# Definium Therapeutics, Inc.: Form 10-Q for the period ended Mar 31, 2023

- Company: [Definium Therapeutics, Inc.](/companies/dftx.md) (CIK 1813814)
- Form: 10-Q
- Filed: 2023-05-04
- Accepted by EDGAR: May 4, 2023, 16:21 ET
- Period: 2023-03-31
- Accession: 0000950170-23-017907
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1813814/000095017023017907/mnmd-20230331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1813814/000095017023017907/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Research and development | 3 months, 2023-01-01 to 2023-03-31 | $12.6m | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2023-01-01 to 2023-03-31 | −$20.9m | us-gaap:OperatingIncomeLoss |
| Net income | 3 months, 2023-01-01 to 2023-03-31 | −$24.8m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-01-01 to 2023-03-31 | −$0.65 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-01-01 to 2023-03-31 | −$0.65 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-01-01 to 2023-03-31 | 38,077,251 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2023-01-01 to 2023-03-31 | −$13.3m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Cash and equivalents | at 2023-03-31 | $129.4m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2023-03-31 | $132.4m | us-gaap:AssetsCurrent |
| Total assets | at 2023-03-31 | $155.5m | us-gaap:Assets |
| Current liabilities | at 2023-03-31 | $24.1m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2023-03-31 | $25.2m | us-gaap:Liabilities |
| Shareholders' equity | at 2023-03-31 | $130.3m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 25,128 characters.

*The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report. This Quarterly Report, including the following sections, contains forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results and events to differ materially from those expressed or implied by such forward-looking statements. For a detailed discussion of these risks and uncertainties, see Item 1A “Risk Factors” in our 2022 Annual Report and this Quarterly Report. See also “Special Note Regarding Forward-Looking Statements.” We caution the reader not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date of this Quarterly Report. We undertake no obligation to update forward-looking statements, which reflect events or circumstances occurring after the date of this Quarterly Report.*

Our U.S. GAAP accounting policies are referred to in Note 2 of the Condensed Consolidated Financial Statements in this Quarterly Report as well as the Consolidated Financial Statements included in our 2022 Annual Report. All amounts are in United States dollars, unless otherwise indicated. References to “CAD$” are to Canadian dollars.

### Overview

We are a clinical stage biopharmaceutical company developing novel product candidates to treat brain health disorders. Our mission is to be the global leader in the development and delivery of treatments that unlock new opportunities to improve patient outcomes. We are developing a pipeline of innovative product candidates, with and without acute perceptual effects, targeting neurotransmitter pathways that play key roles in brain health disorders. This specifically includes pharmaceutically optimized product candidates derived from the psychedelic and empathogen drug classes, including MM-120 and MM-402, our lead product candidates.

We were incorporated under the laws of the Province of British Columbia. Our wholly owned subsidiary, Mind Medicine, Inc. (“MindMed US”) was incorporated in Delaware. Prior to February 27, 2020, our operations were conducted through MindMed US.

On February 26, 2021, we acquired 100% of the issued and outstanding shares of HealthMode Inc. (“HealthMode”), a digital medicine and therapeutics company that used artificial intelligence enabled digital measurement to increase the precision and speed of clinical research and patient monitoring. The acquisition enabled us to build our digital medicine division. We plan to utilize these technologies in our clinical trials to enhance the quality of the data that is collected during our clinical trials.

Since inception, we have incurred losses while advancing the research and development of our products and processes. Our net losses were $24.8 million for the three months ended March 31, 2023, and $18.5 million for the three months ended March 31, 2022. As of March 31, 2023, we had an accumulated deficit of $219.3 million and cash and cash equivalents of $129.4 million

During the three months ended March 31, 2023, we continued to enhance the resources it requires to build our pipeline of opportunities. This included adding personnel and contract resources and ramping up the nonclinical aspects of our activities. In addition, considerable effort was directed towards employing a successful financing strategy.

### Research & Development Program Update

In April 2023, our collaborators at the University Hospital Basel released positive topline data from a double-blind, investigator-initiated trial evaluating lysergide in the treatment of major depressive disorder (“MDD”). The topline data demonstrated significant, rapid, durable and beneficial effects of lysergide and its potential to mitigate symptoms of MDD. The high dose lysergide regimen in which patients received 100 µg at their first dosing day and 200 µg at their second dosing day (separated by four weeks) resulted in statistically and clinically significant improvements on the primary endpoint, which was the change in clinician-rated Inventory of Depressive Symptomatology (IDS-C) scores 6 weeks after the first administration as compared to control (whether or not the patient received a second administration). The control group in this study received a lower dose regimen of 25 µg on both treatment days. Patients in the high dose arm (n=28) demonstrated a least square mean change from baseline in IDS-C scores of -12.9 points compared to -3.6 points in the lower dose arm (n=27, p=0.02). The statistically significant benefit as measured by IDS-C was maintained up to 16 weeks after the first administration compared to placebo (p=0.008). Data from the secondary endpoints were also encouraging. The investigational drug was generally well-tolerated, as indicated by reported adverse events, changes in vital signs and laboratory values.

### Components of Operating Results

### Operating Expenses

#### Research and Development

To date, our resources have focused primarily on the research and development of our product candidates MM-120, MM-402 and MM-110 (prior to when we paused development of MM-110 in the third quarter of 2022) and the commencement of related clinical activities, including funding data and study acquisitions and acquiring the materials required to supply our studies.

Research and development expenses account for a significant portion of our operating expenses. Research and development expenses consist primarily of direct and indirect costs incurred for the development of our product candidates, including:

- payroll, consulting and benefits expenses;
- licensing fees;
- manufacturing costs to produce clinical trial materials;
- clinical research costs associated with discovery, preclinical and clinical testing of our product candidates;
- data and study acquisition cost; and
- allocated operational expenses, which include direct or allocated expenses for information technologies and human resources.

We may also incur in-process research and development expense as we acquire or in-license assets from other parties. Technology acquisitions are expensed or capitalized based upon the asset achieving technological feasibility in accordance with management’s assessment regarding the ultimate recoverability of the amounts paid and the potential for alternative future use. Acquired in-process research and development costs that have no alternative future use are immediately expensed.

We expect our research and development expenses to increase for the foreseeable future as we continue the clinical development of our product candidates and other preclinical programs in generalized anxiety disorder (“GAD”), attention deficit hyperactivity disorder (“ADHD”), autism spectrum disorder (“ASD”) and other potential or future indications, including initiating additional and larger clinical trials.

#### General and Administrative

General and administrative expenses consist primarily of compensation costs, including stock-based compensation, for executive management and administrative employees, including finance and accounting, legal, human resources and other administrative functions, professional services fees, advisory and professional service fees in connection with financing transactions, insurance expenses and allocated expenses.

We expect our general and administrative expenses to continue to increase for the foreseeable future as we continue to advance our research and development programs, grow our business and, if any of our product candidates receive marketing approval, commence commercialization activities. We also expect to incur additional costs related to public relations, printing and legal fees in connection with our ongoing proxy contest.

### Results of Operations

### Comparison of the Three Months Ended March 31, 2023 and 2022

The following tables summarize our results of operations for the periods presented (in thousands):

| Operating expenses: | For the Three Months Ended March 31, 2023 | For the Three Months Ended March 31, 2022 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Research and development | $12,599 | $10,241 | $2,358 | 23% |
| General and administrative | 8,263 | 8,264 | (1) | — |
| Total operating expenses | 20,862 | 18,505 | 2,357 | 13% |
| Loss from operations | (20,862) | (18,505) | (2,357) | 13% |
| Other income/(expense): |  |  |  |  |
| Interest income/(expense), net | 1,284 | (27) | 1,311 | \* |
| Foreign exchange gain/(loss), net | (52) | 45 | (97) | (216)% |
| Change in fair value of 2022 USD Financing Warrants | (5,185) | — | (5,185) | 100% |
| Other income | — | 36 | (36) | (100)% |
| Total other income/(expense), net | (3,953) | 54 | (4,007) | \* |
| Net loss | (24,815) | (18,451) | (6,364) | 34% |
| Other comprehensive gain: |  |  |  |  |
| Gain/(loss) on foreign currency translation | 14 | (49) | 63 | 129% |
| Comprehensive loss | $(24,801) | $(18,500) | $(6,301) | 34% |

#### \* Represents a change greater than 300%

### Operating Expenses

#### Research and Development (in thousands):

| External Costs | For the Three Months Ended March 31, 2023 | For the Three Months Ended March 31, 2022 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| MM-120 program | $4,775 | $1,862 | $2,913 | 156% |
| MM-402 program | 996 | 99 | 897 | \* |
| MM-110 program | 17 | 682 | (665) | (98)% |
| External R&D collaborations | 302 | 1,224 | (922) | (75)% |
| Preclinical and other programs | 1,332 | 1,410 | (78) | (6)% |
| Total external costs | 7,422 | 5,277 | 2,145 | 41% |
| Internal Costs | 5,177 | 4,964 | 213 | 4% |
| Total research and development expenses | $12,599 | $10,241 | $2,358 | 23% |

#### \* Represents a change greater than 300%

Research and development expenses increased by $2.4 million for the three months ended March 31, 2023 compared to the three months ended March 31, 2022. The increase was primarily due to increases of $2.9 million in expenses related to clinical research for the MM-120 GAD study, $0.9 million in expenses related to our MM-402 program, and $0.2 million in internal personnel costs as a result of increasing research and development capacities, offset by a decrease of $0.7 million in expenses related to our MM-110 program, and a decrease of $0.9 million of expenses in connection with various external R&D collaborations.

#### General and Administrative

General and administrative expenses for the three months ended March 31, 2023 was consistent with the amount compared to the three months ended March 31, 2022. Consistent with the three months ended March 31, 2022, the Company continues to incur costs to support the growth of our business.

### Other Income (Expense)

#### Interest Income (Expense), Net

Interest income, net increased by $1.3 million for the three months ended March 31, 2023 compared to the three months ended March 31, 2022. This was primarily due to interest earned on our cash and cash equivalents as a result of higher cash and cash equivalents and higher interest rates during the three months ended March 31, 2023.

#### Foreign Exchange Gain/(Loss), Net

Foreign exchange loss decreased by $0.1 million for the three months ended March 31, 2023 compared to the three months ended March 31, 2022. The decrease was primarily due to unfavorable changes in foreign exchange rates during the three months ended March 31, 2023.

#### Other Income

Other income decreased by a nominal amount for the three months ended March 31, 2023 compared to the three months ended March 31, 2022.

#### Change in fair value of 2022 USD Financing Warrants

Revaluation loss on the 2022 USD Financing Warrants liability was $5.2 million for the three months ended March 31, 2023. Loss on revaluation of the 2022 USD Financing Warrants liability consists of the change in the fair value of our 2022 USD Financing Warrants that were issued as part of our public equity offering which closed on September 30, 2022. No liability classified warrants were outstanding during the three months ended March 31, 2022.

### Liquidity and Capital Resources

### Sources of Liquidity

Since inception, we have financed our operations primarily from the issuance of equity. Our primary capital needs are for funds to support our scientific research and development activities including staffing, manufacturing, preclinical studies, clinical trials, administrative costs and for working capital.

We have experienced operating losses and cash outflows from operations since inception and will require ongoing financing in order to continue our research and development activities. We have not earned any revenue or reached successful commercialization of our products. Our future operations are dependent upon our ability to finance our cash requirements which will allow us to continue our research and development activities and the commercialization of our products. There can be no assurance that we will be successful in continuing to finance our operations.

Our cash and cash equivalents and our working capital at March 31, 2023 was $129.4 million and $108.3 million, respectively.

The Company may issue and sell Common Shares for an aggregate offering price of up to $100.0 million under an at-the-market offering program (the “ATM”). Pursuant to the ATM, the Company will pay the Sales Agents a commission rate equal to 3.0% of the gross proceeds from the sale of any Common Shares. The Company is not obligated to make any sales of its Common Shares under the ATM. During the three months ended March 31, 2023, the Company sold 198,113 Common Shares for net proceeds of $0.6 million under the ATM. As of March 31, 2023, the Company may issue and sell Common Shares for an aggregate offering price of up to $67.3 million under the ATM.

On September 30, 2022, we closed an underwritten public offering of 7,058,823 common shares and accompanying 2022 USD Financing Warrants to purchase 7,058,823 common shares at a combined offering price of $4.25 per common share, for net proceeds of $27.5 million. Each 2022 USD Financing Warrant is immediately exercisable for one common share at an initial exercise price of $4.25 per common share, subject to certain adjustments and will expire on September 30, 2027.

### Future Funding Requirements

To date, we have not generated any revenue. We do not expect to generate any meaningful revenue unless and until we obtain regulatory approval of and commercialize any of our product candidates, and we do not know when, or if at all, that will occur. We will continue to require substantial additional capital to develop our product candidates and fund operations for the foreseeable future. Moreover, we expect our expenses to increase in connection with our ongoing activities, particularly as we continue the development of and seek regulatory approvals for our product candidates. Further, we are subject to all the risks incident in the development of new pharmaceutical products, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may harm our business. Our expenses will increase if, and as, we:

- advance our product candidates through preclinical and clinical development;
- seek regulatory approvals for any product candidates that successfully complete clinical trials;
- seek to discover and develop additional product candidates;
- establish a sales, marketing, medical affairs and distribution infrastructure to commercialize any product candidates for which we may obtain marketing approval and intend to commercialize on our own or jointly;
- expand our operational, financial and management systems and increase personnel, including personnel to support our development, manufacturing and commercialization efforts and our operations as a public company;

We expect our current cash and cash equivalents will be sufficient to fund our current operating plans into the first half of 2025. However, our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially. In order to complete the development of our product candidates and to build the sales, marketing and distribution infrastructure that we believe will be necessary to commercialize our product candidates, if approved, we will require substantial additional funding. Until we can generate a sufficient amount of revenue from the commercialization of our product candidates, we may seek to raise any necessary additional capital through the sale of equity, debt financings or other capital sources, which could include income from collaborations, strategic partnerships or marketing, distribution or licensing arrangements with third parties or from grants. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our shareholders will be or could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common shareholders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, including restricting our operations and limiting our ability to incur liens, issue additional debt, pay dividends, repurchase our Common Shares, make certain investments or engage in merger, consolidation, licensing or asset sale transactions. If we raise funds through collaborations, strategic partnerships and other similar arrangements with third parties, we may be required to grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves. We may be unable to raise additional funds or to enter into such agreements or arrangements on favorable terms, or at all. If we are unable to raise additional funds when needed, we may be required to delay, reduce or eliminate our product development or future commercialization efforts. We have based our projections of operating capital requirements on our current operating plan, which is based on several assumptions that may prove to be incorrect and we may use all of our available capital resources sooner than we expect. Because of the numerous risks and uncertainties associated with research, development and commercialization of product candidates, we are unable to estimate the exact amount and timing of our working capital requirements. Our future funding requirements will depend on many factors, including:

- the scope, progress, results and costs of researching and developing our product candidates, and conducting preclinical studies and clinical trials;
- the costs, timing and outcome of regulatory review of our product candidates;
- the costs of future activities, including product sales, medical affairs, marketing, manufacturing and distribution, for any of our product candidates for which we receive marketing approval;
- the costs of manufacturing commercial-grade products and sufficient inventory to support commercial launch;
- the revenue, if any, received from commercial sale of our products, should any of our product candidates receive marketing approval;
- the cost and timing of hiring new employees to support our continued growth;
- the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims;
- the ability to establish and maintain collaborations on favorable terms, if at all;
- the extent to which we acquire or in-license other product candidates and technologies; and
- the timing, receipt and amount of sales of, or milestone payments related to or royalties on, our current or future product candidates, if any.

### Cash Flows

|  | For the Three Months Ended March 31, 2023 | For the Three Months Ended March 31, 2022 |
| --- | ---: | ---: |
| Net cash used in operating activities | $(13,331) | $(12,866) |
| Net cash provided by/(used in) financing activities | 583 | (166) |
| Foreign exchange impact on cash | 15 | (35) |
| Net decrease in cash and cash equivalents | $(12,733) | $(13,067) |

#### Cash flows from operating activities

Cash used in operating activities for the three months ended March 31, 2023 was $13.3 million, which consisted of a net loss of $24.8 million, partially offset by $9.8 million in non-cash charges and a net change of $1.7 million in our net operating assets and liabilities. The non-cash charges consisted of a change in fair value on the 2022 USD Financing Warrants liability of $5.2 million, share-based payments of $3.8 million, and amortization of intangible assets of $0.8 million.

Cash used in operating activities for the three months ended March 31, 2022 was $12.9 million, which consisted of a net loss of $18.5 million, partially offset by $4.6 million in non-cash charges and a net change of $1.0 million in our net operating assets and liabilities. The non-cash charges consisted of share-based payments of $3.8 million, and amortization of intangible assets of $0.8 million.

#### Cash flows from financing activities

Cash provided by financing activities for the three months ended March 31, 2023 was $0.6 million, which consisted of net proceeds from the issuance of common shares, net of issuance costs.

Cash used in financing activities for the three months ended March 31, 2022 was $0.2 million, which consisted of the proceeds of $0.1 million from exercise of warrants, and proceeds of $0.1 million from exercise of options, offset by $0.4 million of withholding taxes paid on vested restricted stock units.

### Critical Accounting Policies and Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our unaudited interim condensed consolidated financial statements as of March 31, 2023, which have been prepared in accordance with United States generally accepted accounting principles, or U.S. GAAP and on a basis consistent with those accounting principles followed by us and disclosed in Note 2 to our most recent annual audited consolidated financial statements in the 2022 Annual Report. The preparation of these unaudited interim condensed consolidated financial statements requires our management to make judgments and estimates that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenue generated and expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these judgments and estimates under different assumptions or conditions and any such differences may be material.

Other than as described under Note 2 of our unaudited interim condensed consolidated financial statements, there have been no material changes to our critical accounting policies from those described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in our 2022 Annual Report.

### Recent Accounting Pronouncements

See Note 2 to our unaudited financial statements located in “Part I – Financial Information, Item 1. Financial Statements” in this Quarterly Report for a description of recent accounting pronouncements applicable to our financial statements.

### Emerging Growth Company Status

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

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

### Fully Diluted Share Capital

The number of issued and outstanding common shares on a fully converted basis as at March 31, 2023 was as follows:

|  | Number of Common Share Equivalents |
| --- | ---: |
| Common Shares | 38,290,111 |
| Stock Options | 2,197,417 |
| Restricted Stock Units | 2,501,799 |
| Compensation Warrants | 125,890 |
| Financing Warrants | 1,286,282 |
| 2022 USD Financing Warrants | 7,058,823 |
| **Total - March 31, 2023** | 51,460,322 |

21

## Market risk

As filed, 133 characters.

As a "smaller reporting company" as defined by Item 10 of Regulation S-K, we are permitted to omit information required by this item.

## Controls and procedures

As filed, 2,482 characters.

### Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time period specified in the SEC's rules and forms, and that such information is accumulated and communicated to management including our Chief Executive Officer, Chief Financial Officer, and Chief Accounting Officer, as appropriate, to allow timely decisions regarding required disclosure. As of March 31, 2023, our Chief Executive Officer and Chief Financial Officer carried out an evaluation with the participation of management of the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2023.

### Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Securities Exchange Act of 1934 that occurred during the quarter ended March 31, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

### Inherent Limitations on Effectiveness of Internal Controls

A control system, no matter how well designed and operated, can provide only reasonable and not absolute assurance of achieving the desired control objectives. In reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs. In addition, the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

## Risk factors

As filed, 3,053 characters.

*We operate in a rapidly changing environment that involves a number of risks which could materially affect our business, financial condition or future results, some of which are beyond our control. In addition to the other information set forth in this Quarterly Report, the risks and uncertainties that we believe are most important for you to consider are discussed in Part I-Item 1A under the heading “Risk Factors” in our 2022 Annual Report. The risk factors set forth below are risk factors containing changes, which may be material, from the risk factors previously disclosed in Item 1A of our 2022 Annual Report.*

***Our business, financial condition and operating results could be negatively affected as a result of the pending proxy contest or other actions by shareholders.***

A group of Company shareholders (the “Nominating Group”) has notified us of their intention to nominate four director candidates for election to our six-member board of directors at the 2023 AGM and wage a proxy contest in support of their candidates and in opposition to four of our candidates.

Responding to proxy contests and other actions by the Nominating Group or other such shareholders can be costly and time-consuming, and could divert the attention of our Board and management team from the management of our operations and the pursuit of our business strategies. A proxy contest, by the Nominating Group or any other shareholder, and any potential related litigation could have a material adverse effect on us for the following reasons:

- Such shareholders may attempt to effect changes in our governance and strategic direction or to acquire control over the Board or the Company. In particular, if the Nominating Group is successful in the current proxy contest, it may gain control of the Board.
- While we welcome the opinions of all shareholders, responding to proxy contests and related litigation by shareholders is likely to be costly and time-consuming, disrupt our operations, and potentially divert the attention of our Board, management team and other employees away from their regular duties and the pursuit of business opportunities to enhance shareholder value.
- Perceived uncertainties as to our future direction as a result of potential changes to the composition of the Board may lead to the perception of a change in the strategic direction of the business, instability or lack of continuity, which may cause concern to our existing or potential collaboration partners, employees and shareholders; may be exploited by our competitors; may result in the loss of potential business opportunities or limit our ability to timely initiate or advance clinical trials; and may make it more difficult to attract and retain qualified personnel and business partners.
- Proxy contests and related litigation by shareholders could cause significant fluctuations in our share price based on temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects of our business.

Filed May 4, 2023.
Source: SEC EDGAR, the filing index for accession 0000950170-23-017907. Last ingested by Listed: Nov 10, 2026, 02:38 ET. No prices; not investment advice.