Camp4 Therapeutics Corp: Form 10-Q for the period ended Mar 31, 2025

The following discussion and analysis of our financial condition and results of operations and the unaudited interim condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q (the “Quarterly Report”) should be read in conjunction with the audited financial statements and related notes thereto in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, which was filed with the Securities and Exchange Commission (the “SEC”) on March 27, 2025 (the “2024 Form 10-K”). This discussion and analysis and other parts of this Quarterly Report contain forward-looking statements. Our actual results and the timing of selected events could differ materially from those described in or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the sections of this Quarterly Report titled “Special Note Regarding Forward-Looking Statements,” and those risk factors described in “Part I, Item 1A, Risk Factors” of our 2024 Form 10-K and in “Part II, Item 1A, Risk Factors” in this Quarterly Report.

Overview

We are a clinical-stage biopharmaceutical company pioneering the discovery and development of a new class of RNA-based therapeutics with the goal of upregulating gene expression and restoring healthy protein levels to treat a broad range of genetic diseases. Regulatory RNAs (“regRNAs”) play a central role in the regulation of every protein-coding gene by contributing to gene activation and suppression. Our approach is designed to amplify messenger RNA (“mRNA”) expression by harnessing the power of regRNAs that form localized complexes with transcription factors and regulate gene expression. Our proprietary RNA Actuating Platform, or RAP Platform, allows us to rapidly and systematically identify and characterize the active regulatory elements controlling every expressed gene and tens of thousands of druggable enhancer and promoter regRNA sequences that control protein-coding genes. Once a disease-associated target gene is identified, we apply our RAP Platform to identify the controlling regRNA and rapidly generate novel antisense oligonucleotide (“ASO”) candidates, which we also refer to as RNA Actuators. These ASOs are designed to bind to the identified regRNA and amplify the expression of the target gene in a specific and controllable way. We are currently focused on metabolic diseases and diseases of the central nervous system with validated disease biology, and we believe our RAP Platform allows us to address a broad range of rare and prevalent genetic diseases in which a modest increase in protein expression has the potential to be clinically meaningful.

Based on our preclinical studies, we believe our clinical product candidate, CMP-CPS-001, has the potential to be the first disease-modifying therapy for the treatment of the most prevalent urea cycle disorders (“UCDs”). UCDs are a group of severe, inherited metabolic diseases caused by mutations in the genes that encode one or more of the eight enzymes and transporters necessary to convert ammonia into urea. The inability of the body to properly metabolize ammonia leads to the accumulation of toxic levels in circulation, ultimately resulting in severe health outcomes, such as neurologic disability, seizure and death. CMP-CPS-001 is designed to improve urea cycle activity by amplifying expression of carbamoyl phosphate synthetase 1 (“CPS1”), an enzyme that catalyzes the first step of the urea cycle, by binding to a CPS1-specific regRNA. Our preclinical studies have demonstrated that modulating the activity of the target regRNA increases expression of the CPS1 gene, resulting in increased CPS1 enzyme levels, which allows for more ammonia to be converted into urea, thereby lowering ammonia levels to normal, healthy ranges. These preclinical studies also demonstrated that CMP-CPS-001 can increase the level of, or upregulate, the production of multiple enzymes responsible for converting ammonia into urea, potentially allowing us to address more than 85% of patients with UCDs. We are evaluating CMP-CPS-001 in an ongoing Phase 1 clinical trial in healthy volunteers and have completed a planned interim analysis of safety and pharmacokinetic data from all four cohorts of the single ascending dose (“SAD”) portion of the clinical trial, from which no safety trends of concern were observed. We have also completed dosing of the first three cohorts from the multiple ascending dose (“MAD”) portion of the clinical trial. We expect to report data from the SAD and MAD portions of the clinical trial, including safety, pharmacokinetic and key pharmacodynamic biomarker data, in the fourth quarter of 2025. We have also submitted a clinical trial application in Europe for a Phase 1b expansion to enroll female participants who are heterozygous for a mutation of the OTC gene, pending regulatory clearance. We estimate that there are approximately 2,000 diagnosed female OTC heterozygotes in the United States who have inherited one copy of a gene with OTC-related changes and experience potentially addressable UCD symptoms.

We are also leveraging our RAP Platform to advance a preclinical program for the treatment of synaptic Ras GTPase activating protein 1 (“SYNGAP1”)-related disorders, a group of neurodevelopmental conditions caused by pathogenic variants in the SYNGAP1 gene that result in a haploinsufficient state, reducing SYNGAP protein levels by up to 50%. SYNGAP plays a critical role in cognitive development and synaptic function. Epilepsy is a common characteristic of these disorders and nearly all patients experience some degree of developmental delay and cognitive impairment. Incidence estimates vary significantly, ranging from one to 40 per 100,000 individuals. While we believe that SYNGAP1-related disorders remain underdiagnosed, we estimate that there are approximately 10,000 individuals living with these disorders in the United States. SYNGAP1-related disorders are reported to represent 0.5% to 1.0% of all intellectual disability cases, making them among the most common causes of intellectual disability in patients with epilepsy, and indicating that the patient population may be significantly larger than incidence estimates suggest. There are no FDA-approved, disease-modifying therapies for SYNGAP1-related disorders. Treatment is often limited to supportive physical, occupational and speech therapy. A combination of non-specific anti-seizure medications may be prescribed, though SYNGAP1-related disorders have proven difficult to control with available therapeutics. Up to 50% of patients do not adequately respond to medication, in which case implantable devices, such as those for vagus nerve stimulation, may offer incremental therapeutic benefit. We are advancing our CMP-SYNGAP program to address the significant unmet need by targeting the direct cause of SYNGAP1-related disorders, haploinsufficiency, which we believe is amenable to targeting through regRNAs. Our CMP-SYNGAP program is a novel approach that targets the SYNGAP1 gene at the transcriptional level to restore SYNGAP function and improve symptoms by utilizing an intrathecally delivered ASO. Upregulation of SYNGAP1 gene expression may increase SYNGAP protein levels in amounts sufficient to yield therapeutic benefit. Our preclinical studies demonstrated a dose-dependent increase in SYNGAP1 mRNA levels accompanied by a reduction in SYNGAP1 expression. We have nominated a development candidate, CMP-SYNGAP-01, and expect to initiate GLP toxicology studies in 2025 to enable the filing of a clinical trial application. We also plan to present new preclinical data in an oral presentation at the 28th American Society of Gene and Cell Therapy Annual Meeting on May 16, 2025, demonstrating a meaningful increase in SYNGAP1 protein levels following intrathecal administration of CMP-SYNGAP-01 in non-human primates.

In addition, we have initiated a discovery program targeting a regRNA to increase GBA1 gene expression for the treatment of Parkinson’s disease (“PD”) caused by mutations in the GBA1 gene, and plan to initiate discovery programs in other CNS and metabolic indications utilizing our RAP Platform. Finally, we have entered into a strategic research collaboration with BioMarin Pharmaceutical Inc. (“BioMarin”) to advance novel therapeutics that increase protein levels by targeting regRNA sequences for two genetic targets.

Since our inception in 2015, we have focused substantially all of our resources primarily on developing our RAP Platform, identifying, developing and progressing our product candidates through preclinical and clinical development, organizing and staffing our company, research and development (“R&D”) activities, establishing and protecting our intellectual property portfolio, and raising capital. To date, we have primarily funded our operations with proceeds from the sale of convertible preferred stock and common stock, including in our initial public offering (“IPO”), which closed on October 15, 2024, as well as through revenues from our license and collaboration agreements. Through March 31, 2025, we have received net proceeds of $72.4 million from our IPO and $188.3 million from the sale of our convertible preferred stock. In addition, through March 31, 2025, we have recognized $18.9 million in research collaboration and license revenue through our development and license agreements. Our ability to generate any product revenue and, in particular, our ability to generate product revenue sufficient to achieve profitability, will depend on the successful development and eventual commercialization of product candidates.

We have incurred significant operating losses and negative cash flows from operations since our inception. Our net losses were $12.4 million and $12.5 million for the three months ended March 31, 2025 and 2024, respectively. As of March 31, 2025, we had an accumulated deficit of $224.2 million. Substantially all of our net losses have resulted from costs incurred in connection with our R&D programs and, to a lesser extent, from general and administrative (“G&A”) costs associated with our operations. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our clinical trials and preclinical studies, our other R&D activities and capital expenditures, and the timing and amount of any milestone or royalty payments due under our existing or future license or collaboration agreements. In addition, we expect to incur additional costs associated with operating as a public company, including significant legal, audit, accounting, regulatory and tax-related services associated with maintaining compliance with exchange listing and requirements of the SEC, director and officer liability insurance costs, investor and public relations costs, and other expenses that we did not incur as a private company. If we obtain regulatory approval for our product candidates, we expect to incur significant expenses related to developing our commercialization capability to support product sales, marketing and distribution. We anticipate that our expenses will increase substantially if and as we:

• advance our lead product candidate, CMP-CPS-001, through clinical trials;
• finalize preclinical development for our program in SYNGAP1-related disorders;
• conduct preclinical studies and clinical trials for our GBA1 discovery program for the treatment of PD and any future product candidates we may develop;
• expand the capabilities of our RAP Platform and seek to identify and develop additional product candidates;
• seek marketing approvals for any product candidates that successfully complete clinical trials;
• obtain, expand, maintain, defend and enforce our intellectual property portfolio;
• hire additional clinical, regulatory and scientific personnel;
• contract with third-party manufacturers for preclinical and clinical drug supply supporting any future product candidates we may develop, and commercial supply with respect to any such product candidates that receive regulatory approval;
• ultimately establish a sales, marketing and distribution infrastructure to commercialize any products for which we may obtain marketing approval; and
• add operational, legal, compliance, financial and management information systems and personnel to support our research, product development and future commercialization efforts, as well as to support our operations as a public company.

Because of the numerous risks and uncertainties associated with the development of therapeutics, we are unable to accurately predict the timing or amount of increased expenses and when, or if, we will be able to achieve or maintain profitability. Even if we are able to generate product sales, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations as planned and may be forced to reduce or terminate our operations.

We do not have any products approved for sale and have not generated any revenue from product sales. We will not generate revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for our current or any future product candidates, which we expect will take a number of years or may never occur. As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through equity offerings, debt financings, or other capital sources, including current and potential future collaborations, license agreements, and other similar arrangements. However, we may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. If we fail to raise capital or enter into such agreements or arrangements as, and when needed, we may delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise develop and market ourselves, or even cease operations.

As of March 31, 2025, we had cash and cash equivalents of $49.3 million. Based on our current operating plan, we estimate that our existing cash and cash equivalents will be sufficient to fund our projected operating expenses and capital expenditure requirements into the second quarter of 2026, which raises substantial doubt about our ability to continue as a going concern. See the sections titled “Liquidity and Capital Resources” included elsewhere in this Quarterly Report and “Risk Factors - Risks Related to our Financial Position and Need for Additional Capital” included in our 2024 Form 10-K.

We do not own or operate, and currently have no plans to establish, any manufacturing facilities. We rely, and expect to continue to rely, on third parties for clinical supply as well as commercial supply if we obtain marketing approval. In addition, we rely on third parties to package, label, store, and distribute our clinical supply and we intend to rely on third parties to conduct the same activities for our commercial products if we obtain regulatory approval. We believe that this strategy allows us to maintain a more efficient infrastructure by eliminating the need for us to invest in our own manufacturing facilities, equipment, and personnel while also enabling us to focus our expertise and resources on the development of product candidates and continued enhancement of our RAP Platform.

Results of Operations

Comparison of the Three Months Ended March 31, 2025 and 2024

The following table summarizes our results of operations for the three months ended March 31, 2025 and 2024 (in thousands):

Research and Collaboration Revenue

We recognized $0.9 million in research and collaboration revenue during the three months ended March 31, 2025. We did not recognize any research and collaboration revenue during the three months ended March 31, 2024. The increase of $0.9 million was due to revenue recognized under our Collaboration and License Agreement with BioMarin.

Research and Development Expenses

The following table summarizes our R&D expenses for the three months ended March 31, 2025 and 2024 (in thousands):

R&D expenses were $10.1 million for the three months ended March 31, 2025 compared to $9.7 million for the three months ended March 31, 2024. The increase of $0.4 million was primarily due to an increase of $0.1 million in clinical and preclinical expenses due to increases associated with the Company’s UCD clinical trial. In addition, there was an increase of $0.1 million in personnel-related expenses due to lower offsetting personnel reimbursements under one of our collaboration agreements. There was also an increase of $0.1 million in professional and consulting fees due to increased utilization of external support for clinical operations.

General and Administrative Expenses

The following table summarizes our G&A expenses for the three months ended March 31, 2025 and 2024 (in thousands):

24

G&A expenses were $3.8 million for the three months ended March 31, 2025 compared to $3.1 million for the three months ended March 31, 2024. The increase of $0.7 million was partially due to an increase of $0.4 million in personnel-related expenses due to annual merit-related salary increases and stock compensation expense and an increase of $0.1 million in facility-related and overhead expense due to increases in insurance premiums. In addition, there was an increase of $0.2 million in other expenses due to an increase in state franchise taxes.

Other Income, Net

Other income, net was $0.7 million for the three months ended March 31, 2025 compared to $0.4 million for the three months ended March 31, 2024. The increase of $0.3 million was primarily due to an increase in interest income due to higher average invested cash equivalent balances during the three months ended March 31, 2025.

Liquidity and Capital Resources

Sources of Liquidity

Since our inception, we have not generated any revenue from product sales and have incurred significant operating losses and negative cash flows from operations. We expect to incur significant expenses and operating losses in the foreseeable future as we advance the development of product candidates. Through March 31, 2025, we have primarily funded our operations with proceeds from the sale of our equity securities and revenues from our license and collaboration agreements.

As of March 31, 2025, we had cash and cash equivalents of $49.3 million. Based on our current operating plan, we estimate that our cash and cash equivalents as of March 31, 2025 will be sufficient to fund our operating expenses and capital expenditure requirements into the second quarter of 2026. However, we have based this estimate on assumptions that may prove to be wrong, and we could deplete our capital resources sooner than we currently expect. Our capital resources may not be sufficient to fund operations through at least the next twelve months from the date the accompanying unaudited condensed consolidated financial statements as of March 31, 2025 are issued based on our expected cash needs, which raises substantial doubt about our ability to continue as a going concern. Our future viability is dependent on our ability to generate cash from our operating activities or to raise additional capital to finance our operations. There is no assurance that we will succeed in obtaining sufficient funding on terms acceptable to us to fund continuing operations, if at all.

Future Funding Requirements

We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we continue our development of, seek regulatory approval for, and potentially commercialize our product candidates and seek to discover and develop additional product candidates, conduct our ongoing and planned clinical trials and preclinical studies, continue our R&D activities, hire additional personnel, expand and protect our intellectual property, and incur additional costs associated with being a public company. The timing and amount of our funding requirements will depend on many factors for which there have been no material changes from those described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2024 Form 10-K.

Our operating plans and other demands for our cash resources may change because of many factors currently unknown to us, and we may need to seek additional funds sooner than planned.

We have no other committed sources of capital. Until such time, if ever, we can generate substantial product revenues, we expect to finance our operations through the sale of equity securities, debt financings, working capital lines of credit, strategic alliances and/or license arrangements, grant funding, interest income earned on invested cash balances or a combination of two or more of these sources. However, we may be unable to raise additional funds or enter into such other arrangements when needed, on favorable terms or at all. To the extent we raise additional capital through the sale of equity or convertible debt securities, investors’ ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of a common stockholder. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, engaging in acquisition, merger or collaboration transactions, selling or licensing our assets, making capital expenditures, redeeming our stock, making certain investments or declaring dividends. If we raise additional funds through collaborations or license agreements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates, or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves, or even cease operations.

Contractual and Other Obligations

As of March 31, 2025, other than those disclosed within Note 4 and 5 to our condensed consolidated financial statements, there have been no material changes to our contractual obligations and commitments from those described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2024 Form 10-K.

Cash Flows

For the Three Months Ended March 31, 2025 and 2024

The following table provides information regarding our cash flows for the three months ended March 31, 2025 and 2024 (in thousands):

Operating Activities

Cash flows used in operations are primarily attributed to clinical and preclinical expenses, employee compensation, rent and variable rent expenses for our Cambridge and Boulder leases as well as professional fees. Our cash flows from operating activities are significantly affected by our use of cash for operating expenses and working capital to support the business.

Net cash used in operating activities for the three months ended March 31, 2025 was $14.3 million and consisted of net loss of $12.4 million, non-cash adjustments of $1.9 million and a net change in assets and liabilities of $3.7 million. Non-cash items primarily included stock-based compensation of $0.9 million, non-cash operating lease expense of $0.5 million, and depreciation and amortization of $0.4 million. The net change in assets and liabilities was primarily due to a decrease in accrued expenses due to the timing of payout related to annual employee bonuses and cash paid to certain executive officers to offset the tax impact associated with the forgiveness of promissory notes from 2024.

Net cash used in operating activities increased by $3.1 million during the three months ended March 31, 2025, compared to the same period in 2024, primarily attributable to the timing of payout related to annual employee bonuses and cash paid to certain executive officers to offset the tax impact associated with the forgiveness of promissory notes from 2024.

Investing Activities

Our primary investing activities consist of capital expenditures for laboratory and computer equipment as well as software. Net cash used in investing activities for the three months ended March 31, 2025 was $0.3 million, due to purchases of laboratory equipment. Net cash used in investing activities increased by $0.3 million during the three months ended March 31, 2025, compared to the same period in 2024, primarily attributable to the timing of cash payments for laboratory equipment.

Financing Activities

Our primary financing activities consist of principal payments on finance leases. Net cash used in financing activities for the three months ended March 31, 2025 was $0.2 primarily due to principal payments on finance leases. Net cash used in financing activities decreased by $0.1 million during the three months ended March 31, 2025, compared to the same period in 2024, primarily attributable to our completion and conversion of certain finance leases.

Critical Accounting Policies and Significant Judgments and Estimates

There have been no significant changes to our critical accounting estimates in the preparation of our condensed consolidated financial statements during the three months ended March 31, 2025 compared to those disclosed in our 2024 Form 10-K.

Recently Issued Accounting Standards

See Note 2 to our condensed consolidated financial statements included elsewhere in this Quarterly Report for more information.

Emerging Growth Company and Smaller Reporting Company Status

We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and we may remain an emerging growth company until December 31, 2029 or until such earlier time that we are no longer an emerging growth company. For so long as we remain an emerging growth company, we are permitted and intend to rely on certain exemptions from various public company reporting requirements, including not being required to have our internal control over financial reporting audited by our independent registered public accounting firm pursuant to Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and any golden parachute payments not previously approved and an exemption from compliance with the requirements regarding the communication of critical audit matters in the auditor’s report on financial statements.

In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. We have elected to avail ourselves of this extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we will adopt the new or revised standard at the time private companies adopt the new or revised standard and will do so until such time that we either (i) irrevocably elect to “opt out” of such extended transition period or (ii) no longer qualify as an emerging growth company. We may choose to early adopt any new or revised accounting standards whenever such early adoption is permitted for private companies. As a result of this election, our financial statements may not be comparable to those of companies that are not emerging growth companies.

We will remain an emerging growth company until the earliest to occur of: (i) the last day of the fiscal year in which we have at least $1.235 billion in annual revenue; (ii) the last day of the fiscal year in which we are deemed to be a “large accelerated filer,” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock held by non-affiliates exceeded $700.0 million as of the last business day of the second fiscal quarter of such year; (iii) the date on which we have issued more than $1.0 billion in nonconvertible debt securities during the prior three-year period; and (iv) December 31, 2029.

We are also a “smaller reporting company,” meaning that the market value of our shares held by non-affiliates is less than $700.0 million and our annual revenue was less than $100.0 million during the most recently completed fiscal year. We may continue to be a smaller reporting company if either: (i) the market value of our shares held by non-affiliates is less than $250.0 million; or (ii) our annual revenue was less than $100.0 million during the most recently completed fiscal year and the market value of our shares held by non-affiliates is less than $700.0 million. If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company, we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and our principal financial officer, evaluated 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 as of March 31, 2025. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by us in the reports that we file or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of March 31, 2025, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Form 10-K”), which could materially affect our business, financial condition or future results. The risk factors disclosure in our 2024 Form 10-K is qualified by the information that is described in this Quarterly Report on Form 10-Q. The risks described in our 2024 Form 10-K are not our only risks. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial also may materially adversely affect our business, financial condition or future results. There have been no material changes to our risk factors as previously disclosed in the 2024 Form 10-K except as follows:

Risks Related to Our Business Operations and Industry

International trade policies, including tariffs, sanctions and trade barriers may adversely affect our business, financial condition, results of operations and growth prospects.

We rely on third-party suppliers located in, and conduct clinical trials in, countries outside the United States. There is inherent risk, based on the complex relationships among the United States and the countries in which we conduct our business, that political, diplomatic, and national security factors can lead to global trade restrictions and changes in trade policies and export regulations that may adversely affect our business and operations. The U.S. government recently announced tariffs affecting a wide range of products and jurisdictions and has indicated an intention to continue developing new trade policies, including with respect to the pharmaceutical industry. In response, certain foreign governments have announced or implemented retaliatory tariffs and other protectionist measures. These developments have created a dynamic and unpredictable trade landscape, which is adversely impacting, and may continue to adversely impact, our business.

We do not own or operate, and currently have no plans to establish, any manufacturing facilities. We currently rely, and expect to continue to rely, on third parties for the manufacture of our product candidates for clinical testing, as well as for the manufacture of any products that we may commercialize, if approved. Current or future tariffs are likely to result in increased research and development expenses, including with respect to increased costs associated with active pharmaceutical ingredients, raw materials, laboratory equipment and research materials and components. In addition, such tariffs could increase our supply chain complexity, disrupt our existing supply chain and cause delays in our development timelines. Increased development costs and extended development timelines could place us at a competitive disadvantage compared to companies operating in regions with more favorable trade relationships and could reduce investor confidence, negatively impacting our ability to secure additional financing on favorable terms or at all. In addition, if we succeed in commercializing any drug products, tariffs and trade restrictions could hinder our ability to establish cost-effective production capabilities, negatively impacting our growth prospects.

Trade disputes, tariffs, restrictions and other political tensions between the United States and other countries may also exacerbate unfavorable macroeconomic conditions including inflationary pressures, foreign exchange volatility, financial market instability, and economic recessions or downturns. The ultimate impact of current or future tariffs and trade restrictions remains uncertain and could materially and adversely affect our business, financial condition, and prospects. While we actively monitor these risks, any prolonged economic downturn, escalation in trade tensions, or deterioration in international perception of U.S.-based companies could materially and adversely affect our business, results of operations and financial condition. In addition, trade developments have and may continue to heighten the risks related to other risk factors described in our 2024 Form 10-K.