Canton Strategic Holdings, Inc.

Previous wording

Risks Related to Our Common Stock

Current wording

Although we are an operating company, and we believe we offer a different value proposition than a CC investment vehicle such as a spot CC ETP, investors may nevertheless view our common stock as an alternative to an investment in an ETP, and choose to purchase shares of a spot CC ETP instead of our common stock. They may do so for a variety of reasons, including if they believe that ETPs offer a “pure play” exposure to CC that is generally not subject to federal income tax at the entity level as we are, or the other risk factors applicable to an operating business, such as ours. Additionally, unlike spot CC ETPs, we (i) do not seek for our shares of common stock to track the value of the underlying CC we hold before payment of expenses and liabilities, (ii) do not benefit from various exemptions and relief under the Exchange Act, as amended, including Regulation M, and other securities laws, which enable ETPs to continuously align the value of their shares to the price of the underlying assets they hold through share creation and redemption, (iii) are a Delaware corporation rather than a statutory trust, and do not operate pursuant to a trust agreement that would require us to pursue one or more stated investment objectives, and (iv) are not required to provide daily transparency as to our CC holdings or our daily net asset value. Furthermore, recommendations by broker-dealers to buy, hold, or sell complex products and non-traditional ETPs, or an investment strategy involving such products, may be subject to additional or heightened scrutiny that would not be applicable to broker-dealers making recommendations with respect to our common stock. Based on how we are viewed in the market relative to ETPs, and other vehicles which offer economic exposure to CC, any premium or discount in our common stock relative to the value of our CC holdings may increase or decrease in different market conditions.

Previous wording

We are substantially dependent on the success of our product candidates. If we are unable to complete development of, obtain approval for and commercialize our product candidates for one or more indications in a timely manner, our business may be harmed.

Current wording

We are substantially dependent on the success of our product candidates. If we are unable to complete development of, obtain approval for, or successfully commercialize our product candidates, our business may be harmed.

Previous wording

Our pipeline is based on novel ideas and technologies that are unproven and may not result in marketable products, which exposes us to unforeseen risks and makes it difficult for us to predict the time and cost of product development and potential for regulatory approval.

Current wording

Our pipeline is based on novel ideas and technologies that are unproven and may not result in marketable products, which exposes us to unforeseen risks and makes it difficult to predict development timelines, costs, and regulatory approval.

Previous wording

We are using our technology to develop product candidates to treat rare diseases, inflammatory disorders and cancer. Our foundational science and product development approach are based on our ability to deliver our drug candidates to target receptors and specified cells or tissues at the site of disease to boost efficacy while abating adverse effects on healthy tissue. We believe that this approach may offer an improved therapeutic effect by delivering drug candidates to areas which may alleviate symptoms and/or treat diseased tissue. However, this approach to treating these diseases is novel and the clinical research that results in a product candidate has had limited testing in humans. For our early-stage, preclinical compounds, we are in the process of validating different tumor-specific therapeutic product candidates. We may spend substantial funds attempting to develop these products with our approach and never succeed in developing a marketable therapeutic.

Current wording

We are developing product candidates using novel approaches to treat rare diseases, inflammatory disorders, and cancer. Our technology aims to deliver drug candidates to target receptors and specified cells or tissues at disease sites. However, this approach has had limited testing in humans, and we may spend substantial funds attempting to develop these products without ever succeeding in developing a marketable therapeutic. We cannot assure you that our product candidates will safely and effectively treat the targeted diseases.

Previous wording

Before obtaining marketing approval from the FDA for the sale of our product candidate in any indication, we must conduct extensive clinical studies to demonstrate safety and efficacy. Clinical testing is expensive, time consuming and uncertain as to outcome. In addition, we expect to rely in part on pre-clinical, clinical and quality data generated by our CROs and other third parties for regulatory submissions for our drug candidates. While we have or will have agreements governing these third parties’ services, we have limited influence over their actual performance. If these third parties do not make data available to us, or, if applicable, make regulatory submissions in a timely manner, in each case pursuant to our agreements with them, our development programs may be significantly delayed and we may need to conduct additional studies or collect additional data independently. In either case, our development costs would increase. In addition, we will need to initiate clinical trials for TH104. In addition, we will need to receive FDA clearance of our IND for HS3215, HS0059 and HS1940 before we can begin clinical trials and would require the same acceptance by the FDA prior to initiating any clinical trials in the United States for any of our other drug candidates. The FDA may require us to conduct additional pre-clinical studies for any drug candidate before it allows us to initiate clinical trials under any IND, which may lead to additional delays and increase the costs of our pre-clinical development programs.

Current wording

Before obtaining marketing approval from the FDA, we must conduct extensive clinical studies to demonstrate safety and efficacy. Clinical testing is expensive, time consuming, and uncertain. We rely in part on pre-clinical, clinical and quality data generated by CROs and other third parties. The FDA may require additional pre-clinical studies before allowing us to initiate clinical trials, which could delay our development programs and increase costs.

Previous wording

We could also encounter delays if a clinical trial is suspended or terminated by us, by the IRBs/ECs of the institutions in which such trials are being conducted, by a Data Safety Monitoring Board for such trial or by the FDA. Such authorities may impose such a suspension or termination due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a pharmaceutical, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial. In addition, changes in regulatory requirements and policies may occur, and we may need to amend clinical trial protocols to comply with these changes. Amendments may require us to resubmit our clinical trial protocols to IRBs/ECs for reexamination, which may impact the costs, timing or successful completion of a clinical trial.

Current wording

We may not be able to initiate or continue clinical trials if we cannot identify and enroll sufficient eligible patients. Patient enrollment is a significant factor in clinical trial timing. Clinical trials may be suspended or terminated by us, by IRBs/ECs, by a Data Safety Monitoring Board, or by the FDA due to factors including: failure to conduct trials in accordance with regulatory requirements; inspection findings resulting in clinical holds; unforeseen safety issues or adverse side effects; failure to demonstrate benefit; changes in governmental regulations; or lack of adequate funding. Changes in regulatory requirements may require us to amend clinical trial protocols and resubmit them to IRBs/ECs for reexamination, impacting costs, timing, or successful completion. Additionally, financial relationships between us and clinical investigators could create perceived conflicts of interest that the FDA may conclude affect interpretation of data, potentially jeopardizing trial utility and resulting in approval delays or denial.

Previous wording

Certain of our scientific advisors or consultants who receive compensation from us are investigators for our clinical trial. Under certain circumstances, we may be required to report some of these relationships to the FDA. Although we believe our existing relationships are within the FDA’s guidelines, the FDA may conclude that a financial relationship between us and a principal investigator has created a conflict of interest or otherwise affected interpretation of the study. The FDA may therefore question the integrity of the data generated at the applicable clinical trial site and the utility of the clinical trial itself may be jeopardized. This could result in a delay in approval, or rejection, of our marketing applications by the FDA and may ultimately lead to the denial of marketing approval of our product candidates. If we experience delays in the completion of, or termination of, any clinical trial of our drug candidates, the commercial prospects of such drug candidate will be harmed, and our ability to generate product revenues will be delayed. Moreover, any delays in completing our clinical trials will increase our costs, slow down our development and approval process and jeopardize our ability to commence product sales and generate revenues which may harm our business, financial condition, results of operations and prospects significantly.

Current wording

Certain of our scientific advisors or consultants who receive compensation from us are investigators for our clinical trials. We cannot guarantee that the FDA will not deem the financial relationship between us and a principal investigator as creating a conflict of interest or otherwise affecting interpretation of the study. The FDA may therefore question the integrity of the data generated at the applicable clinical trial site and the utility of the clinical trial itself may be jeopardized.

Previous wording

As such, we cannot assure you that even if we are able to develop product candidates to treat the diseases we are targeting, such therapies would safely and effectively treat such diseases. We may spend substantial funds attempting to develop this approach and never succeed in developing a marketable therapeutic. We are unable to predict when or if our drug candidates will prove effective or safe in humans or if we will obtain marketing approval. Before obtaining marketing approval from regulatory authorities for the sale of any drug candidate, we must complete pre-clinical development and then conduct extensive clinical trials to demonstrate the safety and efficacy of our drug candidates in humans. Clinical testing is expensive, difficult to design and implement, can take many years to complete and is uncertain as to the outcome. A failure of one or more clinical trials can occur at any stage of testing. The outcome of pre-clinical testing and early clinical trials may not be predictive of the success of later clinical trials, and interim or preliminary results of a clinical trial do not necessarily predict final results. In particular, the small number of patients in our early clinical trials may make the results of these trials less predictive of the outcome of later clinical trials.

Current wording

The outcome of pre-clinical testing and early clinical trials may not be predictive of later success.

Previous wording

From time to time, we may publicly disclose preliminary, interim or topline data from our clinical trials, such as the interim data from clinical trials related to TH104, or preclinical data for HS3215, HS0059 or HS1940. These interim updates are based on a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change following a more comprehensive review of the data related to the particular study or trial. For example, we may report responses in certain patients that are unconfirmed at the time and which do not ultimately result in confirmed responses to treatment after follow-up evaluations. We also make assumptions, estimations, calculations and conclusions as part of our analyses of data, and we may not have received or had the opportunity to fully and carefully evaluate all data. As a result, the topline results that we report may differ from future results of the same studies, or different conclusions or considerations may qualify such results, once additional data have been received and fully evaluated. Topline data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published. As a result, topline data should be viewed with caution until the final data are available. In addition, we may report interim analyses of only certain endpoints rather than all endpoints. Interim data from clinical trials that we may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available. Adverse changes between interim data and final data could significantly harm our business and prospects. Further, additional disclosure of interim data by us or by our competitors in the future could result in volatility in the price of our common stock.

Current wording

From time to time, we may publicly disclose preliminary, interim, or topline data from clinical trials. These are based on preliminary analysis and are subject to change following more comprehensive review. The topline results that we report may differ from future results of the same studies, or different conclusions or considerations may qualify such results, once additional data have been received and fully evaluated. Topline data remain subject to audit and verification procedures that may result in material changes. Adverse changes between interim and final data could significantly harm our business. In addition, we may report interim analyses of only certain endpoints rather than all endpoints. Interim data from clinical trials that we may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available. Information we choose to disclose is typically selected from a more extensive amount of available information. If the data we report differs from final results, or if others disagree with our conclusions, our ability to obtain approval and commercialize our product candidates may be harmed.

Previous wording

Adverse side effects or other safety risks associated with our drug candidates could delay or preclude approval, cause us to suspend or discontinue clinical trials or abandon further development, limit the commercial profile of an approved label, or result in significant negative consequences following marketing approval, if any.

Current wording

Adverse side effects or safety risks could delay or preclude approval, cause us to suspend clinical trials, or result in negative consequences following any marketing approval.

Previous wording

The use of any of our existing or future product candidates in clinical trials and the sale of any approved pharmaceutical products may expose us to significant product liability claims. We currently do not have product liability insurance coverage but we intend to obtain such insurance. Such insurance coverage may not protect us against any or all of the product liability claims that may be brought against us in the future. We may not be able to acquire or maintain adequate product liability insurance coverage at a commercially reasonable cost or in sufficient amounts or scope to protect us against potential losses. In the event a product liability claim is brought against us, we may be required to pay legal and other expenses to defend the claim, as well as uncovered damage awards resulting from a claim brought successfully against us. In the event our product candidate is approved for sale by the FDA or other regulatory agency and commercialized, we may need to substantially increase the amount of our product liability coverage. Defending any product liability claim or claims could require us to expend significant financial and managerial resources, which could have an adverse effect on our business.

Current wording

The use of our product candidates in clinical trials and the sale of any approved products may expose us to significant product liability claims. We currently do not have product liability insurance coverage but intend to obtain such insurance. Such insurance may not protect us against all claims, and we may not be able to acquire adequate coverage at a commercially reasonable cost. If our product candidates are approved for sale, we may need to substantially increase our coverage. Defending product liability claims could require us to expend significant financial and managerial resources, which could have an adverse effect on our business.

Previous wording

Our success depends on the market’s confidence that we can provide therapeutic products that improve clinical outcomes, lower healthcare costs and enable better biopharmaceutical development. Failure of our products, or those jointly developed with our collaborators, to perform as expected could significantly impair our operating results and our reputation. We believe patients, clinicians, academic institutions and biopharmaceutical companies are likely to be particularly sensitive to defects, errors, inaccuracies, delays and toxicities in or associated with our products. Furthermore, inadequate performance of these products may result in lower confidence in our pipeline in general.

Current wording

Our success depends on the market’s confidence that we can provide therapeutic products that improve clinical outcomes and lower healthcare costs. Failure of our products to perform as expected could impair our operating results and reputation. Patients, clinicians, academic institutions, and biopharmaceutical companies are likely to be particularly sensitive to defects, errors, inaccuracies, delays, and toxicities associated with our products.

Previous wording

Additionally, our customers and collaborators may decide to decrease or discontinue their use of our products due to changes in their research and development plans, failures in their clinical trials, financial constraints, the regulatory environment, negative publicity about our products, competing products or the reimbursement landscape, all of which are circumstances outside of our control. We may not be successful in addressing these or other factors that might affect the market acceptance of our products. Failure to achieve widespread market acceptance of our pipeline and related products would materially harm our business, financial condition and results of operations.

Current wording

Customers and collaborators may decrease or discontinue use of our products due to changes in their plans, financial constraints, the regulatory environment, negative publicity, competing products, or reimbursement landscape. Failure to achieve widespread market acceptance would materially harm our business, financial condition, and results of operations.

Previous wording

We face significant competition, and if our competitors develop and market technologies or products more rapidly than we do or that are more effective, safer or less expensive than the products we develop, our commercial opportunities will be negatively impacted.

Current wording

We face significant competition from companies that may develop more effective, safer, or less expensive products.

Previous wording

The biotechnology and pharmaceutical industries are characterized by rapidly advancing technologies, intense competition and a strong emphasis on proprietary and novel products and product candidates. Our competitors have developed, are developing or may develop products, product candidates and processes competitive with ours. Any product candidates that we successfully develop and commercialize will compete with existing therapies and new therapies that may become available in the future. We believe that a significant number of products are currently under development, and may become commercially available in the future, for the treatment of conditions for which we may attempt to develop product candidates. In addition, our products may need to compete with drugs physicians use off-label to treat the indications for which we seek approval. This may make it difficult for us to replace existing therapies with our products.

Current wording

The biotechnology and pharmaceutical industries are characterized by rapidly advancing technologies, intense competition, and strong emphasis on proprietary products. Our competitors have developed, are developing, or may develop products competitive with ours. Any product candidates we successfully commercialize will compete with existing and new therapies. We may need to compete with drugs physicians use off-label to treat our targeted indications, making it difficult to replace existing therapies.

Previous wording

In particular, there is intense competition in the fields of rare diseases, inflammatory conditions and oncology. We have competitors both in the United States and internationally, including major multinational pharmaceutical companies, established biotechnology companies, specialty pharmaceutical companies, emerging and start-up companies, universities and other research institutions. We also compete with these organizations to recruit management, scientists and clinical development personnel, which could negatively affect our level of expertise and our ability to execute our business plan. We will also face competition in establishing clinical trial sites, enrolling subjects for clinical trials and in identifying and in-licensing new product candidates.

Current wording

There is intense competition in rare diseases, inflammatory conditions, and oncology. We have competitors including major multinational pharmaceutical companies, established biotechnology companies, specialty pharmaceutical companies, and research institutions. We also compete with these organizations to recruit management and scientific personnel and to establish clinical trial sites and enroll subjects.

Previous wording

Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, have fewer side effects, are more convenient, have a broader label, are marketed more effectively, are more widely reimbursed or are less expensive than any products that we may develop. Our competitors also may obtain marketing approval from the FDA, EMA or other comparable foreign regulatory authorities for their products more rapidly than we may obtain approval for ours, which could result in our competitors establishing a strong market position before we are able to enter the market. Even if the product candidates we develop achieve marketing approval, they may be priced at a significant premium over competitive products if any have been approved by then, resulting in reduced competitiveness. Technological advances or products developed by our competitors may render our technologies or product candidates obsolete, less competitive or not economical. If we are unable to compete effectively, our opportunity to generate revenue from the sale of our products we develop may be adversely affected.

Current wording

Our commercial opportunity could be reduced or eliminated if competitors develop safer, more effective, more convenient, or less expensive products, or if they obtain marketing approval before us. Technological advances by our competitors may render our technologies or product candidates obsolete or not economical.

Previous wording

Federal, state and local legislative bodies frequently pass legislation and promulgate regulations relating to healthcare reform or that affect the healthcare industry. We anticipate that there will continue to be increased government oversight and regulation of the healthcare industry in the future. We cannot predict the ultimate content, timing or effect of any new healthcare legislation or regulations, nor is it possible at this time to estimate the impact of potential new legislation or regulations on our business. It is possible that future legislation enacted by Congress or state legislatures, or regulations promulgated by regulatory authorities at the federal or state level, could adversely affect our business. We also cannot predict the outcome of any current or future litigation that may affect interpretation of, or deference to, agency regulations and guidance.

Current wording

Federal, state, and local legislative bodies frequently pass legislation relating to healthcare reform. We anticipate continued government oversight and regulation of the healthcare industry. We cannot predict the content, timing, or effect of new healthcare legislation or regulations, nor their impact on our business.

Previous wording

Orphan drug designation entitles a party to financial incentives, such as opportunities for grant funding towards clinical trial costs, tax advantages and user-fee waivers. Additionally, if a product that has orphan designation subsequently receives the first FDA approval for the disease or condition for which it has such designation, the product is entitled to orphan drug exclusivity. This means that the FDA may not approve any other applications to market the same drug or biological product for the same indication for seven years, except in certain circumstances, including proving clinical superiority (i.e., another product is safer, more effective or makes a major contribution to patient care) to the product with orphan exclusivity. Competitors, however, may receive approval of different products for the indication for which the orphan product has exclusivity, or obtain approval for the same product but for a different indication than that for which the orphan product has exclusivity. In addition, exclusive marketing rights in the United States may be limited if we seek approval for an indication broader than the orphan-designated indication or may be lost if the FDA later determines that the request for designation was materially defective.

Current wording

Competitors may receive approval of different products for the same indication or the same product for different indications. Exclusive marketing rights may be limited if we seek approval for an indication broader than the orphan-designated indication or may be lost if the FDA later determines the designation request was materially defective.

Previous wording

Designation as a breakthrough therapy is within the discretion of the FDA. Accordingly, even if we believe one of our drug candidates meets the criteria for designation as a breakthrough therapy, the FDA may disagree and instead determine not to make such designation. Even if we receive Breakthrough Therapy designation, the receipt of such designation for a drug candidate may not result in a faster development process, review or approval compared to drugs considered for approval under conventional FDA procedures and does not assure ultimate approval by the FDA. In addition, even if one or more of our drug candidates qualify as breakthrough therapies, the FDA may later decide that the drugs no longer meet the conditions for qualification or decide that the time period for FDA review or approval will not be shortened. We may seek a breakthrough therapy designation for some of our drug candidates. A breakthrough therapy is defined as a drug that is intended, alone or in combination with one or more other drugs, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. For drugs and biologics that have been designated as breakthrough therapies, interaction and communication between the FDA and the sponsor of the trial can help to identify the most efficient path for clinical development while minimizing the number of patients placed in ineffective control regimens. Drugs designated as breakthrough therapies by the FDA are also eligible for accelerated approval.

Current wording

Designation as a breakthrough therapy is within the discretion of the FDA. Even if we believe our drug candidates meet the criteria, the FDA may disagree. Receipt of Breakthrough Therapy designation may not result in faster development, review, or approval compared to conventional procedures and does not assure ultimate approval. The FDA may later decide that drugs no longer meet qualification conditions. A breakthrough therapy is defined as a drug intended to treat a serious or life-threatening condition for which preliminary clinical evidence indicates substantial improvement over existing therapies. Drugs designated as breakthrough therapies are eligible for accelerated approval and enhanced FDA interaction during development.

Previous wording

We do not have the ability to independently conduct all aspects of our pre-clinical testing or clinical trials. As a result, we have relied upon and plan to continue to rely upon third-party medical institutions, clinical investigators, contract laboratories and other third party CROs to monitor and manage data for our ongoing pre-clinical and clinical programs. We rely on these parties for the execution of our pre-clinical studies and clinical trials, and control only certain aspects of their activities. Nevertheless, we are responsible for ensuring that each of our studies is conducted in accordance with the applicable protocol, legal, regulatory, and scientific standards, and our reliance on the CROs does not relieve us of our regulatory responsibilities. We and our CROs are required to comply with current GCP, which are regulations and guidelines enforced by the FDA, the Competent Authorities of the Member States of the European Economic Area and comparable foreign regulatory authorities for all of our drugs in clinical development.

Current wording

We rely on third-party medical institutions, clinical investigators, contract laboratories, and CROs to conduct and manage our pre-clinical and clinical programs. We control only certain aspects of their activities but remain responsible for ensuring studies comply with applicable protocols, legal, regulatory, and scientific standards. We and our CROs must comply with current Good Clinical Practice (GCP) regulations enforced by the FDA, EMA, and comparable foreign regulatory authorities.

Previous wording

If any of our relationships with these third-party CROs terminate, we may not be able to enter into arrangements with alternative CROs or to do so on commercially reasonable terms. In addition, our CROs are not our employees, and except for remedies available to us under our agreements with such CROs, we cannot control whether or not they devote sufficient time and resources to our on-going clinical, nonclinical and pre-clinical or clinical programs. If CROs do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols, regulatory requirements or for other reasons, our clinical trials may be extended, delayed or terminated and we may not be able to obtain regulatory approval for or successfully commercialize our drug candidates. As a result, our results of operations and the commercial prospects for our drug candidates would be harmed, our costs could increase and our ability to generate revenues could be delayed.

Current wording

Regulatory authorities enforce GCP through periodic inspections of trial sponsors, principal investigators, and trial sites. If we or our CROs fail to comply with applicable GCPs, clinical data may be deemed unreliable by relevant authorities and additional trials may be required. Our clinical trials must also be conducted with products produced under cGMP. If our relationships with CROs terminate, we may not be able to enter into alternative arrangements on commercially reasonable terms. In addition, CROs are not our employees, and we cannot control their operations-including their conduct of our clinical, nonclinical and pre-clinical or clinical programs. If CROs do not successfully carry out their duties, meet deadlines, or if data quality is compromised, our clinical trials may be extended, delayed, or terminated, harming our commercial prospects and ability to generate revenues.

Previous wording

Many of the third parties with whom we contract may also have relationships with other commercial entities, including our competitors, for whom they may also be conducting clinical trials or other drug development activities that could harm our competitive position. If the third parties conducting our pre-clinical studies or our clinical trials do not perform their contractual duties or obligations, experience work stoppages, do not meet expected deadlines, terminate their agreements with us or need to be replaced, or if the quality or accuracy of the clinical data they obtain is compromised due to their failure to adhere to our clinical trial protocols or to GCP, or for any other reason, we may need to enter into new arrangements with alternative third parties. Switching or adding additional CROs involves additional cost and requires management time and focus. In addition, there is a natural transition period when a new CRO commences work. As a result, delays occur, which can materially impact our ability to meet our desired clinical development timelines. Though we carefully manage our relationships with our CROs, there can be no assurance that we will not encounter similar challenges or delays in the future or that these delays or challenges will not have a material adverse impact on our business, financial condition and prospects.

Current wording

Many third parties with whom we contract may also have relationships with our competitors. If they do not perform their duties, experience work stoppages, or need to be replaced, we may need to enter into new arrangements with alternative third parties. Switching CROs involves additional cost and management time, and transition periods can materially impact our clinical development timelines.

Previous wording

We currently source the active ingredient for HS1940, HS3215 and HS0059 from sole suppliers/manufacturers. In addition, we anticipate that we will also source the active ingredient in TH104 from a sole supplier/manufacturer. Although we believe that we can obtain the active ingredient for HS1940, HS3215, HS0059 and TH104 from other suppliers, supply shortages for these particular raw material may delay our clinical trials. If we are unable to procure the active ingredient for our product candidates as needed, our business may be harmed.

Current wording

We currently source the active ingredient for HS1940, HS3215 and HS0059 from sole suppliers/manufacturers. In addition, we anticipate that we will also source the active ingredient in GV104 from a sole supplier/manufacturer. Although we believe that we can obtain the active ingredient for HS1940, HS3215, HS0059 and GV104 from other suppliers, supply shortages for these particular raw materials may delay our clinical trials. If we are unable to procure the active ingredient for our product candidates as needed, our business may be harmed.

Previous wording

Our strategy for the development and commercialization of our proprietary drug candidates may include the execution of collaborative arrangements with third parties. Existing and future collaborators have significant discretion in determining the efforts and resources they apply and may not perform their obligations as expected. Potential third-party collaborators include biopharmaceutical, pharmaceutical and biotechnology companies, academic institutions and other entities. Third-party collaborators may assist us in:

Current wording

Our strategy for the development and commercialization of our proprietary drug candidates may include the execution of collaborative arrangements with third parties. Existing and future collaborators have significant discretion in determining the efforts and resources they apply and may not perform their obligations as expected. Potential third-party collaborators include biopharmaceutical, pharmaceutical and biotechnology companies, academic institutions and other entities. Third-party collaborators may assist us in funding research and development activities, clinical trials and manufacturing, obtaining regulatory approvals, and commercializing any future drug candidates.

Previous wording

If we are not able to establish further collaboration agreements, we may be required to undertake drug development and commercialization at our own expense. Such an undertaking may limit the number of drug candidates that we will be able to develop, significantly increase our capital requirements and place additional strain on our internal resources. Our failure to enter into additional collaborations could materially harm our business, financial condition and results of operations.

Current wording

If we are not able to establish collaboration, we may be required to undertake drug development and commercialization at our own expense. Such an undertaking may limit the number of drug candidates that we will be able to develop, significantly increase our capital requirements and place additional strain on our internal resources. Our failure to enter into additional collaborations could materially harm our business, financial condition and results of operations.

Previous wording

In addition, our dependence on licensing, collaboration and other agreements with third parties may subject us to a number of risks. These agreements may not be on terms that prove favorable to us and may require us to relinquish certain rights in our drug candidates. To the extent we agree to work exclusively with one collaborator in a given area, our opportunities to collaborate with other entities could be curtailed. Lengthy negotiations with potential new collaborators may lead to delays in the research, development or commercialization of drug candidates. The decision by our collaborators to pursue alternative technologies or the failure of our collaborators to develop or commercialize successfully any drug candidate to which they have obtained rights from us could materially harm our business, financial condition and results of operations.

Current wording

Our dependence on licensing and collaboration with third parties may subject us to additional risks. We may not be able to secure such relationships on terms that prove favorable to us. Our agreements with such partners may contain exclusivity terms that limit other collaboration opportunities. Lengthy negotiations with potential new collaborators may lead to delays in the research, development or commercialization of drug candidates. Our collaborators may decide to pursue other technologies or fail to develop or commercialize our drug candidates, which could materially harm our business, financial condition and results of operations.

Previous wording

Even if we are successful in completing all pre-clinical studies and clinical trials, we may not be successful in commercializing one or more of our drug candidates.

Current wording

We may not be successful in commercializing one or more of our drug candidates.

Previous wording

Even if we complete the necessary pre-clinical studies and clinical trials, the marketing approval process is expensive, time-consuming and uncertain and may prevent us from obtaining approvals for the commercialization of some or all of our drug candidates. If we are not able to obtain, or if there are delays in obtaining, required regulatory approvals, we will not be able to commercialize our drug candidates, and our ability to generate revenue will be materially impaired.

Current wording

We have not submitted an application for or received marketing approval for any of our drug candidates in the United States or in any other jurisdiction. The marketing approval process is expensive, time-consuming and uncertain, which may prevent us from obtaining approvals for the commercialization of some or all of our drug candidates. If we are not able to obtain, or if there are delays in obtaining, required regulatory approvals, we will not be able to commercialize our drug candidates, and our ability to generate revenue will be materially impaired.

Previous wording

Our drug candidates and the activities associated with their development and commercialization, including their design, testing, manufacture, safety, efficacy, recordkeeping, labeling, storage, approval, advertising, promotion, sale and distribution, export and import are subject to comprehensive regulation by the FDA and other regulatory agencies in the United States and by the EMA and similar regulatory authorities outside of the United States. Failure to obtain marketing approval for a drug candidate will prevent us from commercializing the drug candidate. We have not submitted an application for or received marketing approval for any of our drug candidates in the United States or in any other jurisdiction.

Current wording

Our drug candidates and the activities associated with the development and commercialization are subject to comprehensive regulation by the FDA and other regulatory agencies.

Previous wording

We have only limited experience in filing and supporting the applications necessary to gain marketing approvals and expect to rely on third-party clinical research organizations or other third-party consultants or vendors to assist us in this process. Securing marketing approval requires the submission of extensive pre-clinical and clinical data and supporting information to regulatory authorities for each therapeutic indication to establish the drug candidate’s safety and efficacy. Securing marketing approval also requires the submission of information about the drug manufacturing process to, and inspection of manufacturing facilities by, the regulatory authorities. Our drug candidates may not be effective, may be only moderately effective or may prove to have undesirable or unintended side effects, toxicities or other characteristics that may preclude our obtaining marketing approval or prevent or limit commercial use. New therapeutics frequently are indicated only for patient populations that have not responded to an existing therapy or have relapsed. If any of our drug candidates receives marketing approval, the accompanying label may limit the approved use of our drug in this way, which could limit sales of the drug.

Current wording

We have only limited experience in filing and supporting the applications for marketing approvals, and we expect to rely on third-party clinical research organizations or other third-party consultants or vendors to assist us in this process. Securing marketing approval requires the submission of extensive pre-clinical and clinical data and supporting information to regulatory authorities for each therapeutic indication to establish the drug candidate’s safety and efficacy. Securing marketing approval also requires the submission of information about the drug manufacturing process to, and inspection of manufacturing facilities by, the regulatory authorities.

Previous wording

The process of obtaining marketing approvals, both in the United States and abroad, is expensive, may take many years, if approval is obtained at all, and can vary substantially based upon a variety of factors, including the type, complexity and novelty of the drug candidates involved. Changes in marketing approval policies during the development period, changes in or the enactment of additional statutes or regulations, or changes in regulatory review for each submitted drug application, may cause delays in the approval or rejection of an application. Regulatory authorities have substantial discretion in the approval process and may refuse to accept any application or may decide that our data is insufficient for approval and require additional pre-clinical, clinical or other studies. In addition, varying interpretations of the data obtained from pre-clinical studies and clinical trials could delay, limit or prevent marketing approval of a drug candidate. Any marketing approval we ultimately obtain may be limited or subject to restrictions or post-approval commitments that render the approved drug not commercially viable.

Current wording

The process of obtaining marketing approvals, both in the United States and abroad, is lengthy and expensive. Changes in marketing approval policies during the development period, adoption of new statutes or regulations, or changes in regulatory review process, may cause delays in the approval or rejection of an application. Regulatory authorities have broad discretion in the approval process. They may interpret our study and trial data differently, which may also delay, limit, or prevent approval. Any approval obtained may be subject to restrictions or post-approval obligations that could adversely affect commercial viability.

Previous wording

The time required to obtain approval or other marketing authorizations by the FDA is unpredictable, and it typically takes many years following the commencement of clinical trials and depends upon numerous factors, including the substantial discretion of the regulatory authorities. In addition, approval policies, regulations, and the type and amount of clinical data necessary to gain approval may change during the course of a product candidate’s clinical development and may vary among jurisdictions. We have not obtained regulatory approval for any product candidate, and it is possible that we may never obtain regulatory approval for any product candidates we may seek to develop in the future. Neither we nor any current or future collaborator is permitted to market any drug product candidates in the United States until we receive regulatory approval from the FDA.

Current wording

The time required to obtain FDA approval is unpredictable and typically takes many years following the commencement of clinical trials. Approval depends upon numerous factors, including the substantial discretion of regulatory authorities, and approval policies, regulations, and the type and amount of clinical data necessary to gain approval may change during the course of a product candidate’s clinical development. We have not obtained regulatory approval for any product candidate, and it is possible that we may never obtain regulatory approval for any product candidates we may seek to develop in the future.

Previous wording

Prior to obtaining approval to commercialize any drug product candidate in the United States, we must demonstrate with substantial evidence from well-controlled clinical trials, and to the satisfaction of the FDA, that such product candidates are safe, pure and effective for their intended uses. Results from pre-clinical studies and clinical trials can be interpreted in different ways. Even if we believe the pre-clinical or clinical data for our product candidates are promising, such data may not be sufficient to support approval by the FDA. The FDA may also require us to conduct additional pre-clinical studies or clinical trials for our product candidates either prior to or after approval, or it may object to elements of our clinical development programs.

Current wording

Prior to obtaining approval to commercialize any drug product candidate in the United States, we must demonstrate with substantial evidence from well-controlled clinical trials, and to the satisfaction of the FDA, that such product candidates are safe, pure and effective for their intended uses. Even if we believe pre-clinical or clinical data for our product candidates are promising, such data may not be sufficient to support approval by the FDA, and the FDA may require us to conduct additional pre-clinical studies or clinical trials either prior to or after approval.

Previous wording

Additionally, in December 2019, a federal appeals court held that the individual mandate portion of the ACA was unconstitutional and left open the question whether the remaining provisions of the ACA would be valid without the individual mandate. However, on appeal, the Supreme Court ruled, in June 2021, that the parties challenging the law lacked standing, leaving the ACA in place. It is unclear how any other potential litigation challenging the ACA and the healthcare reform measures of the Biden administration will impact the ACA. We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative or executive action, either in the United States or abroad. We expect that additional state and federal health care reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for health care products and services.

Current wording

We expect that additional state and federal healthcare reform measures will be adopted in the future, 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 our product candidates, complementary diagnostics or companion diagnostics, or impose additional pricing pressures.

Previous wording

We have never been profitable and have incurred significant losses in each year since inception. For the years ended December 31, 2024 and 2023 we reported a net loss of $12.2 million and $9.3 million, respectively. As of December 31, 2024, we had an accumulated deficit of $36.9 million. We have funded our operations primarily with proceeds from the sale of our equity and debt securities.

Current wording

We have never been profitable and have incurred significant losses in each year since inception. For the years ended December 31, 2025 and 2024, we reported a net loss of $35.9 million and $12.2 million, respectively. As of December 31, 2025, we had an accumulated deficit of $72.8 million. We have funded our operations primarily with proceeds from the sale of our equity and debt securities.

Previous wording

As is the case with other pharmaceutical companies, our success is heavily dependent on intellectual property, particularly patents. Obtaining and enforcing patents in the pharmaceutical industry involves both technological and legal complexity and is therefore costly, time consuming and inherently uncertain. Changes in either the patent laws or interpretation of the patent laws in the United States could increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of issued patents. Recent patent reform legislation in the United States and other countries, including the Leahy-Smith America Invents Act (the Leahy-Smith Act) signed into law in September 2011, could increase those uncertainties and costs. The Leahy-Smith Act includes a number of significant changes to U.S. patent law. These include provisions that affect the way patent applications are prosecuted, redefine prior art and provide more efficient and cost-effective avenues for competitors to challenge the validity of patents. For example, the Leahy-Smith Act allows third-party submission of prior art to the U.S. Patent and Trademark Office (“USPTO”) during patent prosecution and additional procedures to attack the validity of a patent by USPTO administered post-grant proceedings, including post-grant review, inter parties review, and derivation proceedings. In addition, the Leahy-Smith Act has transformed the U.S. patent system from a “first-to-invent” system to a “first-to-file” system in which, assuming that other requirements for patentability are met, the first inventor to file a patent application will be entitled to the patent on an invention regardless of whether a third party was the first to invent the claimed invention.

Current wording

Obtaining and enforcing patents involves both technological and legal complexity and is therefore costly, time consuming and inherently uncertain. Changes in either the patent laws or interpretation of the patent laws in the United States could increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of issued patents. Recent patent reform legislation in the United States and other countries, including the Leahy-Smith America Invents Act (the “Leahy-Smith Act”) signed into law in September 2011, could increase those uncertainties and costs. The Leahy-Smith Act includes a number of significant changes to U.S. patent law. These include provisions that affect the way patent applications are prosecuted, redefine prior art and provide more efficient and cost-effective avenues for competitors to challenge the validity of patents. For example, the Leahy-Smith Act allows third-party submission of prior art to the U.S. Patent and Trademark Office (“USPTO”) during patent prosecution and additional procedures to attack the validity of a patent by USPTO administered post-grant proceedings, including post-grant review, inter parties review, and derivation proceedings. In addition, the Leahy-Smith Act has transformed the U.S. patent system from a “first-to-invent” system to a “first-to-file” system in which, assuming that other requirements for patentability are met, the first inventor to file a patent application will be entitled to the patent on an invention regardless of whether a third party was the first to invent the claimed invention.

Previous wording

We or our future licensors may become involved in lawsuits to protect or enforce our patent or other intellectual property rights, which could be expensive, time-consuming and unsuccessful.

Current wording

We or our licensors may become involved in lawsuits to protect or enforce our patent or other intellectual property rights, which could be expensive, time-consuming and unsuccessful.

Previous wording

Our commercial success depends upon our ability, and the ability of our collaborators, to develop, manufacture, market and sell our drug candidates and use our proprietary technologies without infringing, misappropriating or otherwise violating the intellectual property and proprietary rights of third parties. There is considerable patent and other intellectual property litigation in the pharmaceutical and biotechnology industries. We may become party to, or threatened with, adversarial proceedings or litigation regarding intellectual property rights with respect to our technology and drug candidates, including interference proceedings, post grant review, inter parties review, and derivation proceedings before the USPTO and similar proceedings in foreign jurisdictions such as oppositions before the European Patent Office.

Current wording

Our commercial success may depend in part upon our ability to develop, manufacture, market and sell our product candidates and use our proprietary technologies without infringing, misappropriating or otherwise violating the intellectual property and other proprietary rights of third parties. There is considerable intellectual property litigation in the pharmaceutical industry.

Previous wording

If we are found to infringe, misappropriate or otherwise violate a third party’s intellectual property rights, we could be required to obtain a license from such third party to continue developing, manufacturing and marketing our drug candidates. However, we may not be able to obtain any required license on commercially reasonable terms or at all. Even if we were able to obtain a license, it could be non-exclusive; thereby giving our competitors and other third parties access to the same technologies licensed to us and could require us to make substantial licensing and royalty payments. We could be forced, including by court order, to cease developing, manufacturing and commercializing the infringing technology or drug. In addition, we could be found liable for significant monetary damages, including treble damages and attorneys’ fees, if we are found to have willfully infringed a patent or other intellectual property right and could be forced to indemnify our collaborators or others. A finding of infringement could prevent us from commercializing our drug candidates or force us to cease some of our business operations, which could materially harm our business. In addition, we may be forced to redesign our drug candidates, seek new regulatory approvals and indemnify third parties pursuant to contractual agreements. Claims that we have misappropriated the confidential information or trade secrets of third parties could have a similar material adverse effect on our business, financial condition, results of operations, and prospects.

Current wording

Even if we believe third-party intellectual property claims are without merit, there is no assurance that a court would find in our favor on questions of infringement, validity, enforceability or priority. A court of competent jurisdiction could hold that third-party patents asserted against us are valid, enforceable and infringed, which could materially and adversely affect our ability to commercialize any of our product candidates and any other product candidates or technologies covered by the asserted third-party patents. In order to successfully challenge the validity of a U.S. patent in federal court, we would need to overcome a presumption of validity. As this burden is a high one requiring us to present clear and convincing evidence as to the invalidity of a U.S. patent claim, there is no assurance that a court of competent jurisdiction would invalidate the claims of any such U.S. patent. If we are found to infringe, misappropriate or otherwise violate a third party’s intellectual property rights, and we are unsuccessful in demonstrating that these rights are invalid or unenforceable, we could be required to obtain a license from such a third party in order to continue developing and marketing our products and technology. However, we may not be able to obtain any required license on commercially reasonable terms or at all. Even if we were able to obtain a license, it could be non-exclusive, thereby giving our competitors access to the same technologies licensed to us. We could be forced, including by court order, to cease commercializing the infringing technology or product. A finding of infringement could prevent us from commercializing our product candidates or force us to cease some of our business operations. In the event of a successful claim of infringement against us, we may have to pay substantial damages, including treble damages and attorneys’ fees for willful infringement, pay royalties and other fees, redesign our infringing product candidate or obtain one or more licenses from third parties, which may be impossible or require substantial time and monetary expenditure. Claims that we have misappropriated the confidential information or trade secrets of third parties could have a similar negative impact on our business.