Investing in our common stock involves a high degree of risk. You should carefully consider the risks described below, as well as the other information in this report, including our consolidated financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” before deciding whether to invest in our common stock. The occurrence of any of the events or developments described below could harm our business, financial condition, results of operations, and growth prospects. In such an event, the market price of our common stock could decline, and you may lose all or part of your investment. Summary of Risk Factors An investment in our common stock involves various risks, and prospective investors are urged to carefully consider the matters discussed in the section titled “Risk Factors” prior to making an investment in our common stock. These risks include, but are not limited to, the following: •We derive substantially all of our revenues from GSK’s commercialization of Jemperli. As a result, our business and financial results and prospects heavily depend on GSK’s ability to successfully develop and commercialize Jemperli. •Our existing collaboration with GSK and other collaborations are important to our business. If we are unable to maintain the GSK collaboration, or if this collaboration is not successful, our business could be adversely affected. •If the commercialization of Jemperli in the countries in which it has received regulatory approval encounters any delays or adverse developments, or perceived delays or adverse developments, or if sales or payor coverage does not meet investors’, analysts’, or our expectations, our business will be harmed and the price of our securities could fall. •We are heavily dependent on GSK for the successful commercialization and development of Jemperli under the GSK Agreement. If GSK does not devote sufficient resources to the commercialization or development of Jemperli, is unsuccessful in its efforts, or chooses to reprioritize its commercial programs, our business would be materially harmed. •Jemperli faces substantial competition for its intended uses in the targeted markets from products discovered, developed and commercialized both by GSK and by other pharmaceutical companies, which could cause the royalties payable to us pursuant to the GSK Agreement to be less than expected, which in turn would harm our business and cause the price of our securities to fall. •The recent separation of our business into two independent, publicly traded companies is subject to continued risks and uncertainties, and completion of the tasks relating to the separation will continue to involve time, effort and expense, which could harm our business, results of operations and financial condition. •If we are unable to obtain or protect intellectual property rights, we may not be able to compete effectively in our market. 29 •We currently have a limited number of employees, and our future success depends on our ability to retain our key executives and to attract, retain and motivate qualified personnel. •The market price of our stock has been and may continue to be volatile, and you could lose all or part of your investment. Risks Related to Continued Commercialization Success of Jemperli We derive substantially all of our revenues from GSK’s commercialization of Jemperli. As a result, our business and financial results and prospects heavily depend on GSK’s ability to successfully develop and commercialize Jemperli. We derive substantially all of our revenues from GSK’s commercialization of Jemperli. Royalty revenues from Jemperli have represented and are expected to represent substantially all of our future revenues. The amount and timing of revenue from such royalties are unknown and highly uncertain. Pursuant to the GSK Agreement, GSK is responsible for the development and commercialization of Jemperli. As a result, our business and financial results and prospects depend upon the performance by GSK of its commercial obligations under the GSK Agreement and the commercial success of Jemperli. We have no control over GSK’s marketing and sales efforts, and GSK might not be successful, which would harm our business and cause the price of our securities to fall. Our quarterly royalty revenues may fluctuate due to a variety of factors, many of which are outside of our control. The amount of royalties and milestone payments, if any, we receive will depend on many factors, including but not limited to the following: •the extent and effectiveness of the sales and marketing and distribution support GSK provides to Jemperli; •market acceptance and demand for Jemperli; •the competitive landscape of generic and branded products and developing therapies that compete with Jemperli (such as Keytruda®) but which are not partnered with us and pricing pressure in the oncology markets targeted by Jemperli; •the size of the market for Jemperli; •decisions as to the timing of product launches, pricing and discounts; •reprioritization of GSK’s commercial efforts on other products owned by GSK, which are not partnered with us; •GSK’s ability to expand the indications for which Jemperli can be marketed; •a satisfactory efficacy and safety profile as demonstrated in a broad patient population; •acceptance of, and ongoing satisfaction with, Jemperli by the medical community, patients receiving therapy and third party payors; •timing and amounts of payor rebate adjustments and prior period rebate adjustments; •seasonal fluctuations of demand; •the ability of patients to be able to afford Jemperli or obtain health care coverage that covers Jemperli; •safety concerns in the marketplace for oncology therapies in general and with Jemperli in particular; •regulatory developments relating to the manufacture or continued use of Jemperli; •the requirement to conduct additional post‑approval studies or trials for Jemperli; •GSK’s ability to obtain regulatory approval of Jemperli in additional countries; •general economic conditions in the jurisdictions where Jemperli is sold, including microeconomic disruptions or slowdowns; or •if our royalty revenue or operating results fall below the expectations of investors or securities analysts or below any guidance we may provide to the market, the price of our common stock could decline substantially. 30 Our existing collaboration with GSK and other collaborations are important to our business. If we are unable to maintain the GSK collaboration, or if this collaboration is not successful, our business could be adversely affected and the price of our securities could fall. Much of our current and near-term projected revenues have been derived from Jemperli under the GSK Agreement. We expect royalties from Jemperli will likely continue to comprise a substantial portion of our revenues in the future. Any action or inaction by either GSK or us that results in a material dispute, allegation of breach, litigation, arbitration, or significant disagreement between the parties may be interpreted negatively by the market or by our investors, could harm our business and cause the price of our securities to fall. Examples of these kinds of issues include but are not limited to non-performance of contractual obligations and allegations of non-performance, disagreements over the relative marketing and sales efforts for our partnered products and other GSK respiratory products, disputes over public statements, and similar matters. If our collaboration with GSK were terminated, we may not receive all or any of the royalties or milestones potentially coming from such collaboration, which could adversely affect our business or financial condition. For example, in October 2023, GSK terminated the LAG-3 antagonist antibody development program, and in October 2025, GSK also terminated the TIM-3 antagonist antibody development program under our existing collaboration. As a result, we will not receive any additional milestones or any royalties from GSK for those development programs. We are unable to predict the success of our collaborations. Our collaborators have discretion in determining and directing the efforts and resources, including the ability to discontinue all efforts and resources, they apply to the development and, if approval is obtained, commercialization and marketing of the product candidates covered by such collaborations. As a result, our collaborators may elect to de-prioritize our programs, change their strategic focus or pursue alternative technologies in a manner that results in reduced, delayed or no revenue to us. Our collaborators may have other marketed products and product candidates under collaboration with other companies, including some of our competitors, and their corporate objectives may not be consistent with our best interests. Our collaborators may also be unsuccessful in developing or commercializing our products. If our collaborations are unsuccessful, our business, financial condition, results of operations and prospects could be adversely affected. In addition, any dispute or litigation proceedings with our collaborators could delay the development programs under collaboration, create uncertainty as to ownership of intellectual property rights, distract management from other business activities and generate substantial expense. For example, we are currently party to litigation regarding our collaboration agreement with GSK and Tesaro. On November 20, 2025, we filed a Verified Complaint in Delaware Chancery Court, requesting a court declaration that Tesaro has materially breached the Collaboration Agreement and that GSK, Tesaro’s corporate parent, has tortiously interfered with the Collaboration Agreement. We have requested that the court declare that we are entitled to all rights and remedies under the Collaboration Agreement. See Item 1. Legal Proceedings for additional information. While this litigation is pending, the ownership of related intellectual property rights may be uncertain, and management is spending significant time and resources. Tesaro and its affiliate Tesaro Development, Ltd. separately filed suit against us the same day, requesting a declaration that they have not materially breached and that we have materially breached our duties. Tesaro’s claim that we materially breached our duties was dismissed by the Delaware Chancery Court on April 24, 2026. Previously, in October 2020, we settled a matter with Tesaro and GSK related to an alleged breach of the Collaboration Agreement in connection with GSK’s development of a drug not covered by the agreement. There can be no assurance that we will not encounter such issues under our collaborations with GSK or other parties in the future. When the FDA or other applicable regulatory authorities approve generic products, including but not limited to generic forms of Keytruda®, which competes with Jemperli, the royalties payable to us pursuant to the GSK Agreement may be less than anticipated, which in turn would harm our business and cause the price of our securities to fall. Keytruda®, manufactured and sold by Merck & Co., Inc., is the biggest competitor of Jemperli. Sales of Keytruda® are expected to be materially negatively impacted by biosimilar competition between 2028 and 2029. Keytruda® is also expected to lose market exclusivity in Europe in 2031 following compound patent expiration. Once market exclusivity is lost, generic substitutes of Keytruda® may enter the market. After the introduction of a generic competitor, a significant percentage of the sales of any branded product that may compete with such branded product is typically lost to the generic product. We cannot yet ascertain what impact 31 these future generic products may have on any sales of Jemperli. The royalties payable to us pursuant to the GSK Agreement may be less than anticipated, which in turn could harm our business, and the price of our securities could fall. Reduced prices and reimbursement rates due to the actions of governments, payors, or competition or other healthcare cost containment initiatives such as restrictions on use, may negatively impact royalties generated under the GSK Agreement. The continuing efforts of governments, pharmaceutical benefit management organizations (“PBMs”), insurance companies, managed care organizations and other payors of health care costs to contain or reduce costs of health care have adversely affected, and may continue to adversely affect, the price, market access and total revenues of Jemperli in the future. These organizations, together with governments, have increasingly imposed utilization management tools favoring the use of generic products. As these practices expand, GSK may face difficulty in obtaining or maintaining timely or adequate pricing or formulary placement of Jemperli. In addition, GSK has experienced and expect to continue to experience increased competitive activity, which has resulted and may result in lower overall prices for Jemperli. The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (together, “PPACA”) and other legislative or regulatory requirements or potential legislative or regulatory actions regarding healthcare and insurance matters, along with the trend toward managed healthcare in the U.S., could adversely influence the purchase of healthcare products and reduce demand and prices for Jemperli. This could harm GSK’s ability to market Jemperli and significantly reduce future revenues. In addition, in certain foreign markets, the pricing of prescription drugs is subject to government control and reimbursement may in some cases be unavailable. We believe that pricing pressures will continue and may increase. This may make it difficult for GSK to sell Jemperli at a price acceptable to us or GSK or to generate revenues in line with our analysts’ or investors’ expectations, which may cause the price of our securities to fall. More recently, the presidential administration and the U.S. Congress have taken, and may continue to take, actions in an effort to modify or replace PPACA and to implement or pass other reforms to the healthcare system, including proposed legislation related to the pricing of pharmaceuticals. There is uncertainty with respect to any potential changes that may be proposed and what the impact, if any, will be on our business, including the impact on coverage and reimbursement for healthcare items and services covered by plans that were authorized by PPACA. However, we cannot predict the ultimate content, timing or effect of any healthcare reform legislation or the impact of potential legislation on us and the royalties generated under existing or future collaborations. We expect that additional state and federal healthcare reform measures will be considered and potentially adopted, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand for Jemperli. If the commercialization of Jemperli in the countries in which it has received regulatory approval encounters any delays or adverse developments, or perceived delays or adverse developments, or if sales or payor coverage does not meet investors’, analysts’, or our expectations, our business will be harmed and the price of our securities could fall. Under our GSK Agreement, GSK has full responsibility for commercialization of Jemperli. GSK has launched Jemperli in a number of countries, including the United States and Europe, among others. The commercialization of the products in countries where they are already launched and the commercialization in new countries are still subject to fluctuating overall pricing levels and uncertain timeframes to obtain payor coverage. Any delays or adverse developments or perceived additional delays or adverse developments with respect to the commercialization of Jemperli including if sales or payor coverage does not meet investors’, analysts’, or our expectations, would significantly harm our business and the price of our securities could fall. We are heavily dependent on GSK for the successful commercialization and development of Jemperli under the GSK Agreement. If GSK does not devote sufficient resources to the commercialization or development of Jemperli, is unsuccessful in its efforts, or chooses to reprioritize its commercial programs, our business would be materially harmed. GSK is responsible for all clinical and other product development, regulatory, manufacturing and commercialization activities for Jemperli under the GSK Agreement. Our royalty revenues under the GSK Agreement may not meet our, analysts’, or investors’ expectations, due to a number of important factors. GSK has a substantial oncology product portfolio in addition to Jemperli. GSK may make oncology product portfolio decisions or statements about its portfolio which may be, or may be perceived to be, harmful to Jemperli. For instance, GSK has discretion in determining the efforts and resources that it will apply to the development and commercialization of Jemperli. In addition, GSK may determine to focus its commercialization efforts on its own products. In the 32 event GSK does not devote sufficient resources to the commercialization of Jemperli or chooses to reprioritize its commercial programs, our business, operations and stock price would be negatively affected. Any adverse developments to the regulatory status of Jemperli in the countries in which it has received regulatory approval, including labeling restrictions, safety findings, or any other limitation to usage, would harm our business and may cause the price of our securities to fall. Although Jemperli is approved and marketed in a number of countries, it is possible that adverse changes to the regulatory status of Jemperli could occur in the event new safety issues are identified, treatment guidelines are changed, or new studies fail to demonstrate product benefits. A number of notable pharmaceutical products have experienced adverse developments during commercialization that have resulted in the product being withdrawn, approved uses being limited, or new warnings being included. In the event that any adverse regulatory changes were to occur to Jemperli, our business would be harmed, and the price of our securities could fall. Jemperli faces substantial competition for its intended uses in the targeted markets from products discovered, developed and commercialized both by GSK and by other pharmaceutical companies, which could cause the royalties payable to us pursuant to the GSK Agreement to be less than expected, which in turn would harm our business and cause the price of our securities to fall. GSK has responsibility for obtaining regulatory approval and commercializing Jemperli for its intended uses in the targeted markets around the world. While Jemperli has received regulatory approval and has been commercialized in the U.S. and certain other targeted markets, Jemperli faces substantial competition from existing products previously developed and commercialized both by GSK and competing pharmaceutical companies and can expect to face additional competition from new products that are discovered, developed and commercialized by GSK, the same pharmaceutical competitors and other competitors going forward. Many of the pharmaceutical companies competing in oncology markets are international in scope with substantial financial, technical and personnel resources that permit them to discover, develop, obtain regulatory approval and commercialize new products in a highly efficient and low-cost manner at competitive prices to consumers. In addition, many of these competitors have substantial commercial infrastructure that facilitates commercializing their products in a highly efficient and low-cost manner at competitive prices to consumers. There can be no assurance that Jemperli will not be replaced by new products that are deemed more effective at lower cost to consumers. The ability of Jemperli to succeed and achieve the anticipated level of sales depends on the commercial and development performance of GSK to achieve and maintain a competitive advantage over other products with the same intended use in the targeted markets. If sales of Jemperli are less than anticipated because of existing or future competition in the markets in which it is commercialized, including competition from existing and new products that are perceived as lower cost or more effective, our royalty payments could be less than anticipated, which in turn would harm our business and cause the price of our securities to fall. Risk Factors Related to Our Recent Separation The recent separation of our business into two independent, publicly traded companies is subject to various risks and uncertainties, and completion of the tasks relating to the separation will continue to involve time, effort and expense, which could harm our business, results of operations and financial condition. On April 20, 2026, we completed the separation of our business into two independent, publicly traded companies (the “Separation”). Following the Separation, we continue to hold and manage the rights to our Jemperli royalties from GSK and imsidolimab royalties from Vanda, with a focus on protecting and returning their value to our stockholders. We will continue to incur expenses in connection with the recent Separation, and such costs and expenses may be greater than we anticipate. In addition, our management’s time and attention will be allocated between the two public-traded companies, which may result in operational disruptions to our business. Any of the foregoing could adversely affect our business, results of operations and financial condition. 33 The Separation may not achieve some or all of the anticipated benefits. The anticipated operational, financial, strategic and other benefits of the Separation may not be achieved. The combined value of the common stock of the two publicly traded companies may not be equal to or greater than what the value of our common stock would have been had the proposed separation not occurred. The combined value of the common stock of the two publicly traded companies could be lower than anticipated for a variety of reasons, including the failure of either company to operate and compete effectively as an independent, publicly traded company. Our common stock price may experience periods of extreme volatility. Our company is now smaller and less diversified, with a narrower business focus, and may be more vulnerable to changing market conditions. The Separation may also present a number of significant risks to our operations and internal processes, including the allocation of management’s time and attention between the two companies and the failure to maintain an adequate control environment due to changes to our infrastructure technology systems and financial reporting processes. Risks Related to Intellectual Property Our royalty revenues depend on patent rights licensed to third parties, and if we or our licensees or collaborators are unable to obtain, maintain, and protect those patent rights, our royalty revenues and the value of our patent portfolio may be materially adversely affected. Our success depends in significant part on our ability and on the ability and willingness of our licensees and collaborators to establish, maintain and protect patents and other intellectual property rights covering licensed products and to operate without infringing the intellectual property rights of others. Although we may own or co-own patents and patent applications underlying our current royalty-bearing licenses, we have exclusively licensed rights under these patent portfolios to third parties for development, regulatory approval, manufacture, commercialization and related activities. We do not expect to conduct further research and development activities or develop or commercialize products directly. As a result, our future business is expected to consist principally of collecting royalties and other payments from licensees and collaborators while maintaining a limited-cost infrastructure. Our ability to generate value from the licensed patent rights depends on our and our licensees’ or collaborators’ ability to obtain, maintain, and protect patents with claims that cover products developed, approved, manufactured and commercialized by our licensees and collaborators. The patent prosecution process is uncertain, expensive and time-consuming, and we or our 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. We also cannot assure you that patents will issue from any patent applications that we or our licensees or collaborators do prepare, file and prosecute. It is also possible that we or our licensees or collaborators will fail to identify patentable aspects of inventions or improvements made in the course of development and commercialization activities before it is too late to obtain patent protection. We may have limited control over patent prosecution, maintenance, enforcement, defense, patent listings, patent term extensions and related intellectual property strategy for licensed products, and our licensees’ or collaborators’ interests may not align with ours. Our royalty revenues may depend on patents and patent applications that are prosecuted, maintained, enforced, defended, listed, submitted or otherwise managed in whole or in part by our licensees or collaborators. We may have limited or no ability to direct patent prosecution strategy, claim scope, continuation or divisional practice, foreign filing decisions, maintenance-fee and annuity payments, patent term adjustment or patent term extension strategy, supplementary protection certificate filings, Purple Book, BPCIA patent-list exchanges and patent-dispute procedures or similar foreign biologics patent procedures, responses to post-grant challenges, infringement litigation or settlement strategy. Our licensees or collaborators may have interests that differ from our interests, including interests in minimizing prosecution, maintenance, litigation or enforcement costs; prioritizing particular products, indications, territories or patent claims; avoiding disputes with competitors or other commercial partners; settling litigation on terms that protect their commercial interests but reduce or eliminate our royalty revenues; or abandoning or narrowing patent rights that we believe are important to our business. If any such third party fails to obtain, maintain, extend, enforce or defend patent rights in a manner that preserves royalty-bearing exclusivity, or if any such third party settles or resolves disputes in a manner that permits earlier competition or reduces royalty-bearing sales, our royalty revenues and the value of our patent portfolio could be materially adversely affected. We may not control decisions regarding whether, when or how to enforce patents against potential infringers, biosimilar or interchangeable biological product applicants or other competitors. A licensee or collaborator may decline to bring suit, may fail to bring suit within applicable statutory periods, may assert only a subset of available patents, may omit patents from required BPCIA 34 lists, Purple Book patent information or notices, may settle litigation on terms that permit earlier competition or reduce royalty-bearing sales, or may make arguments or concessions that adversely affect the scope, validity, enforceability or commercial value of our patents. We may not have access to all information necessary to evaluate infringement, validity, enforceability, regulatory filings, manufacturing processes or settlement terms. Any such limitations could impair our ability to preserve the royalty value of our intellectual property. Because we have exclusively licensed rights under certain patent portfolios to third parties, our ability to enforce those patents may depend on the scope of rights retained by us and granted to our licensees, including whether the licensee has received substantial rights under the patents, whether we or the licensee has the right or obligation to bring suit, whether joinder of the patent owner, licensee, BLA holder or reference product sponsor is required, and whether the applicable party is willing and able to participate in enforcement proceedings. If we lack standing to sue independently, if a required party refuses to participate, if enforcement rights are contractually limited, or if the licensee controls enforcement or settlement decisions, our ability to preserve royalty-bearing patent protection may be impaired. Failure to identify, list, update, assert or defend patents through Purple Book and BPCIA patent-dispute procedures could impair the value of our patent rights and reduce our royalty revenues. For licensed products regulated as biological products, the timing, content, accuracy and completeness of Purple Book patent information, patent lists exchanged under the Biologics Price Competition and Innovation Act of 2009, as amended, or the BPCIA, and related patent-dispute procedures may affect notice rights, litigation strategy, settlement leverage, biosimilar or interchangeable biological product entry, available remedies and the duration and value of royalty-bearing patent protection. We may not control whether a licensee, collaborator, commercialization partner, BLA holder, reference product sponsor or other responsible party identifies all relevant patents, timely provides initial or supplemental patent lists, submits accurate patent expiration dates, supplements or updates patent information, participates in BPCIA patent-dispute procedures, asserts all appropriate patents against biosimilar or interchangeable biological product applicants, or preserves rights to seek injunctive or other relief. If a patent that should have been included in a BPCIA patent list is not timely included, the patent owner may be barred from bringing an infringement action with respect to the biological product under 35 U.S.C. § 271. Any failure to identify, list, update, assert, enforce or defend relevant patents, or any decision to omit patents, assert only a subset of patents, delay or forgo litigation, or settle patent disputes on terms that permit earlier biosimilar or interchangeable product entry, could reduce the effective exclusivity period for licensed products and materially reduce our royalty revenues. The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, and issued patents may not provide meaningful protection for licensed products or prevent competitors from commercializing competitive technologies and products. The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complex legal and factual questions and has in recent years been the subject of much litigation. As a result, the issuance, scope, validity, enforceability and commercial value of our and our licensees’ or collaborators’ patent rights are highly uncertain. Our and our licensees’ or collaborators’ pending and future patent applications may not result in patents being issued which protect licensed technology or licensed products, in whole or in part, or which effectively prevent others from commercializing competitive technologies and products. The patent examination process may require us or our licensees or collaborators to narrow the scope of the claims of our pending and future patent applications, which may limit the scope of patent protection that may be obtained. In the past, we have not always been able to obtain the full scope of patent protection we initially sought in our patent applications, and as is typical for biotechnology patent prosecution, we have been required to narrow or eliminate patent claims as part of the patent prosecution process. In some instances, patent protection for an invention might not be obtainable in view of the prior art or laws of the country in which patent protection is sought. As a result, patent claims that we or our licensees or collaborators seek to obtain now or in the future could be narrowed or eliminated during prosecution, or later held invalid or unenforceable. The ability to obtain and maintain meaningful patent protection for antibodies and other biotechnology inventions may depend on accurate and complete disclosure of technical characterizations, including biological sequence information. Any errors, omissions, inconsistencies or later-developed scientific understanding that affects how such inventions are characterized, including sequence information, epitope mapping, competition data, binding assays or structure-function relationships, could impair our or our licensees’ or collaborators’ ability to obtain, maintain or enforce patents, could provide a basis for third-party challenges, or could necessitate claim narrowing. 35 In addition, some patent applications that we or our licensees or collaborators have filed or may file in the future might not result in issued patents because we or our licensees or collaborators have abandoned, or may choose to abandon, those patent applications as changes in business or legal strategies dictated or may dictate. Our royalty revenues may depend on whether licensed products are covered by valid and enforceable patent claims in particular countries. Filing, prosecuting, enforcing and defending patents on licensed technology and licensed products in all countries throughout the world would be prohibitively expensive, and our or our licensees’ or collaborators’ intellectual property rights may not exist in some countries outside the United States or may be less extensive in some countries than in the United States. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States. Consequently, we and our licensees or collaborators may not be able to prevent third parties from making, using, or selling licensed products in all countries outside the United States or from selling or importing licensed products in and into the United States or other jurisdictions. Competitors may use our and our licensees’ or collaborators’ technologies in jurisdictions where patent protection has not been obtained to develop their own products and, further, may export otherwise infringing products to territories where patent protection exists but enforcement is not as strong as that in the United States. These products may compete with licensed products, and our or our licensees’ or collaborators’ 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 biotechnology and pharmaceutical products, which could make it difficult for us or our licensees or collaborators to stop infringement of our and our licensees’ or collaborators’ patents or marketing of competing products in violation of our and our licensees’ or collaborators’ proprietary rights generally. Proceedings to enforce patent rights in foreign jurisdictions could result in substantial costs, could put our patents at risk of being invalidated or interpreted narrowly and patent applications at risk of not issuing, and could provoke third parties to assert claims against us or our licensees or collaborators. We or our licensees or collaborators may not prevail in any lawsuits that are initiated, and the damages or other remedies awarded, if any, may not be commercially meaningful. Furthermore, the European patent litigation landscape has changed with the advent of the Unified Patent Court, which may allow third parties to seek, or may allow us or our licensees or collaborators to obtain, certain forms of relief with pan-European effect. This could increase the risk that a single adverse decision could significantly narrow, invalidate or render unenforceable one or more of our European patents across multiple jurisdictions, or that we or our licensees or collaborators could be subject to injunctive relief affecting multiple markets, if subjected to the jurisdiction of the Unified Patent Court. We may not be able to collect royalties, or our royalties may be reduced, for sales of licensed products in jurisdictions where we do not obtain valid and enforceable claims covering the licensed products. Furthermore, the inability to obtain or enforce patent protection in some jurisdictions might increase competition, reduce sales, and result in reduced royalties. Disputes over claim coverage could reduce or eliminate royalties. Our license agreements may condition royalties, royalty rates, or royalty duration on the existence of one or more valid, enforceable and unexpired patent claims covering a licensed product in a particular country. Disputes may arise regarding whether a licensed product is covered by a valid claim; whether a pending, amended, challenged, opposed, appealed, narrowed, reissued or reexamined claim qualifies for royalty purposes; whether a method-of-treatment claim covers sales for a particular labeled or off-label use; whether a product modification avoids claim coverage; or whether a patent challenge, expiration, terminal disclaimer, loss of patent term extension, supplementary protection certificate decision or other event triggers a royalty reduction or termination. Licensees, sublicensees or other royalty payors may challenge, or have incentives to challenge, the scope, validity, enforceability, ownership, inventorship or royalty-bearing status of our patents or may assert that particular products, territories, sales, indications, formulations, manufacturing processes or periods are not covered by licensed patent rights. If a licensee, sublicensee or other counterparty successfully asserts that a licensed product is not covered by a valid claim, our royalty revenues could be reduced or eliminated in one or more countries. 36 Licensed products may not be covered by our patent claims, or the licensed products may evolve in a manner that reduces or eliminates claim coverage. Even if patents issue and remain valid and enforceable, they may not cover ultimately approved or commercialized licensed products. Our licensees or collaborators may modify licensed products, develop follow-on or next-generation products, change manufacturing processes, pursue alternative indications or dosing regimens, or commercialize products through sublicensees or affiliates in a manner that reduces or eliminates coverage by our patent claims. Competitors may also design around our claims or develop products that achieve similar therapeutic effects without infringing our patents. If licensed products or related commercial strategies evolve in a way that reduces or eliminates coverage by our patent claims, or if competitors develop non-infringing alternatives, our royalty revenues may be materially reduced. Because we do not expect to conduct further research and development, our ability to generate new patent rights, obtain patent protection for improvements or replace expiring or challenged patents may be limited. Historically, we generated new inventions and patent rights through our own research and development activities. Going forward, we do not expect to conduct further research and development and expect to operate with a limited-cost infrastructure. As a result, we may have limited ability to generate new inventions, create new patent families, supplement existing patent applications with additional technical data, or replace patents that expire, are narrowed, are invalidated or are designed around. Development, regulatory, manufacturing and commercialization activities conducted by our licensees or collaborators may generate inventions, improvements, know-how, data, formulations, dosing regimens, manufacturing processes, biomarkers, methods of use or other intellectual property. Depending on the terms of the applicable agreements and applicable law, we may not own, control or have rights to such improvements or related intellectual property. Licensed products or follow-on products may therefore be protected primarily by intellectual property owned or controlled by our licensees, collaborators or third parties rather than by us, and sales of such products may not be royalty-bearing to us or may be royalty-bearing for a shorter period or at a reduced rate. Our patents may be challenged, narrowed, invalidated or held unenforceable. Third parties may challenge the validity, enforceability, ownership, inventorship, priority, scope, or coverage of our patents and patent applications in litigation, post-grant proceedings, oppositions, reexaminations, inter partes reviews, post-grant reviews, interference or derivation proceedings, nullity actions, revocation actions, declaratory judgment actions, or other proceedings in the United States or foreign jurisdictions. These challenges may be based on a variety of different grounds, including lack of novelty or obviousness over prior art, public use or on-sale activity, lack of written description, lack of enablement, indefiniteness, lack of patent-eligible subject matter, obviousness-type or statutory double patenting, terminal-disclaimer issues, improper priority claims, added matter, incorrect inventorship, inequitable conduct, prosecution laches, or other statutory, equitable, or procedural grounds. We cannot assure you that all potentially relevant prior art relating to our patents and patent applications has been found or that all bases for challenging our patents have been considered. A successful challenge to any patent rights that support royalty payments could shorten or eliminate the royalty period, reduce leverage against biosimilar or other competitors, impair settlement value, reduce expected cash flows or eliminate substantially all value associated with the affected patent rights. Patent terms are limited, and failure to obtain available patent term extension or similar protection could reduce our royalty period. Patents have a limited lifespan. In the United States, if all maintenance fees are timely paid, the natural expiration of a patent is generally 20 years from its earliest U.S. non-provisional filing date. Various extensions may be available, but the life of a patent, and the protection it affords, is limited. Even if patents covering licensed products are obtained, once the patent life has expired for a licensed product, the licensee may be open to competition from competitive medications, including biosimilar or interchangeable biological products, and our royalties may be reduced or eliminated. Furthermore, given the amount of time required for the development, testing and regulatory review of new pharmaceutical products, patents protecting licensed products might expire before or shortly after such products are commercialized. As a result, our and our licensees’ or collaborators’ patent portfolio may not provide sufficient rights to exclude others from commercializing products similar or identical to licensed products for the period we expect. We expect that we or our licensees or collaborators will seek extensions of patent terms where these are available in countries where we or they are prosecuting patents. This includes in the United States under the Drug Price Competition and Patent Term Restoration Act of 1984, which permits a patent term extension of up to five years beyond the expiration of the patent. However, the applicable authorities, including the FDA and the U.S. Patent and Trademark Office in the United States, and any equivalent foreign regulatory authority, may not agree with an assessment of whether such extensions are available and may refuse to grant extensions or may grant more limited extensions than requested. 37 Moreover, we may not control whether the applicable licensee, marketing authorization holder, patent owner or other responsible party timely seeks patent term extension, selects the patent most beneficial to our royalty interests, satisfies applicable requirements or obtains the full extension requested. Even if an extension is granted, the scope of the extension may be limited and may not cover all approved uses, formulations, methods of manufacture or later-modified products. If available patent term extension, supplementary protection certificate protection or analogous foreign protection is not obtained, or is narrower or shorter than expected, the period during which licensed products are covered by royalty-bearing patent rights could be shortened, and our royalty revenues could be materially reduced. Changes in patent law could diminish the value of patents in general, thereby impairing the value of our patent portfolio and our ability to receive royalties. The laws, regulations, administrative practices, and judicial decisions governing patents and patent challenges in the United States and foreign jurisdictions are subject to change and may evolve in ways that reduce the scope, strength, duration, enforceability, or commercial value of our patents and patent applications. In the United States, Congress, the federal courts, and the USPTO have made, and may continue to make, changes that affect patent eligibility, written description, enablement, obviousness, obviousness-type double patenting, patent term, terminal disclaimers, continuation practice, claim construction, damages, injunctive relief, inequitable conduct, enforcement, and the procedures and standards applicable to post-grant patent challenges. For example, Supreme Court and Federal Circuit decisions have created uncertainty or imposed limitations regarding patent-eligible subject matter, including claims involving laws of nature, natural phenomena, natural products, diagnostic methods, and certain method-of-treatment or biomarker-related inventions. Courts have also increased scrutiny of broad genus claims, including functionally defined antibody or biologics claims, under the written description and enablement requirements. As a result, patent claims that we or our licensees or collaborators obtain, maintain, or enforce may be narrower than expected or may be held invalid or unenforceable. Proceedings before the USPTO and other patent offices also may affect the value of our patents. Inter partes review permits third parties to challenge issued patent claims on 35 U.S.C. §§ 102 and 103 grounds based on patents and printed publications, and post-grant review permits broader challenges on any ground that could be raised under 35 U.S.C. § 282(b)(2) or (3). These proceedings, and changes in the rules, standards, policies, or discretionary practices governing such proceedings, could increase the risk that patents covering licensed products will be narrowed, canceled, held unpatentable, or become more costly to defend. Patent laws and practices outside the United States may also change, and foreign courts, patent offices, and administrative bodies may apply standards that differ from those applied in the United States. Changes in foreign patentability standards, opposition practice, supplementary protection certificate or patent term extension rules, compulsory licensing regimes, enforcement procedures, remedies, or centralized patent litigation systems could reduce the geographic scope, duration, enforceability, or economic value of our patent rights. Any such changes, individually or in combination, could materially adversely affect our ability to preserve royalty-bearing patent coverage for licensed products. Obtaining and maintaining patent protection depends on compliance with procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and patent protection could be reduced or eliminated for non-compliance with these requirements. Periodic maintenance and annuity fees on issued patents are due to be paid to the USPTO and foreign patent agencies in several stages over the lifetime of the patent. The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. While an inadvertent lapse can in many cases be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which non-compliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Non-compliance events that could result in abandonment or lapse of a patent or patent application include failure to respond to official actions within prescribed time limits, non-payment of fees and failure to properly legalize and submit formal documents. Because we expect to operate with a limited-cost infrastructure and may rely on licensees, collaborators, outside counsel, annuity service providers or other third parties to monitor and satisfy such requirements, failures by any such party could result in loss of patent rights. If we or our licensees or collaborators fail to maintain the patents and patent applications covering licensed products could adversely affect on our royalty revenues. 38 Defects in inventorship, ownership, assignment or chain of title could impair our patent rights and royalty revenues. Our ability to receive royalties and, where applicable, enforce patent rights depends on proper inventorship, ownership, assignment and chain of title for the relevant patents and patent applications. We may be subject to risks arising from incomplete or defective inventor assignments, inconsistent ownership among members of a patent family, unrecorded assignments, security interests or prior licenses, rights retained by contractors, consultants, collaborators or former employers, defects in foreign assignment formalities, correction of inventorship, or disputes regarding ownership of inventions or improvements. Disputes may arise regarding the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by us and our licensees or collaborators, the priority of invention of patented technology, or the scope of rights granted under license agreements. Any defect or dispute regarding inventorship, ownership, assignment or chain of title could impair our ability to maintain, enforce, license or receive royalties from the affected patent rights. Our reliance on licensees and other third parties may require us to share confidential information and know-how, which increases the possibility that such information may be misappropriated or disclosed. To the extent our licensed technology includes trade secrets, unpatented know-how, data, materials, assays, manufacturing information or other confidential information, we may be required to share such information with licensees, collaborators, advisors, third-party contractors, consultants or other parties. We seek to protect our confidential information and trade secrets, in part, by entering into confidentiality agreements and, if applicable, material transfer agreements, consulting agreements or other similar agreements prior to disclosing proprietary information. These agreements typically limit the rights of third parties to use or disclose our confidential information, including trade secrets. Despite the contractual provisions employed when working with third parties, the need to share trade secrets and other confidential information increases the risk that such information becomes known by competitors, is inadvertently incorporated into the technology of others, or is disclosed or used in violation of these agreements. Our agreements may also contain limited publication rights or other exceptions. Despite our efforts to protect our trade secrets, competitors may discover them through breach of our agreements with third parties, independent development or publication of information by third-party collaborators. A competitor’s discovery of our trade secrets or other unauthorized use or disclosure could impair the value of our intellectual property and our royalty-bearing rights. We may become involved in lawsuits or administrative proceedings to protect or enforce our intellectual property, which could be expensive, time-consuming and unsuccessful and could adversely affect our royalty revenues. Third parties may infringe our patents or misappropriate or otherwise violate our intellectual property rights. In the future, we or our licensees or collaborators may initiate legal proceedings to enforce or defend our intellectual property rights, to protect 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 or our licensees or collaborators to challenge the validity, enforceability or scope of intellectual property rights we own or control. These proceedings can be expensive and time-consuming, and many adversaries in these proceedings may have the ability to dedicate substantially greater resources to prosecuting these legal actions than we do. In an infringement proceeding, a court may decide that a patent owned by us is invalid or unenforceable, or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question. Furthermore, an adverse result in any litigation or administrative proceeding could put one or more of our patents at risk of being invalidated, held unenforceable or interpreted narrowly. Accordingly, despite our efforts, we or our licensees or collaborators may not prevent third parties from infringing upon or misappropriating intellectual property rights we own or control, particularly in countries where the laws may not protect those rights as fully as in the United States. Within and outside of the United States, there has been a substantial amount of litigation and administrative proceedings regarding patent and other intellectual property rights in the pharmaceutical industry, including opposition, derivation, reexamination, inter partes review, interference, or other pre-issuance or post-grant proceedings. Such proceedings may be provoked by third parties or by us or our licensees or collaborators to protect or enforce our patents or patent applications. Additionally, third party pre-issuance submission of prior art to the USPTO or other foreign jurisdictions may jeopardize the issuance or scope of our patent applications. An unfavorable outcome in any such proceeding could affect our patent rights and reduce or eliminate our ability to collect royalties. 39 In addition, if the breadth or strength of protection provided by our patents and patent applications is threatened, it could dissuade existing or potential licensees, collaborators or acquirors from entering into or maintaining arrangements with us. Even if we successfully defend such litigation or proceeding, we may incur substantial costs, and it may distract management and other employees. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that confidential information could be compromised by disclosure during this type of litigation. 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 adversely affect the price of shares of our common stock. If license agreements covering our patents are terminated, disputed or interpreted unfavorably, our royalty revenues may be reduced or eliminated. Our commercial success depends upon the ability and willingness of our licensees and collaborators to develop, manufacture, market and sell licensed products and to pay royalties and other amounts due under license agreements covering our intellectual property. If a licensee or collaborator fails to comply with its obligations under any such agreement, including payment, reporting, diligence, prosecution, maintenance, enforcement, defense, confidentiality or other obligations, our remedies may be limited and our royalty revenues could be reduced, delayed or eliminated. Conversely, if we fail to comply with obligations that apply to us under a license agreement, including obligations relating to cooperation, ownership, enforcement, confidentiality or other intellectual property matters, a licensee or collaborator may assert that it has the right to terminate, reduce payments, challenge the scope of its obligations or seek other remedies. Disputes may arise regarding intellectual property subject to a licensing agreement, including: •the scope of rights granted under the license agreement and other interpretation-related issues; •whether a product, indication, formulation, dosing regimen, manufacturing process, territory, affiliate sale or sublicensee sale is covered by the licensed patent rights; •the sublicensing of patent and other rights under collaboration relationships; •the existence and satisfaction of any diligence, prosecution, maintenance, enforcement or commercialization obligations; •the calculation of royalties, including deductions, offsets, royalty step-downs, patent expiration, valid claim requirements, royalty stacking and treatment of combination products; •the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by us and our licensees or collaborators; and •the priority of invention, inventorship, ownership, validity, enforceability or scope of patented technology. If disputes over intellectual property subject to license agreements prevent or impair our ability to maintain licensing arrangements on acceptable terms, or if licensees, sublicensees or collaborators successfully dispute their obligation to pay royalties, our royalty revenues and the value of our patent portfolio could be materially adversely affected. Third-party intellectual property rights may limit commercialization of licensed products or reduce royalties payable to us. Third parties may initiate legal proceedings against us or our licensees or collaborators alleging that we or they infringe third party intellectual property rights, or we or our licensees or collaborators 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, reexaminations, post-grant reviews, inter partes reviews or derivation proceedings in the United States or other jurisdictions. These proceedings can be expensive and time-consuming, and many adversaries in these proceedings may have the ability to dedicate substantially greater resources to prosecuting these legal actions than we do. Parties making claims may obtain injunctive or other equitable relief, which could effectively block the ability of our licensees or collaborators to further develop, manufacture or commercialize licensed products. An unfavorable outcome could require us or our licensees or collaborators to cease using the related technology, cease developing or commercializing licensed products, redesign products or processes, or attempt to license rights from the prevailing party. Any such license may not be available on commercially reasonable terms or at all. Even if a license is obtained, it may be non-exclusive, may require substantial payments, may result in 40 royalty stacking, or may permit offsets or reductions against royalties owed to us. In addition, a finding of infringement could result in monetary damages, including treble damages and attorneys’ fees, or could prevent commercialization of licensed products, which could reduce or eliminate our royalty revenues. 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. Many of our current or former employees, consultants, advisors, scientific founders or inventors may have been previously employed at universities, research institutions or other biopharmaceutical companies, including competitors or potential competitors. Some of these persons may have executed proprietary rights, non-disclosure, non-competition or similar agreements in connection with previous employment or engagements. Although we seek to ensure that persons involved in our work do not use the proprietary information or know-how of others, we may be subject to claims that we or such persons have used or disclosed confidential information or intellectual property, including trade secrets or other proprietary information, of a former employer, collaborator or other third party. 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 sustain damages. Such intellectual property rights could be awarded to a third party, and we or our licensees or collaborators could be required to obtain a license from such third party to commercialize licensed technology or licensed 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. Our inability to protect confidential information and trade secrets would harm the value of our intellectual property and royalty-bearing rights. In addition to seeking patents for certain technology and products, we may rely on trade secrets, including unpatented know-how, data, technology and other proprietary information, to maintain the value of our intellectual property 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 employees, licensees, 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 employees and consultants. Despite these efforts, any of these parties may breach the agreements and disclose proprietary information, including trade secrets, and we may not be able to obtain adequate remedies for such breaches. 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 within and outside the United States may be less willing or unwilling to protect trade secrets. Furthermore, if a competitor lawfully obtained or independently developed any trade secrets, we would have no right to prevent such competitor from using that technology or information to compete with licensed products, which could harm the value of our royalty-bearing rights. Additionally, if the steps taken to maintain trade secrets are deemed inadequate, we may have insufficient recourse against third parties for misappropriating the trade secret. Risks Related to Managing Growth, Operations and Macroeconomic Conditions We currently have a limited number of full time equivalent contractors, and our future success depends on our ability to retain our key executives and to attract, retain and motivate qualified personnel. To succeed, we must recruit, retain, manage and motivate qualified personnel, and we face significant competition for experienced personnel. If we do not succeed in attracting and retaining qualified personnel, particularly at the management level, it could adversely affect our ability to execute our business plan, harm our operating results and adversely affect our ability to realize the benefits under our existing collaborations and to manage our business after the Separation. Many of the other companies that we compete against for qualified personnel have greater financial and other resources, different risk profiles and a longer history in the industry than we do. They also may provide more diverse opportunities and better chances for career advancement. Some of these characteristics may be more appealing to high-quality candidates than what we have to offer. If we are unable to continue to attract and retain high-quality personnel, our business may be harmed and the price of our securities could fall. 41 Our internal computer systems, or those of our third-party collaborators or other service providers, may fail or suffer security breaches and cyber-attacks, which could result in a material disruption to our business. We are dependent on information technology systems, infrastructure and data to operate our business. In the ordinary course of our business, we collect, store, process and transmit large amounts of confidential and sensitive information. It is critical that we do so in a secure manner to maintain the confidentiality, integrity and availability of such information. We have established physical, electronic and organizational measures to safeguard and secure our systems which are designed to prevent data compromise, and rely on commercially available systems, software, tools and monitoring to provide security for our information technology systems and the processing, transmission and storage of our information. We have also outsourced elements of our information technology infrastructure, resulting in a number of third-party vendors that may or could have access to our information. Despite the implementation of security measures, any of the internal technology systems belonging to us, our collaborators or our third party service providers are vulnerable to damage from computer viruses, bugs, worms, malware, hacking, supply chain attacks and vulnerabilities, distributed denial-of-service attacks, credential stuffing or harvesting, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failure. Any system failure, accident or security breach that causes interruptions in our own, in collaborators’ or in third party service providers’ operations could result in a material disruption of our drug discovery and development programs. Our system protections may be ineffective or inadequate, or we could be impacted by software bugs or other technical malfunctions, as well as employee error or malfeasance. Additionally, laws and regulations regarding privacy and data protection are evolving, and it is possible that they may be interpreted and applied in a manner that is inconsistent with our data handling safeguards and practices that could result in fines, lawsuits, and other penalties, and significant changes to our or our collaborators or third party service providers’ business practices and products and service offerings. To the extent that the measures we or our collaborators or third-party service providers have taken prove to be insufficient or inadequate, we may become subject to litigation, breach notification obligations, or regulatory or administrative sanctions, which could result in significant fines, penalties, damages, harm to our reputation, or loss of customers. While we have not experienced any material losses as a result of any system failure, accident or security breach to date, we have been the subject of certain phishing attempts in the past. If such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our development programs and our business operations, whether due to a loss of our trade secrets or other proprietary information or other similar disruptions. Additionally, a party who circumvents our security measures could, among other effects, appropriate proprietary data, cause interruptions in our operations, or expose our collaborators to hacks, viruses, and other disruptions. In addition, while we maintain cybersecurity insurance coverage, we cannot be sure that such coverage will be adequate or sufficient to compensate for any losses associated with such events, that such coverage will continue to be available on commercially reasonable terms or at all, or that such coverage will pay future claims. The development and maintenance of our information technology systems, controls and processes is costly and requires ongoing monitoring and updating as technologies change and efforts to overcome security measures become increasingly sophisticated. Our operations, or the third parties upon whom we depend, are vulnerable to interruption by fire, earthquake, power loss, telecommunications failure, terrorist activity, health epidemics or pandemics and other events beyond our control, which could harm our business. Our facilities are located in San Diego, California, which is a seismically active region, and has also historically been subject to wildfires and electrical blackouts as a result of a shortage of available electrical power. We have not undertaken a systematic analysis of the potential consequences to our business and financial results from a major earthquake, fire, power loss, terrorist activity, health epidemics or pandemics or other disasters, including those resulting from or amplified by climate change, and do not have a recovery plan for such disasters. In addition, we do not carry sufficient insurance to compensate us for actual losses from interruption of our business that may occur, and any losses or damages incurred by us could harm our business. We maintain multiple copies of each of our antibody sequences and electronic data records, most of which we maintain at our headquarters. If our facilities were impacted by a seismic or wildfire event, there could be an adverse effect on our ability to perform our obligations under our existing and any future collaborations. The macroeconomic and geopolitical environment may have a material impact on the U.S. and global economies and could materially impact our business, financial condition and results of operations. The macroeconomic and geopolitical environment, including inflation, increased volatility in interest rates, tariffs and the debt and equity markets, instability in the global banking system, global health crises and pandemics and geopolitical conflict have had, 42 and may continue to have, an adverse impact on the U.S. and global economic conditions, which could have an adverse effect on our business and financial condition. The extent to which any such factors impact our business and operations will depend on future developments that are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of the event and the actions to contain its impact. We are subject to risks associated with foreign trade policy, including recent tariffs imposed or proposed by the United States on its trading partners, as well as retaliatory actions that have or may be imposed by other countries in response. The recent U.S. tariffs and other trade restrictions against trading partners and specific sectors of the global economy may have an adverse effect on our business and financial condition. The United States has imposed many country-specific tariffs at a rate higher than the 10% global baseline on all foreign countries and continues to impose increased tariffs on China in particular. At this time, the impact of the recently imposed and proposed tariff actions with respect to our operations remain uncertain given ongoing bilateral negotiations between the United States and trading partners, changes in U.S. policy, and an ongoing Section 232 investigation by the U.S. Department of Commerce, which may result in the imposition of an additional tariff rate on U.S. imports of pharmaceuticals and pharmaceutical ingredients. Jemperli involves pharmaceutical ingredients that are partially sourced from outside of the United States, including China, the cost of which may increase due to additional tariff rates. Higher material costs may negatively impact our royalties. Risks Related to Ownership of Our Common Stock The market price of our stock has been and may continue to be volatile, and you could lose all or part of your investment. The trading price of our common stock may be highly volatile and subject to wide fluctuations in response to various factors, some of which we cannot control. In addition to the factors discussed in this “Risk Factors” section and elsewhere in this Quarterly Report, these factors include: •the success of competitive products to the products licensed to our collaborators; •regulatory actions with respect to our collaborators’ products or our collaborators’ competitors’ products; •announcements by our collaborators or their competitors of significant acquisitions, strategic collaborations, joint ventures, collaborations or capital commitments; •results of future clinical trials of Jemperli or any other of our collaborators’ product candidates or those of our collaborators’ competitors; •regulatory or legal developments in the United States and other countries; •developments or disputes concerning patent applications, issued patents or other proprietary rights of our collaborators; •the recruitment or departure of key personnel by us or our collaborators; •developments with respect to our existing collaboration agreements and announcements of new collaboration agreements; •disputes, breaches and terminations of our existing collaboration agreements; •actual or anticipated changes in estimates as to financial results or recommendations by securities analysts; •variations in our financial results or those of companies that are perceived to be similar to us; •fluctuations in the valuation of companies perceived by investors to be comparable to us; •share price and volume fluctuations attributable to inconsistent trading volume levels of our shares; •announcement or expectation of additional financing efforts; •purchases of our common stock by us pursuant to a stock repurchase program; •changes in the structure of health care payment systems; •market conditions in the biotechnology sector; and 43 •general economic uncertainty and capital markets disruptions, which have been substantially impacted by geopolitical instability, actual or perceived instability in the U.S. and global banking systems, uncertainty with respect to the U.S. federal budget, and fluctuating interest rates, tariffs and inflation. In addition, the stock market in general, and the Nasdaq Global Select Market 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. In the past, following periods of volatility in the overall market and the market price of a particular company’s securities, securities class action litigation has often been instituted against these companies. We have been subject to securities litigation in the past, and any future securities litigation could result in substantial costs and a diversion of our management’s attention and resources. The realization of any of the above risks or any of a broad range of other risks, including those described in this “Risk Factors” section, could have a dramatic and adverse impact on the market price of our common stock. We may be subject to securities litigation, which is expensive and could divert management attention. The market price of our common stock is volatile and, in the past, companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We have been, and may in the future be, the target of this type of litigation. Regardless of the outcome, future litigation against us could result in substantial costs and divert our management’s attention from other business concerns, which could seriously harm our business. The requirements of being a public company may strain our resources, divert management’s attention, and affect our ability to attract and retain additional executive management and qualified board members. 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 the Nasdaq Global Select Market. Our management and other personnel devote a substantial amount of time to these compliance initiatives. In addition, changing laws, regulations, and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs, and making some activities more time consuming. We intend to continue to invest resources to comply with evolving laws, regulations, and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention. If our efforts to comply with new laws, regulations, and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us and our business may be adversely affected. 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 required to incur substantial costs to maintain sufficient coverage. We cannot predict or estimate the amount or timing of additional costs we may incur to respond to these and future 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. In addition, we are required to maintain internal control over financial reporting and to report any material weaknesses in such internal control. Section 404 of the Sarbanes-Oxley Act requires that we evaluate and determine the effectiveness of our internal control over financial reporting and provide a management report on our internal controls on an annual basis. If we have material weaknesses in our internal control over financial reporting, we may not detect errors on a timely basis and our financial statements may be materially misstated. While we have compiled the systems, processes and documentation necessary to comply with Section 404 of the Sarbanes-Oxley Act, we will need to maintain and enhance these processes and controls as we grow, and we may require additional management and staff resources to do so. Additionally, even if we conclude our internal controls are effective for a given period, we may in the future identify one or more material weaknesses in our internal controls, in which case our management will be unable to conclude that our internal control over financial reporting is effective. Regardless of compliance with Section 404, any failure of our internal control over financial reporting could have a material adverse effect on our reported operating results and harm our reputation. Internal control deficiencies could also result in a restatement of our financial results. 44 Future sales and issuances of our common stock or rights to purchase common stock, including pursuant to our equity incentive plans, could result in additional dilution of the percentage ownership of our stockholders and could cause our stock price to fall. While we do not expect that additional capital will be needed in the future to continue our planned operations, it is possible we may need to raise capital in the future. To raise capital, we may sell common stock, convertible securities or other equity securities in one or more transactions at prices and in a manner we determine from time to time. If we sell common stock, convertible securities or other equity securities, investors may be materially diluted. We also have registered all shares of common stock that we may issue under our equity incentive plans or that are issuable upon exercise of outstanding options, or upon vesting of outstanding awards. These shares can be freely sold in the public market upon issuance and once vested, subject to volume limitations applicable to affiliates. If any of these additional shares are sold, or if it is perceived that they will be sold, in the public market, the market price of our common stock could decline. Such sales may also result in material dilution to our existing stockholders, and new investors could gain rights, preferences and privileges senior to the holders of our common stock. Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud. We are subject to the periodic reporting requirements of the Exchange Act. We designed our disclosure controls and procedures to reasonably assure that information we must disclose in reports we file or submit under the Exchange Act is accumulated and communicated to management and recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. We believe that any disclosure controls and procedures or internal controls and procedures, no matter how well-conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by an unauthorized override of the controls. Accordingly, because of the inherent limitations in our control system, misstatements due to error or fraud may occur and not be detected. We do not intend to pay dividends on our common stock, so any returns will be limited to the value of our stock. We have never declared or paid any cash dividend on our common stock. We currently anticipate that we will retain future earnings for the operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future. Any return to stockholders will therefore be limited to the appreciation of their stock. Our cash and investments could be adversely affected if the financial institutions in which we hold our cash and investments fail. We regularly maintain cash balances at third party financial institutions in excess of the Federal Deposit Insurance Corporation insurance limit. Further, if we enter into a credit, loan or other similar facility with a financial institution, certain covenants included in such facility may require as security that we keep a significant portion of our cash with the institution providing such facility. If a depository institution where we maintain deposits fails or is subject to adverse conditions in the financial or credit markets, we may not be able to recover all, if any, of our deposits, which could adversely impact our operating liquidity and financial performance. Provisions in our restated certificate of incorporation, restated bylaws and Delaware law might discourage, delay or prevent a change in control of our company or changes in our management and, therefore, depress the market price of our common stock. Our amended and restated certificate of incorporation, (“Restated Certificate”) and second amended and restated bylaws (“Restated Bylaws”) contain provisions that could depress the market price of our common stock by acting to discourage, delay or prevent a change in control of our company or changes in our management that the stockholders of our company may deem advantageous. These provisions, among other things: •establish a classified Board of Directors so that not all members of our Board of Directors are elected at one time; •permit only the Board of Directors to establish the number of directors and fill vacancies on the Board of Directors; •provide that directors may only be removed “for cause” and only with the approval of two-thirds of our stockholders; 45 •require super-majority voting to amend some provisions in our Restated Certificate and Restated Bylaws; •authorize the issuance of “blank check” preferred stock that our Board of Directors could use to implement a stockholder rights plan (also known as a “poison pill”); •eliminate the ability of our stockholders to call special meetings of stockholders; •prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders; •prohibit cumulative voting; and •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 annual stockholder meetings. In addition, Section 203 of the Delaware General Corporation Law (“DGCL”) may discourage, delay or prevent a change in control of our company. Section 203 of the DGCL imposes certain restrictions on mergers, business combinations and other transactions between us and holders of 15% or more of our common stock. The exclusive forum provisions in our organizational documents may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, or employees, or the underwriters of any offering giving rise to such claim, which may discourage lawsuits with respect to such claims. Our Restated Certificate, to the fullest extent permitted by law, provides that the Court of Chancery of the State of Delaware is the exclusive forum for: any derivative action or proceeding brought on our behalf; any action asserting a breach of fiduciary duty; any action asserting a claim against us arising pursuant to the DGCL, our Restated Certificate, or our Restated Bylaws; or any action asserting a claim that is governed by the internal affairs doctrine. This exclusive forum provision does not apply to suits brought to enforce a duty or liability created by the Securities Exchange Act of 1934, as amended, or Exchange Act. It could apply, however, to a suit that falls within one or more of the categories enumerated in the exclusive forum provision. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, or other employees, or the underwriters of any offering giving rise to such claims, which may discourage lawsuits with respect to such claims. Alternatively, if a court were to find the choice of forum provisions contained in our Restated Certificate 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, financial condition, results of operations and prospects. Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all claims brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. Our Restated Bylaws provide that the federal district courts of the United States of America will, to the fullest extent permitted by law, be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act, or the Federal Forum Provision, including for all causes of action asserted against any defendant named in such complaint. For the avoidance of doubt, this provision is intended to benefit and may be enforced by us, our officers and directors, the underwriters to any offering giving rise to such complaint, and any other professional entity whose profession gives authority to a statement made by that person or entity and who has prepared or certified any part of the documents underlying the offering. Our decision to adopt a Federal Forum Provision followed a decision by the Supreme Court of the State of Delaware holding that such provisions are facially valid under Delaware law. While federal or other state courts may not follow the holding of the Delaware Supreme Court or may determine that the Federal Forum Provision should be enforced in a particular case, application of the Federal Forum Provision means that suits brought by our stockholders to enforce any duty or liability created by the Securities Act must be brought in federal court and cannot be brought in state court, and our stockholders cannot waive compliance with the federal securities laws and the rules and regulations thereunder. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all claims brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. In addition, neither the exclusive forum provision nor the Federal Forum Provision applies to suits brought to enforce any duty or liability created by the Exchange Act. Accordingly, actions by our stockholders to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder must be brought in federal court, and our stockholders cannot waive compliance with the federal securities laws and the rules and regulations thereunder. Any person or entity purchasing or otherwise acquiring or holding any interest in any of our securities shall be deemed to have notice of and consented to our exclusive forum provisions, including the Federal Forum Provision. These provisions may limit a 46 stockholder’s ability to bring a claim, and may result in increased costs for a stockholder to bring such a claim, in a judicial forum of their choosing for disputes with us or our directors, officers, other employees or agents, which may discourage lawsuits against us and our directors, officers, other employees or agents. If securities or industry analysts do not publish research or reports about our business, or if they issue an adverse or misleading opinion regarding our stock, our stock price and trading volume could decline. The trading market for our common stock is influenced by the research and reports that industry or securities analysts publish about us, our business, our collaborators or our collaborators’ businesses. If any of the analysts who cover us or our collaborators issues an adverse or misleading opinion regarding us or our collaborators, our business model, our intellectual property or our stock performance, or if our operating results fail to meet the expectations of analysts, our stock price would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline. We plan to use our federal and state net operating loss (“NOL”) carryforwards to offset taxable income from revenue generated from operations or corporate collaborations. However, our ability to use NOL carryforwards to offset taxable income in future years could be limited. We plan to use our current year operating losses and NOL to offset taxable income from any revenue generated from operations, corporate collaborations, or dividends due to the Spin-off. To the extent we have taxable income in excess of current year operating losses, we plan to use our NOL carryforwards to offset income that would otherwise be taxable. As of December 31, 2025, we had federal NOLs of approximately $323.5 million. Of this, $38.6 million will expire beginning in 2031 through 2037, if not used to reduce income taxes payable in the future and $284.9 million carry forward indefinitely. We had state NOLs of approximately $69.8 million, which will expire beginning in 2028 through 2045. However, the benefits from the use of our NOL carryforwards may be limited under Section 382 of the Code, if we undergo an “ownership change,” which is generally defined as a greater than 50 percentage point change (by value) in our equity ownership by certain stockholders over a three-year period. We experienced ownership changes as defined by Section 382 of the Code during 2007, 2017 and 2021. As a result, as of December 31, 2025, there are $154.1 million of federal NOLs available to offset taxable income in future years without Section 382 limitation, while $169.4 million of federal NOLs are subject to annual limitations over future periods. State NOL and credit carryforwards may be similarly limited. Our use of federal and state NOLs could be further limited if we experience one or more ownership changes subsequent to December 31, 2025. Under legislative changes made by the Tax Cuts and Jobs Act, the U.S. federal NOLs incurred in 2018 and in future years may be carried forward indefinitely, but the ability to utilize such federal NOLs to offset taxable income is limited to 80% of our taxable income (without regard to certain deductions). Our significant state NOLs were generated in the state of California, which provides for a 20 year carry forward. State NOL carryforwards may be similarly limited by cumulative ownership changes. In addition, there may be periods during which the use of NOL carryforwards is suspended or otherwise limited at the state level, which could also impact our ability to utilize NOL carryforwards. Any such limitations on the use of our NOLs may result in greater tax liabilities than we would incur in the absence of such a limitation, and any increased liabilities could adversely affect our business, results of operations, financial condition and cash flow. We are a smaller reporting company and may elect to comply with reduced public company reporting requirements applicable to smaller reporting companies, which could make our common stock less attractive to investors. We are a “smaller reporting company,” meaning that we are not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent company that is not a “smaller reporting company,” and have either: (i) a public float of less than $250 million as of our most recently completed second fiscal quarter or (ii) annual revenues of less than $100 million during the most recently completed fiscal year and (A) no public float or (B) a public float of less than $700 million as of our most recently completed second fiscal quarter. As a “smaller reporting company,” we are subject to reduced disclosure obligations in our SEC filings compared to other issuers, including with respect to disclosure obligations regarding executive compensation in our periodic reports and proxy statements. Until such time as we cease to be a “smaller reporting company,” such reduced disclosure in our SEC filings may make it harder for investors to analyze our operating results and financial prospects. If some investors find our common stock less attractive as a result of any choices to reduce future disclosure we may make, there may be a less active trading market for our common stock and our stock price may be more volatile. 47