identifyan alternativesource,could negativelyaffectour abilityto developproductcandidatesin a timelymanneror within budget.

The manufacture of biologic products is complex and we are subject to many manufacturing risks, any of which could substantially increase our costs and limit supply of our products.

To date, BIO89-100 has been manufactured by a single third-party manufacturer, BTPH, solely for preclinical studies and clinical trials. This manufacturer may not be able to scale production to the larger quantities required for large clinical trials and to commercialize BIO89-100. The process of manufacturing BIO89-100 is complex, highly regulated and subject to several risks, including:

the process of manufacturing biologics is susceptible to product loss due to contamination, equipment failure, improper installation or operation of equipment, vendor or operator error and improper storage conditions. Even minor deviations from normal manufacturing processes could result in reduced production yields, product defects and other supply disruptions. If microbial, viral or other contaminations are discovered in our products or in the manufacturing facilities in which our products are made, the manufacturing facilities may need to be closed for an extended period of time to investigate and eliminate the contamination;

the manufacturing facilities in which our products are made could be adversely affected by equipment failures, labor and raw material shortages, financial difficulties of our contract manufacturers, natural disasters, actual or threatened public health emergencies, including the ongoing COVID-19 pandemic, power failures, local political unrest and numerous other factors; and

any adverse developments affecting manufacturing operations for our products may result in shipment delays, inventory shortages, lot failures, product withdrawals or recalls or other interruptions in the supply of our products. We may also have to record inventory write-offs and incur other charges and expenses for products that fail to meet specifications, undertake costly remediation efforts or seek costlier manufacturing alternatives.

The manufacture of biologic products, and in particular, the glycoPEGylation process, is complex and requires significant expertise and capital investment, including the development of advanced manufacturing techniques and process controls. Manufacturers of biologic products often encounter difficulties in production, particularly in scaling up and validating initial production and ensuring the avoidance of contamination. These problems include difficulties with production costs and yields, quality control, including stability of the product, quality assurance testing, operator error and shortages of qualified personnel, as well as compliance with strictly enforced federal, state and foreign regulations. We cannot assure you that any stability or other issues relating to the manufacture of BIO89-100 will not occur in the future.

We have limited process development capabilities and have access only to external manufacturing capabilities. We do not have and we do not currently plan to acquire or develop the facilities or capabilities to manufacture bulk drug substance or filled drug product for use in human clinical trials or commercialization. Any delay or interruption in the supply of clinical trial materials, including as a result of breach by us or BTPH of our agreement with BTPH, or our inability to agree to the terms of supply or related services in any statement of work, could delay the completion of clinical trials, increase the costs associated with maintaining clinical trial programs and, depending upon the period of delay, require us to commence new clinical trials at additional expense or terminate clinical trials completely.

We plan to develop a new drug product formulation for BIO89-100 and we may be unsuccessful. Any changes in methods of product candidate manufacturing or formulation may result in the need to perform new clinical trials or obtain new drug product, which would require additional costs and cause delay.

We plan to develop a new drug product formulation of BIO89-100 for late stage clinical trials and commercialization. Our current drug product is stored as a frozen liquid and is therefore not well-suited to larger clinical trials or commercialization. We have engaged a formulation development company to explore both a new refrigerated liquid formulation and a freeze-dried, or lyophilized, formulation. We have commenced development of a pre-filled syringe for the new drug product formulation and we also plan to begin development of a pen-type ~~autoinjector for the new drug product formulation.~~autoinjector. There is no assurance that we will be successful in developing a new drug product formulation, a pre-filled syringe or an autoinjector on a timely basis or at all, which could impede our development and commercialization strategy for BIO89-100. The FDA or other comparable foreign regulatory authorities could require nonclinical studies or clinical trials to support introduction of any new formulation, pre-filled syringe and autoinjector, which could delay completion of clinical trials, require the conduct of bridging clinical trials or the repetition of one or more clinical trials, increase our clinical trial costs, delay approval of BIO89-100 and jeopardize our ability to commence product sales and generate revenue from BIO89-100, if approved. The FDA or other comparable foreign regulatory authorities may in the future require us to use a drug product formulation that is different than the formulation being used, which would render our current supply unusable, require additional costs and cause delay.

We rely on third parties to conduct our clinical trials and some aspects of our research and preclinical testing, and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such trials, research or testing.

We currently rely on, and expect to continue to rely on, third parties, such as CROs, clinical data management organizations, medical institutions, consultants and clinical investigators, to conduct our clinical trials and certain aspects of our research and preclinical testing. Any of these third parties may terminate their engagements with us at any time. If we need to enter into alternative arrangements, it would delay our product development activities and such alternative arrangements may not be available on terms acceptable to us.

Our reliance on these third parties for research and development activities will reduce our control over these activities, but will 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 trial. Moreover, the FDA requires us to comply with standards, commonly referred to as current Good Clinical Practices, 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 trial participants are protected. We also are required to register ongoing clinical trials and post the results of completed clinical trials on a government-sponsored database, ClinicalTrials.gov, within certain timeframes. Failure to do so can result in fines, adverse publicity and civil and criminal sanctions.

Furthermore, these third parties may also have relationships with other entities, some of which may be our competitors. If these third parties do not successfully carry out their contractual duties, meet expected deadlines or conduct our clinical trials in accordance with regulatory requirements or our stated protocols, we will not be able to obtain, or may be delayed in obtaining, marketing approvals for BIO89-100 or any future product candidates and will not be able to, or may be delayed in our efforts to, successfully commercialize our medicines.

We also expect to rely on other third parties to store and distribute drug supplies for our clinical trials. Any performance failure on the part of our distributors could delay clinical development, marketing approval and/or commercialization of BIO89-100 or any future product candidates, producing additional losses and depriving us of potential revenue.

In addition, while we have received the majority of the knowledge with regard to our current product candidate from Teva, we may still depend on Teva to provide information and documentation regarding certain aspects of BIO89-100 or any future product candidates. If Teva delays providing or fails to provide such information or documentation, we may also be delayed in our efforts to successfully commercialize BIO89-100 or any future product candidates. We also depend on Teva to support our efforts to transfer the manufacturing process to a contract manufacturer. If Teva is unable to or otherwise fails to support such transfer, we may incur significant delay and increased costs in commercializing BIO89-100 or any future product candidates.

We may not be able to obtain and maintain the third-party relationships that are necessary to develop, commercialize and manufacture some or all of our product candidates.

We expect to depend on collaborators, partners, licensees, clinical investigators, CROs, manufacturers and other third parties to support our discovery efforts, to formulate product candidates, to conduct clinical trials for some or all of our product candidates, to manufacture clinical and commercial scale quantities of our drug substance and drug product and to market, sell and distribute any products we successfully develop. Any problems we experience with any of these third parties could delay the development, commercialization and manufacturing of our product candidates, which could harm our results of operations.

We cannot guarantee that we will be able to successfully negotiate agreements for, or maintain relationships with, collaborators, partners, licensees, clinical investigators, CROs, manufacturers and other third parties on favorable terms, if at all. If we are unable to obtain or maintain these agreements, we may not be able to clinically develop, formulate, manufacture, obtain regulatory approvals for or commercialize BIO89-100 and any future product candidates, which will in turn adversely affect our business.

We expect to expend substantial management time and effort to enter into relationships with third parties and, if we successfully enter into such relationships, to manage these relationships. In addition, substantial amounts will be paid to third parties in these relationships. However, we cannot control the amount or timing of resources our future contract partners will devote to our research and development programs, product candidates or potential product candidates, and we cannot guarantee that these parties will fulfill their obligations to us under these arrangements in a timely fashion, if at all. In addition, while we manage the relationships with third parties, we cannot control all of the operations of and any outsourcing used by such third parties. We rely on third parties’ knowledge regarding specific local laws and regulatory requirements in foreign jurisdictions, where applicable.

If we fail to develop and commercialize additional product candidates, we may be unable to grow our business.

Although the development and commercialization of BIO89-100 is currently our primary focus, as part of our longer-term growth strategy, we plan to evaluate the development and commercialization of other therapies related to NASH and other liver and cardio-metabolic diseases. The success of this strategy depends primarily upon our ability to identify and validate new therapeutic candidates, and to identify, develop and commercialize new drugs and biologics. Our research efforts may initially show promise in discovering potential new drugs and biologics, yet fail to yield product candidates for clinical development for a number of reasons, including:

we may need to rely on third parties to generate pipeline candidates for our portfolio;

we may encounter product manufacturing difficulties that limit yield or produce undesirable characteristics that increase the cost of manufacturing our product candidates, cause delays or make our product candidates unmarketable;

product candidates may cause adverse effects in patients or subjects, even after successful initial toxicology studies, which may make the product candidates unmarketable;

product candidates may not demonstrate a meaningful benefit to patients or subjects; and

our future collaboration partners may change their development profiles or plans for potential product candidates or abandon a therapeutic area or the development of a partnered product.

If any of these events occur, we may be forced to abandon our development efforts for one or more programs, which could have a material adverse effect on our business, operating results and prospects and could potentially cause us to cease operations. Future research programs to identify new product candidates may require substantial technical, financial and human resources. We may focus our efforts and resources on potential programs or product candidates that ultimately prove to be unsuccessful.

Product candidates may require additional, time-consuming development efforts prior to commercial sale, including preclinical studies, clinical trials and approval by the FDA and/or comparable foreign regulatory authorities. All product candidates are prone to the risks of failure that are inherent in pharmaceutical product development, including the possibility that the product candidate will not be shown to be sufficiently safe and effective for approval by regulatory authorities. In addition, we cannot assure you that any such products that are approved will be manufactured or produced economically, be successfully commercialized, be widely accepted in the marketplace, or be more effective than other commercially available alternatives.

We may use our limitedfinancialandhumanresourcesto pursue a particularresearchprogram or product candidatethat is ultimatelyunsuccessfulor lesssuccessfulthan other programsor product candidatesthat we may have forgone or delayed.

Because we have limited personnel and financial resources, we may forego or delay the development of certain programs or product candidates that later prove to have greater commercial potential than the programs or product candidates that we do pursue. 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 research and development programs for product candidates may not yield any commercially viable products. Similarly, our decisions to delay or terminate drug development programs may also be incorrect and could cause us to miss

valuableopportunities.If wefailto accuratelyevaluatethe commercialpotentialor targetmarketfor a particular productcandidate,wemay relinquishvaluablerightsto thatproductcandidatethrough strategiccollaboration, licensingor otherarrangementsor wemay allocateour limitedinternalresourcesto thatproductcandidatewhen it would have been moreadvantageousto enterinto such an arrangement.Anysuch failurecould have a material adverseeffecton our business,financialcondition,resultsof operationsor prospects.

As we evolve from a company that is primarily involved in clinical development to a company that is also involved in commercialization, we may encounter difficulties in expanding our operations successfully.

As we advance our product candidates through clinical trials, we will need to expand our development, regulatory, manufacturing, and marketing and sales capabilities and may need to further contract with third parties to provide these capabilities, such as collaborators, distributors, marketers and additional suppliers. We currently have no experience as a company in or infrastructure for sales, marketing and distribution, and our operations are currently limited to clinical development activities and as our operations expand, we likely will need to manage additional relationships with such third parties.

If BIO89-100 or any future product candidate is approved, we intend either to establish a sales organization with technical expertise and supporting distribution capabilities to commercialize BIO89-100 or any future product candidate or to outsource such functions to one or more third parties. Either of these options would be expensive and time-consuming. Some or all of these costs may be incurred in advance of any approval of BIO89-100 or any future product candidate. In addition, we may not be able to hire a sales force that is sufficient in size or has adequate expertise in the medical markets that we intend to target. Any failure or delay in the development of our internal sales, marketing and distribution capabilities would adversely affect the commercialization of BIO89-100 and other future product candidates.

Maintaining third-party relationships for these purposes will impose significant added responsibilities on members of our management and other personnel. We must be able to effectively manage our development efforts, recruit and train sales and marketing personnel, effectively manage our participation in the clinical trials in which our product candidates are involved and improve our managerial, development, operational and finance systems, all of which may impose a strain on our administrative and operational infrastructure.

If we enter into arrangements with third parties to perform sales, marketing or distribution services, any product revenues that we receive, or the profitability of these product revenues to us, are likely to be lower than if we were to market and sell any products that we develop without the involvement of these third parties. In addition, we may not be successful in entering into arrangements with third parties to sell and market our products or in doing so on terms that are favorable to us. We likely will have little control over such third parties, and any of them may fail to devote the necessary resources and attention to sell and market our products effectively. If we do not establish sales and marketing capabilities successfully, either on our own or in collaboration with third parties, we will not be successful in commercializing our products.

We may seek to establish commercial collaborations for our product candidates, and, if we are not able to establish them on commercially reasonable terms, we may have to alter our development and commercialization plans.

Our drug development programs and the potential commercialization of our product candidates will require substantial additional cash to fund expenses. We may decide to collaborate with other pharmaceutical and biotechnology companies for the development and potential commercialization of our product candidates.

We face significant competition in seeking appropriate collaborators. Whether we reach a definitive agreement for a collaboration will depend, among other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator’s evaluation of a number of factors. Those factors may include the design or results of clinical trials, the likelihood of approval by the FDA or comparable foreign regulatory authorities, the potential market for the subject product candidate, the costs and complexities of manufacturing and delivering such product candidate to patients, the potential of competing products and the existence of uncertainty with respect to our ownership of technology, which can exist if there is a challenge to such ownership without regard to the merits of the challenge and industry and market conditions generally. The collaborators may also consider alternative product candidates or technologies for similar indications that may be available to collaborate on and whether such a collaboration could be more attractive than the one with us for our product candidate.

Collaborationsare complexand time-consumingto negotiateand document.In addition,therehave been a significantnumberof businesscombinationsamong largepharmaceuticalcompaniesthathave resultedin a reducednumberof potentialfuturecollaborators.

We may not be able to negotiatecollaborationson a timelybasis,on acceptableterms,or at all.If weare unable to do so, wemay have to curtailthe developmentof the productcandidatefor which weare seekingto collaborate,reduceor delay itsdevelopmentprogramor one or moreof our otherdevelopmentprograms,delay itspotentialcommercializationor reducethe scope of any salesor marketingactivitiesor increaseour expendituresand undertakedevelopmentor commercializationactivitiesat our ownexpense. If weelectto increaseour expendituresto fund developmentor commercializationactivitieson our own,wemay need to obtainadditionalcapital,which may not be availableto us on acceptableterms,or at all.If wedo not have sufficientfunds, wemay not be able to furtherdevelop our productcandidatesor bring themto marketand generateproductrevenue.

We may not be successful in our efforts to identify, in-license or acquire, discover, develop or commercialize additional product candidates.

Although a substantial amount of our effort will focus on the development and potential commercialization of BIO89-100, we also may seek to identify, in-license or acquire, discover, develop and commercialize additional product candidates. We cannot assure you that our effort to in-license or acquire additional product candidates will be successful. Even if we are successful in in-licensing or acquiring additional product candidates, their requisite development activities may require substantial resources, and we cannot assure you that these development activities will result in regulatory approvals.

BIO89-100 and any future product candidates may not achieve adequate market acceptance among physicians, patients, healthcare payors and others in the medical community necessary for commercial success.

Even if our product candidates receive regulatory approval, they may not gain adequate market acceptance among physicians, patients, healthcare payors and others in the medical community. Given the number of drugs in development for the treatment of NASH, if we are unsuccessful in achieving a differentiated profile with BIO89-100 based on efficacy, safety and tolerability, dosing and administration, market acceptance will be limited. Efforts to educate the medical community and third-party payors on the benefits of our product candidates may require significant resources and may not be successful. Demonstrating the safety and efficacy of our product candidates and obtaining regulatory approvals will not guarantee future revenue. Our commercial success also depends on coverage and adequate reimbursement of our product candidates by third-party payors, including government payors, which may be difficult or time-consuming to obtain, may be limited in scope and may not be obtained in all jurisdictions in which we may seek to market our products. Governments and private insurers closely examine medical products to determine whether they should be covered by reimbursement and, if so, the level of reimbursement that will apply. We cannot be certain that third-party payors will sufficiently reimburse sales of our products, or otherwise enable us to sell our products at profitable prices. Similar concerns could also limit the reimbursement amounts that health insurers or government agencies in other countries are prepared to pay for our products. In many countries or regions where we may market our products, either directly or with collaborators, the pricing of prescription drugs is controlled by the government or regulatory agencies.

Regulatory agencies in these countries could determine that the pricing for our products should be based on prices of other commercially available drugs for the same disease, rather than allowing us to market our products at a premium as new drugs. This may be particularly true for drugs that treat NASH or SHTG, which some healthcare providers and payors may deem to be a “lifestyle” disease that could be ameliorated by changes in diet and exercise. The degree of market acceptance of any of our approved product candidates will depend on a number of factors, including:

the efficacy, safety and dosing profile of the product candidate as demonstrated in clinical trials;

the timing of market introduction of the product candidate as well as competitive products;

the clinical indications for which the product candidate is approved;

acceptance of the product candidate as a safe and effective treatment by physicians and patients;

the potential and perceived advantages of the product candidate over alternative treatments, including any similar generic treatments;

the cost of treatment in relation to alternative treatments;

the availability of coverage and adequate reimbursement and pricing by third parties and government authorities, including any requirements for biopsy-proven NASH prior to being approved for reimbursement;

~~patients’willingnessto pay out-of-pocketin the absenceof coverageand/oradequate reimbursementfromthird-partypayors;~~

•

patients’willingnessto pay out-of-pocketin the absenceof coverageand/oradequate reimbursementfromthird-partypayors;

the relative convenience and ease of administration;

the frequency and severity of adverse events;

40the effectivenessof salesand marketingefforts;and

•

~~the effectivenessof salesand marketingefforts;and~~

unfavorable publicity relating to the product candidate.

Sales of medical products also depend on the willingness of physicians to prescribe the treatment, which is likely to be based on a determination by these physicians that the products are safe, therapeutically effective and cost effective. In addition, the inclusion or exclusion of products from treatment guidelines established by various physician groups and the viewpoints of influential physicians can affect the willingness of other physicians to prescribe the treatment. We cannot predict whether physicians, physicians’ organizations, hospitals, other healthcare providers, government agencies or private insurers will determine that our products are safe, therapeutically effective and cost effective as compared with competing treatments. If any product candidate is approved but does not achieve an adequate level of acceptance by such parties, we may not generate or derive sufficient revenue from that product candidate and may not become or remain profitable.

Even if we commercialize BIO89-100 or any future product candidate, we may face challenges to achieving profitability such as our products becoming subject to unfavorable pricing regulations, third-party reimbursement practices or healthcare reform initiatives, which could harm our business.

The regulations that govern marketing approvals, pricing and reimbursement for new drug products vary widely from country to country. Current and future legislation may significantly change the approval requirements in ways that could involve additional costs and cause delays in obtaining approvals. Some countries require approval of the sale price of a drug before it can be marketed. In many countries, the pricing review period begins after marketing or product licensing approval is granted. In some foreign markets, prescription pharmaceutical pricing remains subject to continuing governmental control even after initial approval is granted. As a result, we might obtain marketing approval for a product in a particular country, but then be subject to price regulations that delay or limit our commercial launch of the product, possibly for lengthy time periods, which could negatively impact the revenue we generate from the sale of the product in that particular country. Adverse pricing limitations may hinder our ability to recoup our investment in one or more product candidates, even if our product candidates obtain marketing approval.

Our ability to commercialize any products successfully also will depend in part on the extent to which coverage and adequate reimbursement for these products and related treatments will be available from third-party payors, including government health care programs and private health insurers. Such third-party payors determine which medications they will cover and establish reimbursement levels. Government authorities and other third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications. Increasingly, third-party payors are requiring that drug companies provide them with predetermined discounts from list prices and are challenging the prices charged for medical products. We cannot be sure that coverage and reimbursement will be available for any product that we or our future collaborators commercialize and, if reimbursement is available, what the level of reimbursement will be. Coverage and reimbursement may impact the demand for, or the price of, any product candidate for which we or our future collaborators obtain marketing approval. If coverage and reimbursement are not available or reimbursement is available only to limited levels, we and our future collaborators may not be able to successfully commercialize any product candidate for which marketing approval is obtained.

There may be significant delays in obtaining coverage and reimbursement for newly approved drugs, and coverage may be more limited than the purposes for which the drug is approved by the FDA or comparable foreign regulatory authorities. Moreover, eligibility for coverage and reimbursement does not imply that a drug will be paid for in all cases or at a rate that covers our costs, including research, development, manufacture, sale and distribution. Interim reimbursement levels for new drugs, if applicable, may also not be sufficient to cover our costs and may only be temporary. Reimbursement rates may vary according to the use of the drug and the clinical setting in which it is used, may be based on reimbursement levels already set for lower cost drugs and may be incorporated into existing payments for other services. Net prices for drugs may be reduced by mandatory discounts or rebates required by government healthcare programs or private payors and by any future relaxation of laws that presently restrict imports of drugs from countries where they may be sold at lower prices than in the United States. Our inability to promptly obtain coverage and profitable reimbursement rates from both government-funded and private payors for any approved products that we develop could have a material adverse effect on our operating results, our ability to raise capital needed to commercialize products and our overall financial condition.

Tobecomeand remainprofitable,weor any potentialfuturecollaboratormustdevelop and eventually commercializeBIO89-100 or any futureproductcandidateswith significantmarketpotentialat an adequate profitmarginaftercost of goods sold and otherexpenses.Commercializationof BIO89-100 or any futureproduct candidatesmay entaila substantialcost of goods sold and therecan be no assurancethatwewill be able to achievea suitablegross marginwith respectto salesof BIO89-100 or any future ~~product candidates.~~

~~Healthcare~~ ~~reform~~product candidates.

Healthcare reform in the United Statesmay negativelyimpactour abilityto profitablysellour product candidates,if approved, andto recoup the upfront investmentneeded to obtain regulatoryapproval of our product candidates.

Third-party payors, whether domestic or foreign, or governmental or commercial, are continually developing and advancing new methods of controlling healthcare costs. The United States and many foreign jurisdictions have enacted or proposed legislative and regulatory changes affecting 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 any product for which we obtain marketing approval.

In March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the “Affordable Care Act”) was enacted, which includes measures that have significantly changed the way health care is financed by both governmental and private insurers. Among the provisions of the Affordable Care Act of particular importance include:

an annual, nondeductible fee on any entity that manufactures or imports specified branded prescription drugs and biologic agents, which is apportioned among these entities according to their market share in certain government healthcare programs;

a Medicare Part D coverage gap discount program, in which manufacturers must agree to offer point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D;

an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program to 23.1% and 13.0% of the average manufacturer price for branded and generic drugs, respectively;

a methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected;

a licensure framework for follow-on biologic products;

an extension of a manufacturers’ Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations;

a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in and conduct comparative clinical effectiveness research, along with funding for such research; and

establishment of a Center for Medicare Innovation at the Centers for Medicare & Medicaid Services (“CMS”) to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending.

There remain judicial, executive, and congressional challenges to certain aspects of the Affordable Care Act which could potentially void or significantly modify the Affordable Care Act in part or in whole. For example, since January 2017, President Trump signed Executive Orders and other directives designed to delay, circumvent, or loosen certain requirements mandated by the Affordable Care Act. On December 22, 2017, President Trump signed into law the Tax Act, which includes a provision repealing the individual mandate to maintain health insurance coverage under the Affordable Care Act effective January 1, 2019. Additionally, the 2020 federal spending package permanently eliminated, effective January 1, 2020, the Affordable Care Act’s mandated “Cadillac” tax on high-cost employer-sponsored health coverage and medical device tax and, effective January 1, 2021, also eliminates the health insurer tax. On December 14, 2018, a U.S. District Court Judge in the Northern District of Texas ruled that the individual mandate is a critical and inseverable feature of the Affordable Care Act, and because it was repealed as part of the Tax Act, the remaining provisions of the Affordable Care Act are invalid as well. The decision was been appealed to the United States Court of Appeals for the Fifth Circuit and on December 18, 2019, the United States Court of Appeals for the Fifth Circuit upheld the District Court’s ruling that the individual mandate was unconstitutional, but remanded the case back to the District Court to determine whether the remaining provisions of the Affordable Care Act were nonetheless valid. On March 2, 2020, the United States Supreme Court granted the petitions for writs of certiorari to review this case, although it is unclear when a decision will be made or how the Supreme Court will rule. It is unclear how such litigation and other efforts will impact the Affordable Care Act.

At the sametime,therehas been increasinglegislativeand enforcementinterestin the United States with respectto specialtydrug pricingpractices.Specifically,therehave been severalrecentU.S.congressional inquiriesand proposed billsdesignedto, among otherthings,bring moretransparencyto drug pricing,reducethe cost of prescriptiondrugs under Medicare,review the relationshipbetween pricingand manufacturerpatient programsand reformgovernmentprogramreimbursementmethodologiesfor drugs. At the federallevel,the Trump administration’sbudget proposal for the government’s fiscalyear2021 includes a $135 billion allowance to support legislative proposals seeking to reduce drug prices, increase competition, lower out-of-pocket drug costs for patients, and increase patient access to lower-cost generic and biosimilar drugs.The Trump administration previouslyreleaseda “Blueprint,” or plan, to lower drug pricesand reduceout of pocket costsof drugs that containedproposalsto increasedrug manufacturercompetition,

increase the negotiating power of certain federal healthcare programs, incentivize manufacturers to lower the list price of their products, and reduce the out of pocket costs of drug products paid by consumers. We expect that the 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 any approved product and could seriously harm our future revenues. 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 product revenue, attain profitability or commercialize our products.

There have been, and likely will continue to be, legislative and regulatory proposals at the foreign, federal and state levels directed at broadening the availability of healthcare and containing or lowering the cost of healthcare. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate product revenue, attain profitability, or commercialize our products. Such reforms could have an adverse effect on anticipated revenue from product candidates that we may successfully develop and for which we may obtain regulatory approval and may affect our overall financial condition, including our ability to recoup the upfront investment needed to obtain regulatory approval for our product candidates.

Our international operations may expose us to business, regulatory, political, operational, financial, pricing and reimbursement risks associated with doing business outside of the United States.

Our use of our international facilities subject us to U.S. and foreign governmental trade, import and export, and customs regulations and laws. Compliance with these regulations and laws is costly and exposes us to penalties for non-compliance. Furthermore, if we succeed in developing any products, we intend to market them in other jurisdictions in addition to the United States. If approved, we may hire sales representatives and conduct physician and patient association outreach activities outside of the United States.

Doing business internationally potentially involves a number of risks, including but not limited to:

multiple, conflicting and changing laws and regulations such as privacy regulations, tax laws, export and import restrictions, employment laws, regulatory requirements, and other governmental approvals, permits and licenses;

failure by us to obtain and maintain regulatory approvals for the use of our products in various countries;

rejection or qualification of foreign clinical trial data by the competent authorities of other countries;

additional potentially relevant third-party patent rights;

complexities and difficulties in obtaining, maintaining, protecting and enforcing our intellectual property;

difficulties in staffing and managing foreign operations;

a shortage of high-quality employees;

laws and business practices favoring local companies;

complexities associated with managing multiple payor reimbursement regimes, government payors or patient self-pay systems;

limits in our ability to penetrate international markets;

financial risks, such as longer payment cycles, difficulty collecting accounts receivable, the impact of local and regional financial crises on demand and payment for our products and exposure to foreign currency exchange rate fluctuations;

natural disasters, political and economic instability, including wars, terrorism and political unrest, actual or potential public health emergencies, including the ongoing COVID-19 pandemic, boycotts, curtailment of trade and other business restrictions;

the imposition of restrictions on the activities of foreign agents and representatives;

~~certainexpensesincluding,among others,expensesfor travel,translationand insurance;and~~

•

certainexpensesincluding,among others,expensesfor travel,translationand insurance;and

regulatory and compliance risks that relate to anti-corruption compliance and record-keeping that may fall within the purview of the U.S. Foreign Corrupt Practices Act, its accounting provisions or its anti-bribery provisions or provisions of anti-corruption or anti-bribery laws in other countries.

Any of these factors could harm our ongoing international clinical operations and supply chain, as well as any future international expansion and operations and, consequently, our business, financial condition, prospects and results of operations.

If wefailto complywith foreignregulatoryrequirementsgoverning humanclinicaltrialsandmarketing approval for drugs, wecould be preventedfromsellingour product candidatesin foreignmarkets,whichmay adverselyaffectour operatingresultsandfinancialcondition.

The requirements governing the conduct of clinical trials, product licensing, pricing, and reimbursement for marketing our product candidates outside the United States vary greatly from country to country and may require additional testing. We expect that our future clinical development of our product candidates will involve a number of clinical trials in foreign jurisdictions. We have no direct experience as a company in obtaining foreign regulatory approvals. The time required to obtain approvals outside the United States may differ from that required to obtain FDA approval. We may not obtain foreign regulatory approvals on a timely basis, if at all. Approval by the FDA does not guarantee approval by comparable foreign regulatory authorities, and approval by one foreign regulatory authority does not ensure approval by regulatory authorities in other countries or by the FDA. Failure to comply with these regulatory requirements or obtain required approvals could impair our ability to develop foreign markets for our product candidates and may have a material adverse effect on our results of operations and financial condition.

Product liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of any products that we may develop.

We face an inherent risk of product liability exposure related to the testing of our product candidates in human clinical trials and will face an even greater risk if we commercialize any resulting products. Product liability claims may be brought against us by subjects enrolled in our clinical trials, patients, or others using our products. If we cannot successfully defend ourselves against claims that our product candidates or products that we may develop caused injuries, we could incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:

decreased demand for any product candidates or products that we may develop;

product recalls or a change in the indications for which products may be used;

termination of clinical trial sites or entire trial programs;

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 trial subjects or patients;

loss of revenue;

diversion of management and scientific resources from our business operations; and

the inability to commercialize any products that we may develop.

Our clinical trial liability insurance coverage may not adequately cover all liabilities that we may incur. 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. Our inability to obtain product liability insurance at an acceptable cost or to otherwise protect against potential product liability claims could prevent or delay the commercialization of any products or product candidates that we develop. We intend to expand our insurance coverage for products to include the sale of commercial products if we obtain marketing approval for our product candidates in development, but we may be unable to obtain commercially reasonable product liability insurance for any products approved for marketing. Large judgments have been awarded in class action lawsuits based on drugs that had unanticipated side effects. If we are sued for any injury caused by our products, product candidates or processes, our liability could exceed our product liability insurance coverage and our total assets. Claims against us, regardless of their merit or potential outcome, may also generate negative publicity or hurt our ability to obtain physician endorsement of our products or expand our business.

Ouremployees,contractors,vendors, principalinvestigators,consultantsandfuture partnersmay engage in misconductor other improperactivities,including noncompliancewith regulatorystandards andrequirements andinsidertrading.

We are exposed to the risk of fraud or other misconduct by our employees, contractors, vendors, principal investigators, consultants or future partners. Misconduct by these parties could include failures to comply with FDA regulations, to provide accurate information to the FDA, to comply with federal and state healthcare fraud and abuse laws and regulations, to report financial information or data timely, completely or accurately, or to disclose unauthorized activities to us. 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,marketingand promotion,salescommission,customerincentiveprogramsand otherbusinessarrangements.Third-partymisconductcould also involvethe improperuse of information obtainedin the courseof clinicaltrials,which could resultin regulatorysanctionsand seriousharmto our reputation.Although we have adopted a Codeof Business Conduct and Ethics,it is not always possibleto identifyand determisconduct,and the precautions wetake to detectand preventthisactivitymay not be effectivein controllingunknownor unmanagedrisksor lossesor in protectingus fromgovernmentalinvestigationsor otheractionsor lawsuitsstemmingfroma failure to complywith theselaws or regulations.If any such actionsare institutedagainstus resultingfromthis misconductand weare not successfulin defendingourselvesor assertingour rights,those actionscould have a significantimpacton our business,includingthe impositionof significantfinesor othersanctions.If weor our futurepartnersmarketproductsin a mannerthatviolatesfraudand abuse and otherhealthcarelaws, or if weor our futurepartnersviolategovernmentpricereportinglaws, weor our futurepartnersmay be subjectto administrativeciviland/orcriminalpenalties,among othersanctions.

Most states also have statutes or regulations similar to these federal laws, which may apply to items such as pharmaceutical products and services reimbursed by private insurers. We and/or our future partners may be subject to administrative, civil and criminal sanctions for violations of any of these federal and state laws.

Pharmaceutical and other healthcare companies have been prosecuted under these laws for a variety of promotional and marketing activities, such as: providing free trips, free goods, sham consulting fees and grants and other monetary benefits to prescribers; reporting to pricing services inflated average wholesale prices that were then used by federal programs to set reimbursement rates; engaging in off-label promotion; and submitting inflated best price information to the Medicaid Rebate Program to reduce liability for Medicaid rebates. Ensuring that our internal operations and future business arrangements with third parties comply with applicable healthcare laws and regulations will involve substantial costs. It is possible that governmental authorities will conclude that our business practices do not comply with current or future statutes, regulations, agency guidance or case law involving applicable fraud and abuse or other healthcare laws and regulations.

Our business operations and relationships with investigators, healthcare professionals, consultants, third-party payors, patient organizations and customers are subject to broadly applicable healthcare regulatory laws, which could expose us to penalties.

Healthcare providers, physicians and third-party payors will play a primary role in the recommendation and prescription of any product candidate for which we obtain regulatory approval. Our current and future arrangements may expose us to broadly applicable fraud and abuse and other healthcare laws that may constrain the business or financial arrangements and relationships through which we would research, market, sell and distribute our products. Even though we will not control referrals of healthcare services or bill directly to Medicare, Medicaid or other third-party payors, federal and state healthcare laws pertaining to fraud and abuse are and will be applicable to our business. Such laws include, but are not limited to, the following:

Federal false claims laws, including the federal civil False Claims Act (“FCA”), which can be enforced through civil whistleblower or qui tam actions, and false statements and civil monetary penalties law prohibit, among others, any person from knowingly presenting, or causing to be presented, a false claim for payment to the federal government or knowingly making, or causing to be made, a false statement to get a false claim paid.

The federal Anti-Kickback Statute prohibits, among other things, knowingly and willfully offering, paying, soliciting or receiving remuneration to induce, or in return for, purchasing, leasing, ordering or arranging for the purchase, lease or order of any healthcare item or service reimbursable under Medicare, Medicaid or other federally financed healthcare programs. This statute has been interpreted to apply to arrangements between pharmaceutical manufacturers, on the one hand, and prescribers, purchasers and formulary managers, on the other. Although there are several statutory exceptions and regulatory safe harbors protecting certain common activities from prosecution, the exceptions and safe harbors are drawn narrowly, and practices that involve remuneration intended to induce prescribing, purchasing or recommending may be subject to scrutiny if they do not qualify for an exception or safe harbor. In addition, the intent standard under the federal Anti-Kickback Statute was amended by the Affordable Care Act to a stricter standard such that a person or entity no longer needs to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation. Moreover, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the FCA.

~~The federalHealth InsurancePortabilityand AccountabilityAct of 1996 (“HIPAA”), which prohibits,among otherthings,knowingly and willfullyexecuting,or attemptingto execute,a schemeor artificeto defraudany healthcarebenefitprogramor obtain,by meansof falseor fraudulentpretenses,representations,or promises,any of the money or propertyownedby, or under the custody or controlof, any healthcarebenefitprogram,regardlessof the payor (e.g., publicor private),willfullyobstructinga criminalinvestigationof a healthcareoffense,and knowingly and willfullyfalsifying,concealingor coveringup by any trickor devicea materialfactor makingany materiallyfalse,fictitiousor fraudulentstatementsin connectionwith the deliveryof, or payment for, healthcarebenefits,itemsor servicesrelatingto healthcarematters.Similarto the federalAnti-Kickback Statute,a person or entitydoes not need to have actualknowledge of the statuteor specificintentto violateit in orderto have committeda violation.~~

•

~~Patient~~The federal ~~data privacy~~Health InsurancePortability and ~~security~~Accountability ~~regulation,~~Act of 1996 (“HIPAA”), which prohibits, ~~including,~~among otherthings,knowingly and willfullyexecuting,or attemptingto execute,a schemeor artificeto defraudany healthcarebenefitprogramor obtain,by meansof falseor fraudulentpretenses,representations,or promises,any of the money or propertyownedby, or under the custody or controlof, any healthcarebenefitprogram,regardlessof the payor (e.g., publicor private),willfullyobstructinga criminalinvestigationof a healthcareoffense,and knowingly and willfullyfalsifying,concealingor coveringup by any trickor devicea materialfactor makingany materiallyfalse,fictitiousor fraudulentstatements in ~~the United States,~~connection ~~HIPAA,~~with the delivery ~~as amendedby the Health InformationTechnology~~of, or payment for, ~~ClinicalHealth Act of 2009 (“HITECH”), and their respectiveimplementingregulations,which imposespecifiedrequirementson “coveredentities,” including~~healthcare ~~providers,~~benefits, ~~health~~items ~~plans, and healthcareclearinghouses,as well as their respective“businessassociates”thatperformservicesfor themthatinvolvethe use,~~ or ~~disclosure of, individuallyidentifiablehealthinformation~~services relating to ~~the privacy,~~healthcare ~~security~~matters. ~~and transmission~~Similar ~~of individually~~to the federal ~~identifiable~~Anti-Kickback Statute, ~~health~~a person or entity ~~information.~~does not need to have actualknowledge of the statuteor specificintentto violateit in orderto have committeda violation.

Patientdata privacyand securityregulation,including,in the United States,HIPAA,as amendedby the Health InformationTechnology for ClinicalHealth Act of 2009 (“HITECH”), and their respectiveimplementingregulations,which imposespecifiedrequirementson “coveredentities,” includinghealthcareproviders,healthplans, and healthcareclearinghouses,as well as their respective“businessassociates”thatperformservicesfor themthatinvolvethe use, or disclosure of, individuallyidentifiablehealthinformationrelatingto the privacy,securityand transmissionof individuallyidentifiablehealthinformation.

The federal transparency requirements under the Physician Payments Sunshine Act, enacted as part of the Affordable Care Act, that require applicable manufacturers of covered 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 track and annually report to CMS payments and other transfers of value provided to physicians, as defined by such law, and teaching hospitals and certain ownership and investment interests held by physicians or their immediate family members in the applicable manufacturer, and disclosure of such information will be made by CMS on a publicly available website.

Analogous state, local or foreign laws, such as state anti-kickback and false claims laws, which may apply to items or services reimbursed by any third-party payor, including commercial insurers; state and local marketing and/or transparency laws applicable to manufacturers that may be broader in scope than the federal requirements; state laws that require biopharmaceutical companies to comply with the biopharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government; state and local laws that require licensure or registration by sales and marketing agents of a pharmaceutical company; state laws that require disclosure of information related to drug pricing; and state and foreign laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect as HIPAA.

The global data protection landscape is rapidly evolving, and we may be affected by or subject to new, amended or existing laws and regulations in the future, including as our operations continue to expand or if we operate in foreign jurisdictions. For example, in June 2018, California enacted the California Consumer Privacy Act of 2018 (the “CCPA”), which took effect on January 1, 2020. The CCPA gives California residents the right to access and require deletion of their personal information, the right to opt out of certain personal information sharing, and the right to detailed information about how their personal information is collected, used and shared. The CCPA provides civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation. Although the CCPA includes exemptions for certain clinical trials data, the law may increase our compliance costs and potential liability with respect to other personal information we collect about California residents. The CCPA has prompted a wave of proposals for new federal and state privacy legislation that, if passed, could increase our potential liability, increase our compliance costs and adversely affect our business. Several foreign jurisdictions, including the European Union (EU), its member states, the United Kingdom, Japan and Australia, among others, have adopted legislation and regulations that increase or change the requirements governing the collection, use, disclosure and transfer of the personal information of individuals in these jurisdictions. Additionally, certain countries have passed or are considering passing laws that require local data residency and/or restrict the international transfer of data. These laws have the potential to increase costs of compliance, risks of noncompliance and penalties for noncompliance.

If our operationsare found to be in violationof any of theselaws or any othergovernmentalregulations thatmay apply to us, wemay be subjectto significantcivil,criminaland administrativepenalties,damages, disgorgement,fines,imprisonment,exclusionfromgovernmentfunded healthcareprograms,such as Medicare and Medicaid,additionaloversightand reportingobligations,contractualdamages,reputationalharm,diminished profitsand futureearnings,and the curtailmentor restructuringof our operations.If any of the physiciansor otherhealthcareprovidersor entitieswith whom weexpectto do businessis found not to be in compliancewith applicablelaws, thatperson or entitymay be subjectto significantcriminal,civilor administrativesanctions, includingexclusionsfromgovernmentfunded healthcareprograms.

We depend onour informationtechnologysystemsandthose of our third-partycollaborators,service providers,contractorsor consultants.Ourinternalcomputersystems,or those of our third-partycollaborators, serviceproviders,contractorsor consultants,may failor suffersecuritybreaches, disruptions,or incidents, whichcould resultin a materialdisruptionof our developmentprogramsor loss of data or compromisethe privacy,security,integrityor confidentialityof sensitiveinformationrelatedto our business andhave a materialadverseeffectonour reputation,business, financialconditionor resultsof operations.

In the ordinary course of our business, we collect, store and transmit large amounts of confidential information, including intellectual property, proprietary business information and personal information. Our internal technology systems and infrastructure, and those of our current or future third-party collaborators, service providers, contractors and consultants are vulnerable to damage from computer viruses, unauthorized access or use resulting from malware, natural disasters, terrorism, war and telecommunication and electrical failures, denial-of-service attacks, cyber-attacks or cyber-intrusions over the Internet, hacking, phishing and other social engineering attacks, persons inside our organizations (including employees or contractors), loss or theft, or persons with access to systems inside our organization. Attacks on information technology systems are increasing in their frequency, levels of persistence, sophistication and intensity, and they are being conducted by increasingly sophisticated and organized foreign governments, groups and individuals with a wide range of motives and expertise. In addition to extracting or accessing sensitive information, such attacks could include the deployment of harmful malware, ransomware, denial-of-service attacks, social engineering and other means to affect service reliability and threaten the security, confidentiality, integrity and availability of information. The prevalent use of mobile devices that access sensitive information also increases the risk of data security incidents which could lead to the loss of confidential information or other intellectual property. While to our knowledge we have not experienced any material system failure, accident or security breach to date, if such an event were to occur and cause interruptions in our operations or the operations of third-party collaborators, service providers, contractors and consultants, it could result in a material disruption of our development programs and significant reputational, financial, legal, regulatory, business or operational harm. The costs to us to mitigate, investigate and respond to potential security incidents, breaches, disruptions, network security problems, bugs, viruses, worms, malicious software programs and security vulnerabilities could be significant, and while we have implemented security measures to protect our data security and information technology systems, our efforts to address these problems may not be successful, and these problems could result in unexpected interruptions, delays, cessation of service and other harm to our business and our competitive position.

For example, the loss of clinical trial data from completed, ongoing or planned clinical trials for our product candidates could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. To the extent that any real or perceived security breach affects our systems (or those of our third-party collaborators, service providers, contractors or consultants), or results in the loss of or accidental, unlawful or unauthorized access to, use of, release of, or other processing of personally identifiable information or damage to our data or applications or other data or applications relating to our technology or product candidates, or inappropriate disclosure of confidential or proprietary information, we could incur liabilities and the further development of our product candidates could be delayed. Such a breach may require notification to governmental agencies, the media or individuals pursuant to various foreign, domestic (federal and state) privacy and security laws, if applicable, including HIPAA, as amended by HITECH, and its implementing rules and regulations, as well as regulations promulgated by the Federal Trade Commission and state breach notification laws. In addition, our liability insurance may not be sufficient in type or amount to cover us against claims related to security breaches, cyberattacks and other related incidents.

Any failure or perceived failure by us or any third-party collaborators, service providers, contractors or consultants to comply with our privacy, confidentiality, data security or similar obligations, or any data security incidents or other security breaches that result in the accidental, unlawful or unauthorized access to, use of, release of, processing of, or transfer of sensitive information, including personally identifiable information, may result in negative publicity, harm to our reputation, governmental investigations, enforcement actions, regulatory fines, litigation or public statements against us, could cause third parties to lose trust in us or could result in claims by third parties, including those that assert that we have breached our privacy, confidentiality, data security or similar obligations, any of which could have a material adverse effect on our reputation, business, financial condition or results of operations. To the extent we maintain individually identifiable health information, we could be subject to fines and penalties (including civil and criminal) under HIPAA for any failure by us or our business associates to comply with HIPAA’s requirements. Moreover, data security incidents and other security breaches can be difficult to detect, and any delay in identifying them may lead to increased harm. While we have implemented data security measures intended to protect our information, data, information technology systems, applications and infrastructure, there can be no assurance that such measures will successfully prevent service interruptions or data security incidents.

European data collection is governed by restrictive regulations governing the collection, use, processing and cross-border transfer of personal information.

We may collect, process, use or transfer personal information from individuals located in the European Economic Area in connection with our business, including in connection with conducting clinical trials in the European Economic Area (the “EEA”). Additionally, if any of our product candidates are approved, we may seek to commercialize those products in the European Economic Area. The collection and use of personal health data in the European Economic Area is governed by the provisions of the General Data Protection Regulation ((EU) 2016/679) (the “GDPR”), along with other European Union and country-specific laws and regulations. The United Kingdom and Switzerland have also adopted data protection laws and regulations. These legislative acts (together with regulations and guidelines) impose requirements relating to having legal bases for processing personal data relating to identifiable individuals and transferring such data outside of the European Economic Area, including to the United States, providing details to those individuals regarding the processing of their personal data, keeping personal data secure, having data processing agreements with third parties who process personal data, responding to individuals’ requests to exercise their rights in respect of their personal data, reporting security breaches involving personal data to the competent national data protection authority and affected individuals, appointing data protection officers or corporate representatives, conducting data protection impact assessments and record-keeping. The GDPR imposes additional responsibilities and liabilities in relation to personal data that we process and we may be required to put in place additional mechanisms ensuring compliance with the new data protection rules. Failure to comply with the requirements of the GDPR and related national data protection laws of the member states of the European Economic Area and other states in the European Economic Area may result in substantial fines, other administrative penalties and civil claims being brought against us, which could have a material adverse effect on our business, financial condition and results of operations. European data protection authorities may interpret the GDPR and national laws differently and may impose additional requirements, which adds to the complexity of processing personal data in or from the EEA or United Kingdom. Guidance on implementation and compliance practices are often updated or otherwise revised.

Our insurance policies are expensive and only protect us from some business risks, leaving us exposed to significant uninsured liabilities.

We do not carry insurance for all categories of risk that our business may encounter. We believe that we maintain insurance customary for businesses of our size and type, including clinical trial liability insurance.

However, there are types of losses we may incur that cannot be insured against or that we believe are not economically reasonable to insure. Moreover, any loss incurred could exceed policy limits and policy payments made to us may not be made on a timely basis. Such losses could adversely affect our business prospects, results of operations, cash flows and financial condition. We do not know if our current levels of coverage are adequate or if we will be able to obtain insurance with adequate levels of coverage in the future, if at all. Any significant uninsured liability may require us to pay substantial amounts, which could materially and adversely affect our financial position and results of operations.

Disputes under key agreements or conflicts of interest with our scientific advisors or clinical investigators could delay or prevent development or commercialization of our product candidates.

Any agreements we have or may enter into with third parties, such as collaboration, license, formulation supplier, manufacturing, clinical research organization or clinical trial agreements, may give rise to disputes regarding the rights and obligations of the parties. Disagreements could develop over contract interpretation, rights to ownership or use of intellectual property, the scope and direction of research and development, the approach for regulatory approvals or commercialization strategy. We intend to conduct research programs in a range of therapeutic areas, but our pursuit of these opportunities could result in conflicts with the other parties to these agreements that may be developing or selling pharmaceuticals or conducting other activities in these same therapeutic areas. Any disputes or commercial conflicts could lead to the termination of our agreements, delay progress of our product development programs, compromise our ability to renew agreements or obtain future agreements, lead to the loss of intellectual property rights, result in increased financial obligations for us or result in costly litigation.

We work with outside scientific advisors and collaborators at academic and other institutions that assist us in our research and development efforts. Our scientific advisors are not our employees and may have other commitments that limit their availability to us. If a conflict of interest between their work for us and their work for another entity arises, we may lose their services.

If the market opportunities for any product that we or our strategic collaborators develop are smaller than we believe they are, our revenue may be adversely affected and our business may suffer.

We intend to initially focus our product candidate development on therapies for the treatment of liver and cardio-metabolic diseases. Our projections of addressable patient populations that have the potential to benefit from treatment with our product candidates are based on estimates. These estimates have been derived from a variety of sources, including the scientific literature, surveys of clinics, patient foundations or market research, and may prove to be incorrect. Further, new studies may change the estimated incidence or prevalence of these diseases. The number of patients may turn out to be lower than expected. Additionally, the potentially addressable patient population for our product candidates may not ultimately be amenable to treatment with our product candidates. Our market opportunity may also be limited by future competitor treatments that enter the market. If any of our estimates are inaccurate, the market opportunities for any of our product candidates could be significantly diminished and have an adverse material impact on our business.

Monitoring safety of patients receiving our product candidates is challenging, which could adversely affect our ability to obtain regulatory approval and commercialize.

For our ongoing clinical trial and planned clinical trials, we have and expect to contract with CROs and clinical trial sites experienced in the assessment and management of toxicities arising during clinical trials.

Nonetheless, these CROs and clinical trial sites may have difficulty observing patients and treating toxicities, which may be more challenging due to personnel changes, inexperience, shift changes, house staff coverage or related issues. This could lead to more severe or prolonged toxicities or even patient deaths, which could result in us or the FDA delaying, suspending or terminating one or more of our clinical trials, and which could jeopardize regulatory approval. We also expect the health care centers using our product candidates, if approved, on a commercial basis could similarly have difficulty in managing adverse events. Medicines used at these centers to help manage adverse side effects of our product candidates may not adequately control the side effects and/or may have a detrimental impact on the efficacy of the treatment. Use of these medicines may increase with new physicians and health care centers administering our product candidates.

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, various economic and trade sanctions regulations administered by the U.S. Treasury Department’s Office of Foreign Assets Controls, the U.S. Foreign Corrupt Practices Act of 1977, as amended, 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. Anti-corruption laws are interpreted broadly and prohibit companies and their employees, agents, contractors, and other collaborators from authorizing, promising, offering, or providing, directly or indirectly, improper payments or anything else of value to recipients in the public or private sector. We may engage third parties to sell our products sell our products outside the United States, to conduct clinical trials, and/or to obtain necessary permits, licenses, patent registrations, and other regulatory approvals. We have direct or indirect interactions with officials and employees of government agencies or government-affiliated hospitals, universities, and other organizations. We can be held liable for the corrupt or other illegal activities of our employees, agents, contractors, and other collaborators, 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 criminal fines and penalties, imprisonment, the loss of export or import privileges, debarment, tax reassessments, breach of contract and fraud litigation, reputational harm, and other consequences.

Changes in our effective income tax rate could adversely affect our results of operations.

As an international company, we are subject to taxation in numerous countries, states and other jurisdictions. Our effective tax rate is derived from a combination of statutory tax rates in the various jurisdictions in which we operate. In preparing our financial statements, our effective tax rate is based on estimates of the amount of tax that will become payable in each of these jurisdictions. Our effective tax rate may, however, differ from estimates due to numerous factors, including a change in the mix of our profitability from country to country and changes in tax laws. The fluctuations in our effective tax rate could have an adverse effect on our business, financial condition and results of operations and cash flows.

Risks Related to Regulatory Approvals

BIO89-100 has not received regulatory approval. If we are unable to obtain regulatory approvals to market BIO89-100 or any future product candidates, our business will be adversely affected.

We do not expect BIO89-100 or any future product candidate to be commercially available for several years, if at all. BIO89-100 is and any future product candidate will be subject to strict regulation by regulatory authorities in the United States and in other countries. We cannot market any product candidate until we have completed all necessary preclinical studies and clinical trials and have obtained the necessary regulatory approvals. We do not know whether regulatory agencies will grant approval for BIO89-100 or any future product candidate. Even if we complete preclinical studies and clinical trials successfully, we may not be able to obtain regulatory approvals or we may not receive approvals to make claims about our products that we believe to be necessary to effectively market our products. Data obtained from preclinical studies and clinical trials is subject to varying interpretations that could delay, limit or prevent regulatory approval, and failure to comply with regulatory requirements or inadequate manufacturing processes are examples of other problems that could prevent approval. The regulatory authorities in the United States and the EU have not approved any products for the treatment of NASH, and while there are recent guidelines issued by the FDA for the development of drugs for the treatment of NASH and a FDA surrogate endpoint table for drug approval that includes SHTG, it is unclear whether the requirements for approval will change in the future. Any such changes may require us to conduct new trials that could delay our timeframe and increase the costs of our programs related to BIO89-100 or any future product candidate for the treatment of NASH or SHTG. While the FDA has approved reduction in triglycerides levels as a surrogate endpoint for the full approval of drugs for the treatment of SHTG, it is unclear whether this endpoint will apply to any product candidates that we develop. If such endpoint is not deemed to apply to our product candidates, it would delay our development timeline and increase the costs of our programs for the treatment of SHTG. We have not had any discussions with the FDA regarding a surrogate endpoint or accelerated approval regulations. However, we currently expect that our SHTG program would be subject to smaller clinical trials and that we may expect a relatively quick overall development timeline for this indication. These expectations are based on a published FDA surrogate endpoint table for drug approval that includes SHTG, as well as the development path followed by other companies that developed an SHTG therapy.

However, we do not have a Special Protocol Assessment or other agreement with the FDA on the required clinical trials needed to support an application for approval of BIO89-100 in SHTG, and the overall clinical requirements and development timeline may be greater than expected. In addition, we may encounter delays or rejections due to additional government regulation from future legislation, administrative action or changes in the policies of the FDA or comparable foreign regulatory authorities. Even if the FDA or a comparable foreign regulatory authority approves a product, the approval will be limited to those indications covered in the approval.

Even if we are able to obtain regulatory approvals for BIO89-100 or any future product candidate, if they exhibit harmful side effects after approval, our regulatory approvals could be revoked or otherwise negatively impacted, and we could be subject to costly and damaging product liability claims.

Even if we receive regulatory approval for BIO89-100 or any future product candidates, we will have tested them in only a small number of patients during our clinical trials. If our applications for marketing are approved and more patients begin to use our product, new risks and side effects associated with our products may be discovered. As a result, regulatory authorities may revoke their approvals. We have not had any discussions with the FDA regarding a surrogate endpoint or accelerated approval regulations. However, based on recent guidelines issued by the FDA for the development of drugs for the treatment of NASH, if BIO89-100 is approved by the FDA based on a surrogate endpoint pursuant to section 506(c) of the Federal Food, Drug, and Cosmetic Act and the accelerated approval regulations (21 C.F.R. part 314, subpart H; 21 C.F.R. part 601, subpart E), consistent with FDA guidance, we will be required to conduct additional clinical trials establishing clinical benefit on the ultimate outcome of NASH. If BIO89-100 is approved by the FDA for the treatment of SHTG based on an endpoint of the reduction of triglycerides, the FDA may still require a cardiovascular outcomes study as part of a post-marketing authorization commitment. Such a study would be time consuming and costly and we cannot guarantee that we will see positive results, which could result in the revocation of the approval. Additionally, we may be required to conduct additional clinical trials, make changes in labeling of our product, reformulate our product or make changes and obtain new approvals for our and our suppliers’ manufacturing facilities for BIO89-100 and any future product candidates. We might have to withdraw or recall our products from the marketplace. We may also experience a significant drop in the potential sales of our product if and when regulatory approvals for such product are revoked. As a result, we may experience harm to our reputation in the marketplace or become subject to lawsuits, including class actions. Any of these results could decrease or prevent any sales of our approved product or substantially increase the costs and expenses of commercializing and marketing our product.

The regulatory approval processes of the FDA and comparable foreign regulatory authorities are lengthy, time-consuming and inherently unpredictable. Our inability to obtain regulatory approval for BIO89-100 or any future product candidates would substantially harm our business.

Currently, we do not have any product candidates that have received regulatory approval. The time required to obtain approval from the FDA and comparable foreign regulatory authorities is unpredictable but typically takes many years following the commencement of preclinical studies and clinical trials and depends upon numerous factors, including the substantial discretion of the regulatory authorities. In addition, approval policies, regulations or the type and amount of clinical data necessary to gain approval may change during the course of a product candidate’s development and may vary among jurisdictions. It is possible that none of BIO89-100 or any future product candidates will ever obtain regulatory approval.

BIO89-100 or any future product candidate could fail to receive regulatory approval from the FDA or comparable foreign regulatory authorities for many reasons, including:

disagreement with the design or implementation of our clinical trials;

failure to demonstrate that a product candidate is safe and effective for its proposed indication;

failure of clinical trials to meet the level of statistical significance required for approval;

failure to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks;

disagreement with our interpretation of data from preclinical studies or clinical trials;

the insufficiency of data collected from clinical trials of a product candidate to support the submission and filing of a BLA or other submission or to obtain regulatory approval;

failure to obtain approval of the manufacturing processes or facilities of third-party manufacturers with whom we contract for clinical and commercial supplies; or

changes in the approval policies or regulations that render our preclinical and clinical data insufficient for approval.

The FDA or comparable foreign regulatory authorities may require more information, including additional preclinical or clinical data to support approval, which may delay or prevent approval and our commercialization plans, or we may decide to abandon the development program for other reasons. If we were to obtain approval, regulatory authorities may approve any of our product candidates for fewer or more limited indications than we request, may grant approval contingent on the performance of costly post-marketing clinical trials or may approve a product candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that product candidate.

Our failure to obtain regulatory approval in international jurisdictions would prevent us from marketing our product candidates outside the United States.

If we succeed in developing any products, we intend to market them in foreign jurisdictions in addition to the United States. In order to market and sell our products in other jurisdictions, we must obtain separate marketing approvals and comply with numerous and varying regulatory requirements. We may not obtain foreign regulatory approvals on a timely basis, if at all. Approval by the FDA does not ensure approval by regulatory authorities in other countries or jurisdictions. 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. If we fail to obtain approval of any of our product candidates by regulatory authorities in another country we will be unable to commercialize our product in that country, and the commercial prospects of that product candidate and our business prospects could decline. The approval procedure varies among countries and can involve additional testing. 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, we must secure product reimbursement approvals before regulatory authorities will approve the product for sale in that country.

Obtaining foreign regulatory approvals and compliance with foreign regulatory requirements could result in significant delays, difficulties and costs for us and could delay or prevent the introduction of our products in certain countries. Further, clinical trials conducted in one country may not be accepted by regulatory authorities in other countries and regulatory approval in one country does not ensure approval in any other country, while a failure or delay in obtaining regulatory approval in one country may have a negative effect on the regulatory approval process in others. Also, regulatory approval for any of our product candidates may be withdrawn if we fail to comply with regulatory requirements, if problems occur after the product candidate reaches the market or for other reasons. If we fail to comply with the regulatory requirements in international markets and fail to receive applicable marketing approvals, our target market will be reduced and our ability to realize the full market potential of our product candidates will be harmed and our business will be adversely affected.

Even if BIO89-100 or any future product candidate receives regulatory approval, it may still face future development and regulatory difficulties.

Even if we obtained regulatory approval for a product candidate, it would be subject to ongoing requirements by the FDA and comparable foreign regulatory authorities governing the manufacture, quality control, further development, labeling, packaging, storage, distribution, safety surveillance, import, export, advertising, promotion, recordkeeping and reporting of safety and other post-market information. The FDA and comparable foreign regulatory authorities will continue to closely monitor the safety profile of any product even after approval. If the FDA, or comparable foreign regulatory authorities, become aware of new safety information after approval of any of our product candidates, it may require labeling changes or establishment of a risk evaluation and mitigation strategy or similar strategy, impose significant restrictions on a product’s indicated uses or marketing or impose ongoing requirements for potentially costly post-approval studies or post-market surveillance.

In addition, manufacturers of drug products and their facilities are subject to continual review and periodic inspections by the FDA and other regulatory authorities for compliance with cGMP, regulations and standards. If we or a regulatory agency discover previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured, a regulatory agency may impose restrictions on that product, the manufacturing facility or us, including requiring recall or withdrawal of the product from the market or suspension of manufacturing. If we, our product candidates or the manufacturing facilities for our product candidates fail to comply with applicable regulatory requirements, or undesirable side effects caused by such products are identified, a regulatory agency may:

issue safety alerts, Dear Healthcare Provider letters, press releases or other communications containing warnings about such product;

mandate modifications to promotional materials or require us to provide corrective information to healthcare practitioners;

require that we conduct post-marketing studies;

require us to enter into a consent decree, which can include imposition of various fines, reimbursements for inspection costs, required due dates for specific actions and penalties for noncompliance;

seek an injunction or impose civil or criminal penalties or monetary fines;

suspend marketing of, withdraw regulatory approval of or recall such product;

suspend any ongoing clinical studies;

refuse to approve pending applications or supplements to applications filed by us;

suspend or impose restrictions on operations, including costly new manufacturing requirements; or

seize or detain products, refuse to permit the import or export of products or require us to initiate a product recall.

The occurrence of any event or penalty described above may inhibit our ability to commercialize our products and generate product revenue.

Advertising and promotion of any product candidate that obtains approval in the United States will be heavily scrutinized by the FDA, the Department of Justice, the Department of Health and Human Services’ Office of Inspector General, state attorneys general, members of Congress and the public. Violations, including promotion of our products for unapproved (or off-label) uses, are subject to enforcement letters, inquiries and investigations, and significant civil and criminal sanctions by the government. In the United States, engaging in the impermissible promotion of our products for off-label uses can also subject us to false claims litigation under federal and state statutes, which can lead to significant civil and criminal penalties. Additionally, comparable foreign regulatory authorities will heavily scrutinize advertising and promotion of any product candidate that obtains approval outside of the United States.

The FDA’s 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.

Risks Relating to Intellectual Property

Our success depends upon our ability to obtain and maintain intellectual property protection for our products and technologies.

Our success will depend in significant part on our current or future licensors’, licensees’ or collaborators’ ability to establish and maintain adequate protection of our owned and licensed intellectual property covering the product candidates we plan to develop, and the ability to develop these product candidates and commercialize the products resulting therefrom, without infringing the intellectual property rights of others. In addition to taking other steps to protect our intellectual property, we hold issued patents, we have applied for patents, and we intend to continue to apply for, patents with claims covering our technologies, processes and product candidates when and where we deem it appropriate to do so. We have filed numerous patent applications both in the United States and in certain foreign jurisdictions to obtain patent rights to inventions we have discovered, with claims directed to compositions of matter, methods of use and other technologies relating to our programs. There can be no assurance that any of these patent applications will issue as patents or, for those applications that do mature into patents, that the claims of the patents will exclude others from making, using or selling our product candidates or products that compete with or are similar to our product candidates. In countries where we have not sought and do not seek patent protection, third parties may be able to manufacture and sell our product candidates without our permission, and we may not be able to stop them from doing so.

With respect to patent rights, we do not know whether any of the pending patent applications for any of our product candidates will result in the issuance of patents that effectively protect our technologies, processes and product candidates, or if any of our issued patents or our current or future licensors’, licensees’ or collaborators’ issued patents will effectively prevent others from commercializing competitive technologies, processes and products. 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, until they are issued as a patent. Therefore, we cannot be certain that we or our current or future licensors, licensees or collaborators were the first to make the inventions claimed in our owned or licensed patents or pending patent applications, or that we or our current or future licensors, licensees or collaborators were the first to file for patent protection of such inventions.

Any changes we make to our BIO89-100 or any future product candidates to cause them to have what we view as more advantageous properties may not be covered by our existing patents and patent applications, and we may be required to file new applications and/or seek other forms of protection for any such altered product candidates. The patent landscape surrounding the technology underlying our product candidates is crowded, and there can be no assurance that we would be able to secure patent protection that would adequately cover an alternative to BIO89-100 or any future product candidates.

The patent prosecution process is expensive and time-consuming, and we and our current or future licensors, licensees or collaborators may not be able to prepare, file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. It is also possible that we or our current or future licensors, licensees or collaborators will fail to identify patentable aspects of inventions made in the course of development and commercialization activities before it is too late to obtain patent protection for them. Moreover, in some circumstances, we may not have the right to control the preparation, filing and prosecution of patent applications, or to maintain or enforce the patents, covering technology that we license from or license to third parties and may be reliant on our current or future licensors, licensees or collaborators to perform these activities, which means that these patent applications may not be prosecuted, and these patents enforced, in a manner consistent with the best interests of our business. If our current or future licensors, licensees or collaborators fail to establish, maintain, protect or enforce such patents and other intellectual property rights, such rights may be reduced or eliminated. If our current or future licensors, licensees or collaborators are not fully cooperative or disagree with us as to the prosecution, maintenance or enforcement of any patent rights, such patent rights could be compromised.

Similar to the patent rights of other biotechnology companies, the scope, validity and enforceability of our owned and licensed patent rights generally are highly uncertain and involve complex legal and factual questions. The issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and our patents may be challenged in the courts or patent offices in the United States and abroad. In recent years, these areas have been the subject of much litigation in the industry. As a result, the issuance, scope, validity, enforceability and commercial value of our and our current or future licensors’, licensees’ or collaborators’ patent rights are highly uncertain. Our and our current or future licensors’, licensees’ or collaborators’ pending and future patent applications may not result in patents being issued that protect our technology or product candidates, or products resulting therefrom, in whole or in part, or that effectively prevent others from commercializing competitive technologies and products. The patent examination process may require us or our current or future licensors, licensees or collaborators to narrow the scope of the claims of pending and future patent applications, which would limit the scope of patent protection that is obtained, if any. Our and our current or future licensors’, licensees’ or collaborators’ patent applications cannot be enforced against third parties practicing the technology that is currently claimed in such applications unless and until a patent issues from such applications, and then only to the extent the claims that issue are broad enough to cover the technology being practiced by those third parties.

Furthermore, 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 the resulting products are commercialized. As a result, our owned and in-licensed patents may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours. We expect to seek extensions of patent terms for our issued patents, where available. This includes in the United States under the Hatch-Waxman Act, which permits a patent term extension of up to five years beyond the original expiration date of the patent as compensation for regulatory delays. However, such a patent term extension cannot lengthen the remaining term of a patent beyond a total of 14 years from the product’s approval date. Only one patent applicable to an approved drug is eligible for the extension and the application for the extension must be submitted prior to the expiration of the patent. During the period of patent term extension, the claims of a patent are not enforceable for their full scope, but are instead limited to the scope of the approved product. In addition, the applicable authorities, including the FDA in the United States, and any comparable foreign regulatory authorities, may not agree with our assessment of whether such extensions are available, and may refuse to grant extensions to our patents, or may grant more limited extensions than we request. In addition, we may not be granted an extension because of, for example, failing to apply within applicable deadlines, failing to apply prior to the expiration of relevant patents or otherwise failing to satisfy applicable requirements. If this occurs, any period during which we have the right to exclusively market our product will be shorter than we would otherwise expect, and our competitors may obtain approval of and launch products earlier than might otherwise be the case.

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

The legal protection afforded to inventors and owners of intellectual property in countries outside of the United States may not be as protective or effective as that in the United States and we may, therefore, be unable to acquire and enforce intellectual property rights outside the United States to the same extent as in the United States. Whether filed in the United States or abroad, our patent applications may be challenged or may fail to result in issued patents.

In addition, our existing patents and any future patents we obtain may not be sufficiently broad to prevent others from practicing our technologies or from developing or commercializing competing products. Furthermore, others may independently develop or commercialize similar or alternative technologies or drugs, or design around our patents. Our patents may be challenged, invalidated, circumvented or narrowed, or fail to provide us with any competitive advantages. In many foreign countries, patent applications and/or issued patents, or parts thereof, must be translated into the native language. If our patent applications or issued patents are translated incorrectly, they may not adequately cover our technologies; in some countries, it may not be possible to rectify an incorrect translation, which may result in patent protection that does not adequately cover our technologies in those countries.

Filing, prosecuting, enforcing 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 are 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 certain state laws in the United States.

Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the United States, or from selling or importing products made using our inventions in and into the United States or other jurisdictions. Competitors may use technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export otherwise 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 BIO89-100 or any future product candidates 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 certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, particularly those relating to biopharmaceuticals. This could make it difficult for us to stop the infringement of our patents or the marketing of competing products in violation of our proprietary rights, generally. Proceedings to enforce our patent rights in foreign jurisdictions 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, could place our patent applications at risk of not issuing and could provoke third parties to assert claims against us or our collaborator. We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful.

The requirements for patentability differ and certain countries have heightened requirements for patentability, requiring more disclosure in the patent application. In addition, certain countries have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. In those countries, we may have limited remedies if patents are infringed or if we are compelled to grant a license to a third party, which could materially diminish the value of those patents. This could limit our potential revenue opportunities. In addition, many countries limit the enforceability of patents against government agencies or government contractors. In these countries, the patent owner may have limited remedies, which could materially diminish the value of such patent. Accordingly, our efforts to enforce intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we own or license.

We rely on a license from Teva and a sublicense from ratiopharm to patents and know-how related to glycoPEGylation technology that are used in the development, manufacture and commercialization of BIO89-100. Any termination or loss of significant rights, including the right to glycoPEGylation technology, or breach, under these agreements or any future license agreement related to our product candidates, would materially and adversely affect our ability to continue the development and commercialization of the related product candidates.

In April 2018, we entered into an Asset Transfer and License Agreement (the “FGF21 Agreement”) with Teva under which we acquired certain patents, intellectual property and other assets relating to Teva’s glycoPEGylated FGF21 program, including BIO89-100. Under this agreement, we were granted a perpetual, non-exclusive (but exclusive as to BIO89-100), non-transferable, worldwide license to patents and know-how related to glycoPEGylation technology used in the development, manufacture and commercialization of BIO89-100 and products containing BIO89-100. The FGF21 Agreement also contains numerous covenants with which we must comply, including the utilization of commercially reasonable efforts to develop and ultimately commercialize BIO89-100, as well as certain reporting covenants and the obligation to make royalty payments, if and when BIO89-100 is approved for commercialization. Our failure to satisfy any of these covenants could result in the termination of the FGF21 Agreement. In addition, we entered into a Sublicense Agreement with ratiopharm (the “ratiopharm Sublicense”), under which we were granted a perpetual, exclusive, worldwide sublicense to patents and know-how related to glycoPEGylation technology used in the development, manufacture and commercialization of BIO89-100 and products containing BIO89-100. Termination of the FGF21 Agreement or the ratiopharm Sublicense will impact our rights under the intellectual property licensed to us by Teva and ratiopharm, respectively, including our license to glycoPEGylation technology, but will not affect our rights under the assets assigned to us.

Beyond this agreement, our commercial success will also depend upon our ability, and the ability of our licensors, to develop, manufacture, market and sell our product candidates and use our proprietary technologies without infringing the proprietary rights of third parties. A third party may hold intellectual property rights, including patent rights, that are important or necessary to the development of our product candidates. As a result, we may enter into additional license agreements in the future. If we fail to comply with the obligations under these agreements, including payment and diligence obligations, our licensors may have the right to terminate these agreements, in which event we may not be able to develop, manufacture, market or sell any product that is covered by these agreements or to engage in any other activities necessary to our business that require the freedom to operate afforded by the agreements, or we may face other penalties under the agreements.

Any of the foregoing could materially and adversely affect the value of the product candidate being developed under any such agreement. Termination of these agreements or reduction or elimination of our rights under these agreements may result in our having to negotiate new or amended agreements, which may not be available to us on equally favorable terms, or at all, or cause us to lose our rights under these agreements, including our rights to intellectual property or technology important to our development programs.

Changes in patent law could diminish the value of patents in general, thereby impairing our ability to protect BIO89-100 and any future product candidates.

As is the case with other biotechnology and pharmaceutical companies, our success is heavily dependent on intellectual property rights, particularly patents. Obtaining and enforcing patents in the biopharmaceutical industry involves technological and legal complexity, and obtaining and enforcing biopharmaceutical patents is costly, time-consuming and inherently uncertain. The U.S. Supreme Court in recent years has issued rulings either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations or ruling that certain subject matter is not eligible for patent protection. In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained. Depending on decisions by Congress, the federal courts, the USPTO and equivalent bodies in foreign jurisdictions, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce existing patents and patents we may obtain in the future.

Patent reform laws, such as the Leahy-Smith America Invents Act (the “Leahy-Smith Act”), as well as changes in how patent laws are interpreted, could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents. The Leahy-Smith Act made a number of significant changes to U.S. patent law. These include provisions that affect the filing and prosecution strategies associated with patent applications, including a change from a “first-to-invent” to a “first-inventor-to-file” patent system, and a change allowing third-party submission of prior art to the USPTO during patent prosecution and additional procedures to attack the validity of a patent by USPTO-administered post-grant proceedings, including post-grant review, inter partes review and derivation proceedings. The USPTO has developed regulations and 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-inventor-to-file” provisions, became effective in 2013. The Leahy-Smith Act and its implementation may 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 adverse effect on our business, financial condition and results of operations.

We may be unable to obtain intellectual property rights or technology necessary to develop and commercialize BIO89-100 and any future product candidates.

The patent landscape around our programs is complex, and we are aware of several third-party patents and patent applications containing subject matter that might be relevant to BIO89-100. Depending on what claims ultimately issue from these patent applications, and how courts construe the issued patent claims, as well as depending on the ultimate formulation and method of use of BIO89-100 or any future product candidates, we may need to obtain a license to practice the technology claimed in such patents. There can be no assurance that such licenses will be available on commercially reasonable terms, or at all. If a third party does not offer us a necessary license or offers a license only on terms that are unattractive or unacceptable to us, we might be unable to develop and commercialize one or more of our product candidates, which would have a material adverse effect on our business, financial condition and results of operations. Moreover, even if we obtain licenses to such intellectual property, but subsequently fail to meet our obligations under the relevant license agreements, or such license agreements are terminated for any other reasons, we may lose our rights to the technologies licensed under those agreements.

The licensing or acquisition of third-party intellectual property rights is an area in which many companies operate that have interests that are in conflict with ours, and several more established companies may pursue strategies to license or acquire third-party intellectual property rights that we may consider attractive or necessary. These established companies may have a competitive advantage over us due to their size, capital resources and greater clinical development and commercialization capabilities. 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, or at all. If we are unable to successfully obtain rights to required third-party intellectual property rights or maintain the existing intellectual property rights we have, we may have to abandon development of the relevant program or product candidate, which could have a material adverse effect on our business, financial condition, results of operations and prospects.

We may become involved in lawsuits or other proceedings to protect or enforce our intellectual property, which could be expensive, time-consuming and unsuccessful and have a material adverse effect on the success of our business.

Third parties may infringe our patents or misappropriate or otherwise violate our intellectual property rights. In the future, we may initiate legal proceedings to enforce or defend our intellectual property rights, to protect our trade secrets or to determine the validity or scope of intellectual property rights we own or control. Also, third parties may initiate legal proceedings against us to challenge the validity or scope of intellectual property rights we own, control or to which we have rights. For example, generic or biosimilar drug manufacturers or other competitors or third parties may challenge the scope, validity or enforceability of our patents, requiring us to engage in complex, lengthy and costly litigation or other proceedings. These proceedings can be expensive and time-consuming and many of our adversaries in these proceedings may have the ability to dedicate substantially greater resources to prosecuting these legal actions than we can. Accordingly, despite our efforts, we may not be able to prevent third parties from infringing upon or misappropriating intellectual property rights we own, control or have rights to, particularly in countries where the laws may not protect those rights as fully as in the United States. Litigation could result in substantial costs and diversion of management resources, which could harm our business and financial results. In addition, if we initiated legal proceedings against a third party to enforce a patent covering a product candidate, the defendant could counterclaim that such patent is invalid or unenforceable. In patent litigation in the United States, defendants usually assert counterclaims alleging invalidity or unenforceability. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness or non-enablement. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information from the USPTO, or made a misleading statement, during prosecution. In an infringement or declaratory judgment proceeding, a court may decide that a patent owned by or licensed to us is invalid or unenforceable, or may refuse to stop the other party from using the subject matter alleged to be infringing on the grounds that our patents do not cover that subject matter. An adverse result in any litigation proceeding could put one or more of our patents at risk of being invalidated, narrowed, held unenforceable or interpreted in such a manner that would not preclude third parties from entering the market with competing products.

Third-party pre-issuance submission of prior art to the USPTO, or opposition, derivation, revocation, reexamination, inter partes review or interference proceedings, or other pre-issuance or post-grant proceedings or other patent office proceedings or litigation in the United States or other jurisdictions provoked by third parties or brought by us, may be necessary to determine the inventorship, priority, patentability or validity of inventions with respect to our patents or patent applications. An unfavorable outcome could leave our technology or product candidates without patent protection, allow third parties to commercialize our technology or product candidates and compete directly with us, without payment to us, or could require us to obtain license rights from the prevailing party in order to be able to manufacture or commercialize our product candidates without infringing third-party patent rights. Our business could be harmed if the prevailing party in such a case does not offer us a license on commercially reasonable terms, or at all. Even if we obtain a license, it may be non-exclusive, thereby giving our competitors access to the same technologies licensed to us. In addition, if the breadth or strength of protection provided by our patents and patent applications is threatened, it could dissuade companies from collaborating with us to license, develop or commercialize current or future product candidates. Even if we successfully defend such litigation or proceeding, we may incur substantial costs and our defense may distract our management and other employees.

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 during this type of litigation. In addition, many foreign jurisdictions have rules of discovery that are different than those in the United States and that may make defending or enforcing our patents extremely difficult. There could also be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of shares of our common stock.

Third parties may initiate legal proceedings against us alleging that we infringe their intellectual property rights or we may initiate legal proceedings against third parties to challenge the validity or scope of intellectual property rights controlled by third parties, the outcome of which would be uncertain and could have a material adverse effect on our business.

Our commercial success depends upon our ability to develop, manufacture, market and sell BIO89-100 and any future product candidates that we may develop and use our proprietary technologies without infringing, misappropriating or otherwise violating the intellectual property and proprietary rights of third parties. The biotechnology and pharmaceutical industries are characterized by extensive litigation regarding patents and other intellectual property rights. Third parties may initiate legal proceedings against us alleging that we infringe their intellectual property rights or we may initiate legal proceedings against third parties to challenge the validity or scope of intellectual property rights controlled by third parties, including in oppositions, interferences, revocations, reexaminations, inter partes review or derivation proceedings before the USPTO or its counterparts in other jurisdictions. These proceedings can be expensive and time-consuming and many of our adversaries in these proceedings may have the ability to dedicate substantially greater resources to prosecuting these legal actions than we can.

We could be found liable for monetary damages, including treble damages and attorneys’ fees, if we are found to have willfully infringed a patent of a third party. A finding of infringement could prevent us from commercializing our BIO89-100 or any future product candidates or force us to cease some of our business operations, which could materially harm our business.

We may not be aware of all third-party intellectual property rights potentially relating to BIO89-100 or any future product candidates and technologies. We are not aware of any facts that would lead us to conclude that the valid and enforceable claims of any third-party patents would reasonably be interpreted to cover our product candidates. As to pending third-party applications, we cannot predict with any certainty which claims will issue, if any, or the scope of such issued claims. Even if we believe third-party intellectual property claims are without merit, there is no assurance that a court would find in our favor on questions of infringement, validity, enforceability or priority. A court of competent jurisdiction could hold that these third-party patents are valid, enforceable and infringed, which could materially and adversely affect our ability to commercialize any product candidates we may develop and any other product candidates or technologies covered by the asserted third-party patents. In order to successfully challenge the validity of any such U.S. patent in federal court, we would need to overcome a presumption of validity. As this burden is a high one requiring us to present clear and convincing evidence as to the invalidity of any such U.S. patent claim, there is no assurance that a court of competent jurisdiction would invalidate the claims of any such U.S. patent. If any such third-party patents (including those that may issue from such applications) were successfully asserted against us or other commercialization partners and we were unable to successfully challenge the validity or enforceability of any such asserted patents, then we and other commercialization partners may be prevented from commercializing our product candidates, or may be required to pay significant damages, including treble damages and attorneys’ fees if we are found to willfully infringe the asserted patents, or obtain a license to such patents, which may not be available 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 and other third parties access to the same technologies licensed to us, and it could require us to make substantial licensing and royalty payments. Any of the foregoing would have a material adverse effect on our business, financial condition and operating results.

Although we have reviewed certain third-party patents and patent filings that we believe may be relevant to our therapeutic candidates or products, we have not conducted a freedom-to-operate search or analysis for any of our therapeutic candidates or products, and we may not be aware of patents or pending or future patent applications that, if issued, would block us from commercializing our therapeutic candidates or products. Thus, we cannot guarantee that our therapeutic candidates or products, or our commercialization thereof, do not and will not infringe any third party’s intellectual property.

We may be subject to claims by third parties asserting misappropriation of intellectual property, or claiming ownership of what we regard as our own intellectual property.

Although we seek to ensure that our employees do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or these employees have used or disclosed confidential information or intellectual property, including trade secrets or other proprietary information, of any such employee’s former employer, or that third parties have an interest in our patents as an inventor or co-inventor. Litigation may be necessary to defend against these claims. If we fail in prosecuting or defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or the services of personnel or sustain other damages. Such intellectual property rights could be awarded to a third party, and we could be required to obtain a license from such third party to commercialize our technology or products. Such a license may not be available on commercially reasonable terms, or at all. Even if we successfully prosecute or defend against such claims, litigation could result in substantial costs and distract management.

In addition, while it is our policy to require our employees and contractors who may be involved in the conception or development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who, in fact, conceives or develops intellectual property that we regard as our own. The assignment of intellectual property rights may not be self-executing, or the assignment agreements may be breached, and we may be forced to bring claims against third parties, or defend claims that they may bring against us, to determine the ownership of what we regard as our intellectual property. Such claims could have a material adverse effect on our business, financial condition, results of operations and prospects.

Our inability to protect our confidential information and trade secrets would harm our business and competitive position.

In addition to seeking patents for some of our technology and product candidates, we also rely substantially on trade secrets, including unpatented know-how, technology and other proprietary materials and 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 also enter into confidentiality and invention or patent assignment agreements with our employees and consultants. However, these steps may be inadequate, we may fail to enter into agreements with all such parties or any of these parties may breach the agreements and disclose our trade secrets and there may be no adequate remedy available for such breach of an agreement. We cannot assure you that our trade secrets will not be disclosed or that we can meaningfully protect our trade secrets. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time consuming, and the outcome is unpredictable. In addition, some courts both within and outside the United States may be less willing, or unwilling, to protect trade secrets. If a competitor lawfully obtained or independently developed any technology or information that we protect as trade secret, we would have no right to prevent such competitor from using that technology or information to compete with us, which could harm our competitive position.

Intellectual property rights do not necessarily address all potential threats.

The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations and may not adequately protect our business or permit us to maintain our competitive advantage. For example:

others may be able to make products that are similar to BIO89-100 and any future product candidates we may develop or utilize similar technology but that are not covered by the claims of the patents that we exclusively license or may own in the future;

we, or our future collaborators, might not have been the first to make the inventions covered by the issued patents and pending patent applications that we exclusively license or may own in the future;

we, or our future collaborators, might not have been the first to file patent applications covering certain of our or their inventions;

others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our owned or exclusively licensed intellectual property rights;

it is possible that our pending patent applications or those that we may file in the future will not result in issued patents;

issued patents that we hold rights to may be held invalid or unenforceable, including as a result of legal challenges by our competitors;

our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in major commercial markets in which we do not have sufficient patent rights to stop such sales;

we may not develop additional proprietary technologies that are patentable;

the patents of others may be asserted against our product candidates and technologies in a manner that harms our business; and

we may choose not to file a patent application in order to maintain certain trade secrets or know-how, and a third party may subsequently file a patent covering such trade secrets or know-how.

Should any of these events occur, they could have a material adverse effect on our business, financial condition, results of operations and prospects.

If our trademarks and trade names are not maintained and adequately protected, we may not be able to build name recognition in our markets of interest, and our business may be adversely affected.

Failure to obtain trademark registrations in the future, could limit our ability to protect and enforce our trademarks and impede our marketing efforts in the countries in which we operate. We may not be able to protect our rights to trademarks and trade names which we may need to build name recognition with potential partners or customers in our markets of interest. As a means to enforce any future trademark rights and prevent infringement, we may be required to file trademark claims against third parties or initiate trademark opposition proceedings. This can be expensive, and strain the financial resources of a company of our size, and time-consuming, and we may not be successful in enforcing our trademark rights. In addition, our registered or unregistered trademarks or trade names may be challenged, infringed, circumvented, declared generic or determined to be infringing on other marks.

Future trademark applications in the United States and in other foreign jurisdictions where we may file may not be allowed or may subsequently be opposed. Even if these applications result in registration of trademarks, third parties may challenge our use or registration of these trademarks in the future. Over the long term, if we are unable to establish name recognition based on our trademarks and trade names, then we may not be able to compete effectively and our business may be adversely affected.

Risks Related to Ownership of Our Common Stock

The price of our common stock may be volatile, and you may lose all or part of your investment.

The market price of our common stock could fluctuate significantly, and you may not be able to resell your shares at or above the price you paid for your shares. Those fluctuations could be based on various factors in addition to those otherwise described in this prospectus, including those described in these “Risk Factors.” Any of these factors may result in large and sudden changes in the volume and trading price of our common stock. In the past, following periods of volatility in the market price of a company’s securities, stockholders have often instituted securities class action litigation against that company. If we were involved in a class action suit, it could divert the attention of management, result in negative press reports and, if adversely determined, have a material adverse effect on our results of operations and financial condition.

In addition, the stock market, in general, and the stocks of many small healthcare and 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. Broad market and industry factors may negatively affect the market price of our common stock, regardless of our actual operating performance. Further, a decline in the broader financial markets and related factors beyond our control may cause the price of our common stock to decline rapidly and unexpectedly.

Sales of our common stock, or the perception that such sales may occur, could depress the price of our common stock.

Sales of a substantial number of shares of our common stock in the public market, or the perception that such sales may occur, could depress the market price of our common stock. Holders of an aggregate of ~~7,077,366~~6,802,366 shares of our common stock have rights, subject to certain conditions, to require us to file registration statements covering their shares or to include their shares in registration statements that we may file for ourselves or other stockholders. In addition, we have filed a registration statement registering under the Securities Act the shares of our common stock reserved for issuance under our 2019 Equity Incentive Plan, including shares issuable upon exercise of outstanding options. These shares can be freely sold in the public market upon issuance, subject to volume limitations applicable to affiliates. Further, as opportunities present themselves, we may enter into financing or similar arrangements in the future, including the issuance of debt or equity securities. If we issue common stock or securities convertible into our common stock, our common stockholders would experience additional dilution and, as a result, the price of our common stock may decline.

Raising additional capital may cause dilution to existing stockholders, restrict our operations or require us to relinquish rights to our technologies.

Existing stockholders could suffer dilution or be negatively affected by fixed payment obligations we may incur if we raise additional funds through the issuance of additional equity securities or debt or the Loan Agreement. Furthermore, these securities may have rights senior to those of our common stock and could contain covenants or protective rights that would restrict our operations and potentially impair our competitiveness, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. If we need to secure additional financing, such additional fundraising efforts may divert our management and research efforts from our day-to-day activities, which may adversely affect our ability to develop and commercialize BIO89-100 and any future product candidates.

To the extent we obtain additional funding through product collaborations, these arrangements would generally require us to relinquish rights to some of our technologies, product candidates or products, and we may not be able to enter into such agreements, on acceptable terms, if at all. If we are unable to obtain additional funding on a timely basis, we may be required to curtail or terminate some or all of our development programs or product candidates.

Our directors, executive officers and current holders of 5% or more of our capital stock have substantial control over our company, which could limit your ability to influence the outcome of matters subject to stockholder approval, including a change of control.

As of ~~June~~September 30, 2020, our executive officers, directors and other holders of 5% or more of our common stock beneficially owned a majority of our outstanding common stock. As a result, our executive officers, directors and other holders of 5% or more of our common stock, if they act, will be able to influence or control matters requiring approval by our stockholders, including the election of directors and the approval of mergers, acquisitions or other extraordinary transactions. In addition, our current directors, executive officers and other holders of 5% or more of our common stock, acting together, would have the ability to control the management and affairs of our company. They may also have interests that differ from yours and may vote in a way with which you disagree and that may be adverse to your interests. This concentration of ownership may have the effect of delaying, preventing or deterring a change of control of our company, could deprive our stockholders of an opportunity to receive a premium for their shares of our common stock as part of a sale of our company and could affect the market price of our common stock.

If securities or industry analysts do not publish research, or publish inaccurate or unfavorable research, about our stock or business, the price of our common stock 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 stock or publish inaccurate or unfavorable research about our business, demand for our common stock could decrease and the price of our common stock could decline. In addition, if our operating results fail to meet the forecast of analysts, the price of our common stock would likely decline. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, demand for our stock could decrease, which might cause the price of our common stock and trading volume to decline.

We have identified material weaknesses in our internal control over financial reporting. If our remediation of the material weaknesses is not effective, or if we experience additional material weaknesses or otherwise fail to maintain an effective system of internal controls in the future, we may not be able to produce timely and accurate financial statements, and we or our independent registered public accounting firm may conclude that our internal control over financial reporting is not effective, which could adversely affect our investors’ confidence and our stock price.

Prior to our initial public offering in November 2019, we were a private company and were not required to test our internal controls on a systematic basis. As an emerging growth company under the JOBS Act, our management will be required to report upon the effectiveness of our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act beginning with our Annual Report on Form 10-K for the year ending December 31, 2020. Our independent registered public accounting firm is not required to formally attest to the effectiveness of our internal control over financial reporting until the date we are no longer an emerging growth company and reach accelerated filer status.

Effective internal controls over financial reporting are necessary for us to provide reliable financial information and, together with adequate disclosure controls and procedures, are designed to prevent fraud. Any failure to implement required new or improved controls, or difficulties encountered in their implementation, could cause us to fail to meet our reporting obligations. In addition, any testing by us conducted in connection with Section 404, or any subsequent testing by our independent registered public accounting firm, may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses or that may require prospective or retroactive changes to our consolidated financial statements or identify other areas for further attention or improvement. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis.

In connection with our financial statement close process for 2018, we identified material weaknesses in the design and operating effectiveness of our internal control over financial reporting.

These material weaknesses related to the following:

We did not have an internal finance department. Consequently, we lacked sufficient personnel with an appropriate level of knowledge and requisite U.S. generally accepted accounting principles expertise to identify, evaluate and account for complex and non-routine transaction and an adequate supervisory review structure that is needed to comply with financial reporting requirements.

We did not have an adequate assessment of risks that could significantly impact internal control over financial reporting and did not effectively design and monitor controls in response to the risks of material misstatement.

We have implemented and are in the process of implementing measures designed to improve our disclosure controls and procedures and internal control over financial reporting to address the underlying causes of these material weaknesses, including the implementation of appropriate segregation of duties, formalization of accounting policies and controls, implementation of accounting systems to automate manual processes, formalization of our hiring practices, hiring of our Chief Financial Officer, principal accounting officer and additional qualified accounting and finance personnel, appointment of two new board members, one as an audit committee chair and the other as an audit committee financial expert in June 2020 and April 2020, respectively, and engagement of financial consultants to enable the implementation of internal controls over financial reporting.

Our remediation efforts are ongoing. While we believe that these efforts have improved and will continue to improve our internal control over financial reporting, remediation of the material weaknesses will require validation and testing of the design and operating effectiveness of internal controls over a sustained period of financial reporting cycles. We cannot assure you that these measures will significantly improve or remediate the material weaknesses described above. We, and our independent registered public accounting firm, were not required to perform an evaluation of our internal control over financial reporting as of December 31, 2019 in accordance with the provisions of the Sarbanes-Oxley Act. Accordingly, we cannot assure you that we have identified all material weaknesses or that there will not be additional material weaknesses or deficiencies that we will identify.

We are required to comply with Section 404, which requires management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of our internal control over financial reporting commencing with our second annual report. To achieve compliance with Section 404 we will need to continue to dedicate internal resources, outside consultants and continue to execute a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes, as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting. Despite our efforts, there is a risk that we will not be able to conclude, within the prescribed timeframe or at all, that our internal control over financial reporting is effective as required by Section 404 and material weaknesses may still exist. We also cannot assure you that there will not be additional material weaknesses or significant deficiencies in our internal controls in the future. In the event that we are not able to successfully remediate the existing material weaknesses in our internal control over financial reporting or demonstrate compliance with the Sarbanes-Oxley Act, that our internal control over financial reporting is perceived as inadequate or that we are unable to produce timely or accurate consolidated financial statements, investors may lose confidence in our operating results, our stock price could decline and we may not be able to remain listed on The Nasdaq Global Market.

We have and will continue to incur increased costs as a result of operating as a public company, and our management will devote substantial time to new compliance initiatives.

As a public company, we have and will continue to incur significant legal, accounting and other expenses that we did not incur as a private company, and these expenses may increase even more after we are no longer an emerging growth company. As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Protection Act, as well as rules adopted, and to be adopted, by the SEC and Nasdaq. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, we expect these rules and regulations to substantially increase our legal and financial compliance costs and to make some activities more time-consuming and costly.

The increased costs will increase our net loss. For example, we expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be forced to accept reduced policy limits or incur substantially higher costs to maintain the same or similar coverage. We cannot predict or estimate the amount or timing of additional costs we may incur to respond to these requirements. The impact of these requirements could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers.

We are an emerging growth company, as defined in the Securities Act, and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.

We are an emerging growth company, as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including relief from the auditor attestation requirements of Section 404 less extensive disclosure obligations regarding executive compensation in our registration statements, periodic reports and proxy statements, exemptions from the requirements to hold a nonbinding advisory vote on executive compensation, and exemptions from stockholder approval of any golden parachute payments not previously approved. As a result, our stockholders may not have access to certain information that they may deem important. We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier.

In addition, the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in the Securities Act for complying with new or revised accounting standards. An emerging growth company can therefore delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of this exemption and, as a result, will not be subject to the same implementation timing for new or revised accounting standards as for other public companies that are not emerging growth companies, which may make comparison of our consolidated financial statements to those of other public companies more difficult.

We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and the price of our common stock may be more volatile.

Because we do not expect to pay dividends in the foreseeable future, you must rely on price appreciation of our common stock for return on your investment.

We intend to retain most, if not all, of our available funds and earnings to fund the development and growth of our business. As a result, we do not expect to pay any cash dividends in the foreseeable future. In addition, the terms of our Loan Agreement with Silicon Valley Bank restrict our ability to pay dividends to limited circumstances. As a result, investors in our common stock may only receive a return if the market price of our common stock increases.

Therefore, you should not rely on an investment in our common stock as a source for any future dividend income.

Our board of directors has significant discretion as to whether to distribute dividends and in what amounts, subject to the restrictions in the Loan Agreement. Even if our board of directors decides to declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on, among other matters, our future results of operations and cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiaries, our financial condition, contractual restrictions and other factors deemed relevant by our board of directors.

Our amended and restated certificate of incorporation, amended and restated bylaws and Delaware law could prevent a third party from acquiring us (even if an acquisition would benefit our stockholders), may limit the ability of our stockholders to replace our management and limit the price that investors might be willing to pay for shares of our common stock.

Our amended and restated certificate of incorporation and our amended and restated bylaws could have the effect of making it more difficult for a third party to acquire, or of discouraging a third party from attempting to acquire, control of us. These provisions could delay or prevent a change in control of the company and could limit the price that investors might be willing to pay in the future for shares of our common stock. These provisions, among other things.

establish a staggered board of directors divided into three classes serving staggered three-year terms, such that not all members of the board will be elected at one time;

authorize our board of directors to issue new series of preferred stock without stockholder approval and create, subject to applicable law, a series of preferred stock with preferential rights to dividends or our assets upon liquidation, or with superior voting rights to our existing common stock;

eliminate the ability of our stockholders to call special meetings of stockholders;

eliminate the ability of our stockholders to fill vacancies on our board of directors;

establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at our annual stockholder meetings;

permit our board of directors to establish the number of directors;

provide that our board of directors is expressly authorized to make, alter or repeal our amended and restated bylaws;

•

provide that shareholders can remove directors only for cause and only upon the approval of not less than 66^2/3 of all outstanding shares of our voting stock;

•

require the approval of not less than 66^2/3 of all outstanding shares of our voting stock to amend our bylaws and specific provisions of our certificate of incorporation; and

limit the jurisdictions in which certain stockholder litigation may be brought.

As a Delaware corporation, we are subject to the anti-takeover provisions of Section 203 of the Delaware General Corporation Law, which prohibits a Delaware corporation from engaging in a business combination specified in the statute with an interested stockholder (as defined in the statute) for a period of three years after the date of the transaction in which the person first becomes an interested stockholder, unless the business combination is approved in advance by a majority of the independent directors or by the holders of at least two-thirds of the outstanding disinterested shares. The application of Section 203 of the Delaware General Corporation Law could also have the effect of delaying or preventing a change of control of us.

Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware and the federal district courts of the United States 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 amended and restated certificate of incorporation provides 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 breach of a fiduciary duty; any action asserting a claim against us arising pursuant to the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws; or any action asserting a claim against us that is governed by the Delaware internal affairs doctrine. This provision would not apply to claims brought to enforce a duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. Our amended and restated certificate of incorporation provides further that the federal district courts of the United States will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act. These choice of 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. If a court were to find the choice of forum provision contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business. For example, under the Securities Act, federal courts have concurrent jurisdiction over all suits brought to enforce any duty or liability created by the Securities Act, and investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Use of Proceeds from our Initial Public Offering

On November 13, 2019, we completed our initial public offering (“IPO”), pursuant to which we issued and sold an aggregate of 6,100,390 shares of common stock at the IPO price of $16.00 per share. The aggregate gross proceeds from our IPO were $97.6 million, and the net proceeds were $87.7 million after deducting underwriting discounts and commissions of $6.8 million and other offering expenses of $3.1 million. The offer and sale of the shares of common stock in the IPO were registered pursuant to registration statements on Form S-1 (File Nos. 333-234174 and 333-234617), which the SEC declared effective on November 8, 2019. No offering expenses were paid directly or indirectly to any of our directors or officers (or their associates) or persons owning 10% or more of any class of our equity securities or to any other affiliates. The underwriters for our IPO were BofA Securities, Inc., SVB Leerink LLC, RBC Capital Markets, LLC, and Oppenheimer & Co. Inc.

The net proceeds from our IPO have been used and will be used, together with our cash and cash equivalents to complete our ongoing POC Phase 1b/2a clinical trial and initiate our subsequent Phase 2b clinical trial of BIO89-100 in patients with NASH, fund our Phase 2 trial of BIO89-100 in patients with SHTG as well as evaluate potential new indications for BIO89-100, and BIO89-100 manufacturing and scale up, with the balance to be used to fund working capital and other general corporate purposes, which may include licensing, acquiring or investing in complementary businesses, technologies, products or assets, the acquisition or licensing of other products, businesses or technologies.

There has been no material change in the intended use of proceeds from our IPO as described in our final prospectus filed with the SEC pursuant to Rule 424(b)(4) on November 12, 2019.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

Exhibit Number		Description

2.1		Contribution and Exchange Agreement, dated as of September 17, 2019, by and among 89Bio Ltd., the Company and its shareholders (filed with the SEC as Exhibit 2.1 to the Company’s Form S-1 filed on October 11, 2019).

3.1		Second Amended and Restated Certificate of Incorporation (filed with the SEC as Exhibit 3.1 to the Company’s Form 8-K filed on November 15, 2019).

3.2		Second Amended and Restated Bylaws (filed with the SEC as Exhibit 3.2 to the Company’s Form 8-K filed on November 15, 2019).

4.1		Specimen common stock certificate of the registrant (filed with the SEC as Exhibit 4.1 to the Company’s Form S-1/A filed on October 28, 2019).

4.2		Investors’ Rights Agreement, dated as of September 17, 2019, by and among the Company and certain of its shareholders (filed with the SEC as Exhibit 4.2 to the Company’s Form S-1 filed on October 11, 2019).

4.3		Form of Warrant to Purchase Common Stock for Silicon Valley Bank (filed with SEC as Exhibit 4.1 to the Company’s Form 8-K filed on April 13, 2020).

~~10.1~~10.1*+		Loan and Security Agreement, dated as of April 7, 2020, among Silicon Valley Bank, the Lenders party thereto, 89bio, Inc., 89bio Management, Inc. and 89Bio Ltd. (filed with the SEC as Exhibit 10.1 to the Company’s Form 8-K filed on April 13, 2020).

~~10.2+~~		~~Executive Employment Offer Letter, dated April 15, 2020, by and between 89bio, Inc. and Rohan Palekar (filed with the SEC as Exhibit 10.1 to the Company’s Form 8-K filed on May 4, 2020).~~

~~10.3+~~		~~Executive Employment Offer Letter, dated April 15, 2020, by and between 89bio, Inc. and Ryan Martins (filed with the SEC as Exhibit 10.2 to the Company’s Form 8-K filed on May 4, 2020).~~

~~10.4+~~		~~Executive Employment Offer Letter, dated April 15, 2020, by and between 89bio, Inc. and Hank Mansbach (filed with the SEC as Exhibit 10.3 to the Company’s Form 8-K filed on May 4, 2020).~~

~~10.5+~~		~~Executive Employment Offer Letter, dated April 15, 2020, by and between 89bio, Inc. and Quoc Le-Nguyen (filed with the SEC as Exhibit 10.4 to the Company’s Form 8-K filed on May 4, 2020).~~Non-Employee Director Compensation Policy.

31.1*		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934.

31.2*		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934.

32#		Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350.

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

*	Filed herewith.

+	Indicates management contract or compensatory plan.

#	Furnished herewith and not deemed to be “filed” for purposes of Section 18 of the Exchange Act, and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	89bio, Inc.

Date: ~~August 13,~~November 12, 2020	By:	/s/ Rohan Palekar
		Rohan Palekar
		Chief Executive Officer (principal executive officer)

Date: ~~August 13,~~November 12, 2020	By:	/s/ Ryan Martins
		Ryan Martins Chief Financial Officer
		(principal financial and accounting officer)

6568

Delaware	36-4946844
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
142 Sansome Street, Second Floor San Francisco, California 94104	94104
(Address of principal executive offices)	(Zip Code)

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss	2
	Condensed Consolidated Statements of Convertible Preferred Stock and Stockholder’s Equity (Deficit)	3
	Condensed Consolidated Statements of Cash Flows	45
	Notes to Unaudited Condensed Consolidated Financial Statements	56
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1314
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2021
Item 4.	Controls and Procedures	2122
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	2223
Item 1A.	Risk Factors	2223
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6366
Item 3.	Default Upon Senior Securities	6366
Item 4.	Mine Safety Disclosures	6366
Item 5.	Other Information	6366
Item 6.	Exhibits	6467
Signatures		6568

	June 30,			December 31,			September 30,			December 31,
	2020			2019			2020			2019
	(Unaudited)			(Note 2)			(Unaudited)			(Note 2)
Assets
Current assets:
Cash and cash equivalents	$	68,199		$	93,335		$	141,551		$	93,335
Restricted cash		24			25			25			25
Short-term investments		5,697			—			77,602			—
Prepaid and other current assets		1,371			1,966			3,360			1,966
Total current assets		75,291			95,326			222,538			95,326
Property and equipment, net		191			155			177			155
Other assets		1,080			72			713			72
Total assets	$	76,562		$	95,553		$	223,428		$	95,553
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	3,070		$	989		$	4,086		$	989
Accrued expenses		3,721			4,620			5,338			4,620
Total current liabilities		6,791			5,609			9,424			5,609
Commitments and contingencies (Note 5)
Stockholders’ equity:
Common stock		14			14			20			14
Additional paid-in capital		165,668			163,526			324,501			163,526
Accumulated other comprehensive loss								(3	)		—
Accumulated deficit		(95,911	)		(73,596	)		(110,514	)		(73,596	)
Total stockholders’ equity		69,771			89,944			214,004			89,944
Total liabilities and stockholders’ equity	$	76,562		$	95,553		$	223,428		$	95,553

	Three Months Ended				Six Months Ended					Three Months Ended						Nine Months Ended
	June 30,				June 30,					September 30,						September 30,
	2020		2019		2020			2019		2020			2019			2020			2019
Operating expenses:
Research and development	$	8,443	$	3,165	$	16,221		$	7,474	$	11,208		$	6,680		$	27,429		$	14,154
General and administrative		3,230		834		6,154			1,357		3,225			1,518			9,379			2,875
Total operating expenses		11,673		3,999		22,375			8,831		14,433			8,198			36,808			17,029
Loss from operations		11,673		3,999		22,375			8,831		14,433			8,198			36,808			17,029
Other expenses (income), net		98		10,968		(59	)		10,552
Other expenses, net											146			10,470			87			21,022
Net loss before tax		11,771		14,967		22,316			19,383		14,579			18,668			36,895			38,051
Income tax expense (benefit)		—		6		(1	)		29
Net loss and comprehensive loss	$	11,771	$	14,973	$	22,315		$	19,412
Income tax expense											24			57			23			86
Net loss										$	14,603		$	18,725		$	36,918		$	38,137
Other comprehensive (income) loss:
Unrealized gain on available-for-sale securities											(7	)		—			(7	)		—
Foreign currency translation adjustments											10			—			10			—
Total other comprehensive loss										$	3		$	—		$	3		$	—
Comprehensive loss										$	14,606		$	18,725		$	36,921		$	38,137
Net loss per share, basic and diluted	$	0.85	$	24.50	$	1.62		$	31.76	$	(0.86	)	$	(30.63	)	$	(2.49	)	$	(62.39	)
Weighted-average shares used to compute net loss per share, basic and diluted		13,797,356		611,226		13,793,544			611,226		16,884,244			611,226			14,809,131			611,226

	Six Months Ended						Nine Months Ended
	June 30,						September 30,
	2020			2019			2020			2019
Cash flows from operating activities:
Net loss	$	(22,315	)	$	(19,412	)	$	(36,918	)	$	(38,137	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		29			7			47			12
Share-based compensation		1,403			111			2,557			223
Deferred tax assets		—			(50	)		—			(69	)
Revaluation of convertible preferred stock liability		—			10,511			—			21,018
Amortization of premium on available-for-sale securities		1			—			85			—
Amortization of debt issuance costs		77			—			154			—
Changes in operating assets and liabilities:
Prepaids and other current assets		595			(36	)
Prepaid and other current assets								(1,404	)		(314	)
Accounts payable		2,123			(541	)		2,804			1,610
Accrued expenses		(1,189	)		1,279			459			1,329
Net cash used in operating activities		(19,276	)		(8,131	)		(32,216	)		(14,328	)
Cash flows from investing activities:
Purchases of available-for-sale securities		(5,698	)		—			(78,705	)		—
Proceeds from maturities of available-for-sale securities								1,025			—
Purchases of property and equipment		(107	)		(20	)		(124	)		(28	)
Net cash used in investing activities		(5,805	)		(20	)		(77,804	)		(28	)
Cash flows from financing activities:
Proceeds from issuance of common stock upon public offering, net of issuance costs								158,287			—
Proceeds from issuance of convertible preferred stock and convertible preferred stock liability, net of issuance cost		—			18,826			—			20,000
Proceeds from issuance of common stock upon stock option exercises		30			—			35			—
Proceeds from issuance of common stock upon ESPP purchase		75			—			75			—
Proceeds from issuance of common stock		—			11			—			11
Payment of debt issuance costs		(161	)		—			(161	)		—
Net cash (used in) provided by financing activities		(56	)		18,837
Net (decrease) increase in cash and cash equivalents, and restricted cash		(25,137	)		10,686
Payment of deferred offering costs								—			(686	)
Net cash provided by financing activities								158,236			19,325
Net increase in cash and cash equivalents, and restricted cash								48,216			4,969
Cash and cash equivalents, and restricted cash at beginning of period		93,360			11,257			93,360			11,257
Cash and cash equivalents, and restricted cash at end of period	$	68,223		$	21,943		$	141,576		$	16,226
Components of cash and cash equivalents, and restricted cash:
Cash and cash equivalents	$	68,199		$	21,919		$	141,551		$	16,188
Restricted cash		24			24			25			38
Total cash and cash equivalents, and restricted cash	$	68,223		$	21,943		$	141,576		$	16,226
Supplemental disclosures of non-cash investing and financing activities:
Supplemental cash flow disclosures:
Issuance of common stock warrant in connection with term loan facility	$	634		$	—		$	634		$	—
Deferred offering costs included in accrued expenses	$	290		$	204
Property and equipment purchases included in accounts payable	$	13		$	—
Deferred offering costs included in accounts payable and accrued expenses							$	607		$	942
Cash paid for taxes							$	135		$	—

											Accumulated
									Additional		Other						Total
	Convertible Preferred Stock				Common Stock				Paid-in		Comprehensive			Accumulated			Stockholders’
	Shares		Amount		Shares		Amount		Capital		Loss			Deficit			Equity
Balance as of December 31, 2019		—	$	—		13,788,982	$	14	$	163,526	$	—		$	(73,596	)	$	89,944
Issuance of common stock upon exercise of stock options		—		—		4,876		—		9		—			—			9
Share-based compensation		—		—		—		—		493		—			—			493
Net loss		—		—		—		—		—		—			(10,544	)		(10,544	)
Balance as of March 31, 2020		—		—		13,793,858		14		164,028		—			(84,140	)		79,902
Issuance of common stock upon exercise of stock options		—		—		6,919		—		21		—			—			21
Issuance of common stock upon ESPP purchase		—		—		4,427		—		75		—			—			75
Issuance of common stock warrant in connection with term loan facility		—		—		—		—		634		—			—			634
Share-based compensation		—		—		—		—		910		—			—			910
Net loss		—		—		—		—		—		—			(11,771	)		(11,771	)
Balance as of June 30, 2020		—		—		13,805,204		14		165,668		—			(95,911	)		69,771
Issuance of common stock upon public offerings, net of issuance costs of $1,208		—		—		6,072,040		6		157,674		—			—			157,680
Issuance of common stock upon exercise of stock options		—		—		1,608		—		5		—			—			5
Share-based compensation		—		—		—		—		1,154		—			—			1,154
Net loss		—		—		—		—		—		—			(14,603	)		(14,603	)
Other comprehensive loss		—		—		—		—		—		(3	)		—			(3	)
Balance as of September 30, 2020		—	$	—		19,878,852	$	20	$	324,501	$	(3	)	$	(110,514	)	$	214,004

		June 30, 2020									September 30, 2020
	Valuation	Amortized		Unrealized		Unrealized				Valuation	Amortized		Unrealized		Unrealized
	Hierarchy	Cost		Gains		Losses		Fair Value		Hierarchy	Cost		Gains		Losses			Fair Value
Money market funds	Level 1	$	30,397	$	—	$	—	$	30,397	Level 1	$	32,445	$	—	$	—		$	32,445
Commercial paper	Level 2		4,792		—		—		4,792	Level 2		45,034		1		(1	)		45,034
Agency bonds										Level 2		28,751		12		(3	)		28,760
U.S. government bonds										Level 2		7,135		1		—			7,136
Corporate debt securities	Level 2		905		—		—		905	Level 2		5,822		—		(3	)		5,819
U.S. treasury bills										Level 2		2,150		—		—			2,150
Agency discount securities										Level 2		460		—		—			460
Municipal bonds										Level 2		177		—		—			177
Total cash equivalents and available-for-sale securities		$	36,094	$	—	$	—	$	36,094		$	121,974	$	14	$	(7	)	$	121,981
Classified as:
Cash equivalents																		$	44,379
Short-term investments																			77,602
Total cash equivalents and available-for-sale securities																		$	121,981

	September 30, 2020
Within one year	$	103,643
After one year through two years		18,338
Total cash equivalents and available-for-sale securities	$	121,981

	Six Months Ended			Nine Months Ended
	June 30, 2019			September 30, 2019
Beginning balance	$	1,671		$	1,671
Revaluation of convertible preferred stock liability recorded in other expenses, net		10,511			21,018
Partial settlement of convertible preferred stock liability in subsequent closings		(6,269	)		(6,673	)
Ending balance	$	5,913		$	16,016

				~~Six~~Nine Months Ended
				~~June~~September 30, 2019
Stock price	$	0.99 - ~~1.31~~1.97
Exercise price	$		1.00
Expected term (years)		0.00 - 2.25
Expected volatility			72.0		%
Risk-free interest rate		0.0 - 2.4			%

	June 30, 2020		September 30, 2020
Remainder of 2020	$	129	$	64
2021		232		232
2022		8		8
Total future minimum annual payments	$	369	$	304

	Six Months Ended						Nine Months Ended
	June 30						September 30,
	2020			2019			2020			2019
Stock Options
Expected term (years)	5.50 - 6.11				6.11		4.00-6.11			5.88-6.11
Expected volatility	86.4 - 91.3		%		61.8	%	86.4-93.7		%	61.8-72.5		%
Risk-free interest rate	0.4 - 1.5		%	2.5 - 2.6		%	0.2-1.5		%	1.6-2.6		%
Expected dividend		—			—			—			—

						Weighted									Weighted
				Weighted		Average							Weighted		Average
				Average		Remaining		Aggregate					Average		Remaining		Aggregate
	Number of			Exercise		Contractual		Intrinsic		Number of			Exercise		Contractual		Intrinsic
	Options			Price		Term		Value		Options			Price		Term		Value
						(In years)		(In thousands)							(In years)		(In thousands)
Balance outstanding as of December 31, 2019		1,320,243		$	3.34		9.23	$	30,353		1,320,243		$	3.34		9.23	$	30,353
Granted		549,000			30.19						609,000			30.29
Exercised		(11,795	)		2.62						(13,403	)		2.68
Cancelled		(40,482	)		2.87						(40,482	)		2.87
Balance outstanding as of June 30, 2020		1,816,966			11.44		9.01	$	21,218
Exercisable as of June 30, 2020		348,601		$	2.03		8.45	$	6,241
Balance outstanding as of September 30, 2020											1,875,358			12.08		8.80	$	28,652
Exercisable as of September 30, 2020											492,557		$	2.24		8.32	$	11,537

	Three Months Ended						Three Months Ended
	June 30,						September 30,
	2020		2019		Change		2020		2019		Change
Clinical development	$	3,399	$	1,034	$	2,365	$	2,882	$	1,254	$	1,628
Contract manufacturing		2,521		625		1,896		6,040		3,931		2,109
Preclinical costs		660		311		349		217		297		(80	)
Personnel-related expenses		1,531		944		587		1,841		845		996
Other expenses		332		251		81		228		353		(125	)
Total research and development expenses	$	8,443	$	3,165	$	5,278	$	11,208	$	6,680	$	4,528

	Six Months Ended						Nine Months Ended
	June 30,						September 30,
	2020		2019		Change		2020		2019		Change
Clinical development	$	7,747	$	2,451		5,296	$	10,629	$	3,705		6,924
Contract manufacturing		3,712		2,679		1,033		9,752		6,610		3,142
Preclinical costs		1,316		418		898		1,533		715		818
Personnel-related expenses		2,934		1,540		1,394		4,775		2,385		2,390
Other expenses		512		386		126		740		739		1
Total research and development expenses	$	16,221	$	7,474	$	8,747	$	27,429	$	14,154	$	13,275

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company