We are, from time to time, party to various claims and legal proceedings arising in the ordinary course of our business. Given that such proceedings are subject to uncertainty, there can be no assurance that any such legal proceedings, either individually or in the aggregate, will not have a material adverse effect on our business, results of operations, financial condition or cash flows. See Part I, Item I “Financial Statements (Unaudited) – Note 19, Commitments and Contingencies, in this Quarterly Report, which are incorporated herein by reference. Item lA. Risk Factors. Investing in our common stock involves a high degree of risk. In addition to the other information set forth in this Quarterly Report and in other documents that we file with the SEC, you should carefully consider the factors described in the section titled "Risk Factors" in our Form 10-K. Other than the below, there have been no material changes to the risk factors described in Part I, Item 1A of our Form 10-K. If any of the risk factors described in the Form 10-K actually materializes, our business, financial condition and results of operations could be materially adversely affected. In such an event, the market price of our common stock could decline and you may lose all or part of your investment. Additional risks that we currently do not know about or that we currently believe to be immaterial may also impair our business. We may disclose changes to such risk factors or disclose additional risk factors from time to time in our future filings with the SEC. Risks Related to the Merger The conditions to the consummation of the Merger may not be satisfied at all or in the anticipated timeframe. On July 15, 2026, we entered into the Merger Agreement with Lilly and Merger Sub, pursuant to which Merger Sub will merge with and into the Company, with the Company surviving the Merger as a wholly-owned subsidiary of Lilly. Consummation of the Merger is subject to a number of conditions, including: (i) approval of the Merger Agreement by holders of at least a majority of the outstanding stock entitled to vote; (ii) the expiration or termination of any applicable waiting period (and extensions thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; (iii) the expiration or termination of the antitrust notices, approvals, clearances and waiting periods required under the antitrust laws of Australia and Germany, as well as the antitrust laws of the United Kingdom and another specified jurisdiction; (iv) the absence of any law or order by any governmental authority of competent jurisdiction that would prohibit or prevent the Merger; (v) the absence of any pending suit, action or proceeding by a governmental authority of competent jurisdiction (a) seeking to prohibit or impose material limitations on Lilly or Merger Sub’s ownership or operation of all or any material portion of their or our businesses or assets, or to compel a divestiture or hold separate of any material portion thereof, (b) seeking to prohibit or make illegal the consummation of the Merger, (c) seeking to impose material limitations on Lilly’s or Merger Sub’s ability to exercise full rights of ownership of our shares, or (d) seeking to require divestiture by Lilly of our shares; and (vii) other conditions specified in the Merger Agreement. As a result, there can be no assurance that the Merger will be consummated. These conditions are described in more detail in the Merger Agreement, which is filed as an exhibit to the Current Report on Form 8-K, filed with the SEC on July 16, 2026, and incorporated herein by reference. The Company intends to pursue all required approvals in accordance with the Merger Agreement. However, no assurance can be given that the required approvals will be obtained and, even if all such approvals are obtained, no assurance can be given to the terms, conditions and timing of the approvals or that they will satisfy the terms of the Merger Agreement. The announcement of, or a failure to consummate, the Merger could negatively impact our business, financial condition, results of operations or our stock price. Our announcement of having entered into the Merger Agreement could cause a material disruption to our business and there can be no assurance that the conditions to the consummation of the Merger will be satisfied. The Merger Agreement may also be terminated by us and/or Lilly in certain specified circumstances, as described below. We are subject to several risks as a result of the announcement of the Merger Agreement, including, but not limited to, the following: •if the Merger is not completed within the expected timeframe, or at all, the share price of our common stock will change to the extent that the current market price of our common stock reflects an assumption that the Merger will be consummated; •pursuant to the Merger Agreement, we are subject to certain restrictions on the conduct of our business prior to the completion of the Merger, which restrictions could adversely affect our ability to realize certain of our business strategies or take advantage of certain business opportunities; •the attention of our management may be directed towards the consummation of the Merger and related matters, and their focus may be diverted from the day-to-day business operations of our Company, including from other opportunities that might otherwise be beneficial to us; 56 •we may experience difficulty retaining existing key employees or hire new capable employees, given the uncertainty regarding our future, in order to execute on our continuing business operations; •a failure to complete the Merger within the proposed timeframe, or at all, may result in negative publicity and/or a negative impression of us in the investment community or business community generally; •we may experience difficulties maintaining relationships with collaborators, vendors, and other business partners; •third parties may determine to terminate and/or attempt to renegotiate their relationship with us as a result of the Merger, whether pursuant to the terms of their existing agreements with us or otherwise; •upon termination of the Merger Agreement by us or Lilly under specified circumstances, we would be required to pay a termination fee of $104,300,000; •we could be subject to litigation related to any failure to complete the Merger; and •if the Merger is not completed, we will have incurred significant transaction costs and expended significant management resources, and may need to seek additional financing to continue to develop our product candidates, which financing may not be available within the necessary timeframe, on acceptable terms, or at all. In addition, our executive officers and directors may have interests in the Merger that are different from, or are in addition to, those of our stockholders generally. These interests include without limitation the following: •each of our directors and executive officers hold outstanding Company equity awards; •our directors and officers are subject to a voting and support agreement in favor of the adoption and approval of the Merger Agreement; •each of our executive officers is a party to an employment agreement that provides for severance benefits upon a qualifying termination of employment in connection with a change in control, which includes the Merger; •all equity awards, whether vested or unvested (other than out-of-the-money options), held by our executive officers will be cancelled at the Effective Time in exchange for a cash payment, plus a certain number of CVRs, under the terms of the Merger Agreement; •all equity awards held by our non-employee directors will vest in full at the Effective Time, under the terms of the applicable award agreement underlying such equity award; and •certain executive officers may continue to provide employment or other services to Lilly after the Effective Time and may enter into new agreements, arrangements or understandings with Lilly to set forth the terms and compensation of such post-Effective Time service. The Merger Agreement contains provisions that could make it difficult for a third-party to acquire us prior to the completion of the Merger. The Merger Agreement contains restrictions on our ability to obtain a third-party proposal for an acquisition of our Company. These provisions include our agreement not to solicit or initiate any additional discussions with third parties regarding other proposals to acquire us, as well as restrictions on our ability to respond to such proposals, subject to fulfillment of certain fiduciary requirements of our Board of Directors. The Merger Agreement also contains certain termination rights, including, under certain circumstances, a requirement for us to pay Lilly a termination fee of $104,300,000. These provisions might discourage an otherwise-interested third party from considering or proposing an acquisition of our Company, even one that may be deemed of greater value to our stockholders than the Merger. Furthermore, even if a third party elects to propose an acquisition, the concept of a termination fee may result in that third party offering a lower value to our stockholders than such third-party might otherwise have offered. While the Merger Agreement is in effect, we are subject to restrictions on our business activities. The Merger Agreement includes restrictions on the conduct of our business prior to the completion of the Merger, generally requiring us to use commercially reasonable efforts to conduct our business in the ordinary course consistent with past practice, including using commercially reasonable efforts to preserve our business organization and goodwill and maintain existing relationships with customers, suppliers, officers, employees and creditors. In addition, we are subject to a variety of specified restrictions. Unless we obtain Lilly’s prior written consent (which consent may not be unreasonably withheld, conditioned or delayed), except as specifically required by the Merger Agreement or required by applicable law, we may not, among other things and subject to certain exceptions, limitations and qualifications, incur additional indebtedness, issue additional shares of our common stock outside of our equity incentive plans, pay distributions, acquire certain assets or securities, sell or dispose of certain material intellectual property, enter into material contracts other than in the ordinary course of business, or make certain capital expenditures. We may find that these and other contractual restrictions in the Merger Agreement 57 delay or prevent us from responding, or limit our ability to respond, effectively to competitive pressures, industry developments and future business opportunities that may arise during such period, even if our management believes they may be advisable. If any of these effects were to occur, it could materially and adversely impact our operating results, financial position, cash flows or the price of our common stock. Securities class action and derivative lawsuits in connection with the Merger could result in substantial costs and prevent or delay the consummation of the Merger. Securities class action lawsuits and derivative lawsuits are often brought against public companies that have entered into acquisition or merger agreements. Defending against and settling or otherwise resolving these types of claims can result in substantial costs, including costs associated with indemnification of directors and officers, and divert management time and resources. An adverse judgment in any such litigation relating to the Merger could result in monetary damages, which could have a negative impact on our financial condition. If a plaintiff is successful in obtaining an injunction prohibiting completion of the Merger, that injunction could delay or prevent the Merger from being completed, which could negatively impact our business, financial condition, results of operations or our stock price. Our stockholders may not receive any payment on the CVR and the CVR may expire valueless. If the Merger is completed, the holders of our common stock will be entitled to receive CVRs, subject to the terms and conditions of a Contingent Value Rights Agreement (the “CVR Agreement”). Each CVR will represent a contractual right to receive contingent cash payments upon achievement of specified development and regulatory milestones related to the BPL-003 and VLS-01 programs. There can be no assurance any payments will be made with respect to the CVRs. The CVRs will not be transferable, except in the limited circumstances specified in the CVR Agreement, will not have any voting or dividend rights, and will not represent any equity or ownership interest in Lilly or any constituent party to the Merger Agreement. Accordingly, the right of any of our stockholders to receive any future payment on or derive any value from the CVRs will be contingent solely upon the occurrence of certain events, as outlined in the CVR Agreement, and if no such events are achieved for any reason within the time periods specified in the CVR Agreement, no payments will be made under the CVRs, and the CVRs will expire valueless.