We currently have our API produced for us by a contract manufacturer
exclusively in one manufacturing facility and if this or any future facility, any facility we use for storage of the finished product
or our equipment were damaged or destroyed, our ability to continue to operate our business would be materially harmed.
Our executive offices are located in Waltham,
Massachusetts, and our API is manufactured at Lonza’s facility located in Visp, Switzerland. We expect that Lonza plans to
utilize this facility in the future to support commercial production if our product candidate is approved. We have manufactured
our entire finished product for the ongoing Phase 3 clinical trial of vonapanitase and currently store the finished product in
only one location. Extended delays in our Phase 3 clinical trial causing us to need to manufacture new clinical supply would cause
a significant disruption in our operations and cause us to incur unexpected costs to manufacture new finished product. We are vulnerable
to natural disasters, such as severe storms and other events that could disrupt our operations. We do not carry insurance for natural
disasters and we may not carry sufficient business interruption insurance to compensate us for losses that may occur. If the current
manufacturing facility or any future facility, stored product or equipment were damaged or destroyed, or if we experience a significant
disruption in our operations for any reason, our ability to continue to operate our business would be materially harmed.
If supply is interrupted, there could be a significant
disruption in our clinical development and commercial supply. If the supply is interrupted after approval of the BLA, an alternative
manufacturer would need to be qualified through a BLA supplement which could result in further delay. The regulatory agencies may
also require additional studies if a new manufacturer is relied upon for commercial production. Switching manufacturers may involve
substantial costs and would likely result in a delay in our desired clinical and commercial timelines.
These factors could cause the delay of clinical
trials, regulatory submissions, required approvals or commercialization of vonapanitase or any additional product candidates, cause
us to incur higher costs and prevent us from commercializing our products successfully. Furthermore, if our suppliers fail to meet
contractual requirements, and we are unable to secure one or more replacement suppliers capable of production at a substantially
equivalent cost, our clinical trials may be delayed or we could lose potential revenue.
Our business and operations would suffer in the event of system
failures or security breaches.
Despite the implementation of security measures,
our internal computer systems, and those of our CROs and other third parties on which we rely, are vulnerable to damage from computer
viruses, unauthorized access, cyber attacks, natural disasters, terrorism, war and telecommunication and electrical failures. If
issues were to arise and cause interruptions in our operations, it could result in a material disruption of our drug and biologic
development programs. For example, the loss of clinical trial data from completed or ongoing or planned clinical trials could result
in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. To the extent
that any disruption or security breach were to result in a loss of or damage to our data or applications, or inappropriate disclosure
of confidential or proprietary information, we could incur liability and the further development of vonapanitase or any additional
product candidates could be delayed. We may also be vulnerable to cyber attacks by hackers, or other malfeasance. This type of
breach of our cybersecurity may compromise our confidential information and/or our financial information and detrimentally impact
our business or result in legal proceedings.
Our employees may engage in misconduct or other improper activities,
including noncompliance with regulatory standards and requirements and insider trading, which could significantly harm our business.
We are exposed to the risk of employee fraud
or other misconduct. Misconduct by employees could include intentional failures to comply with the regulations of the FDA and foreign
regulators, provide accurate information to the FDA and foreign regulators, comply with healthcare fraud and abuse laws and regulations
in the United States and abroad, and report financial information or data accurately or disclose unauthorized activities to us.
In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations
intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict
or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other
business arrangements. Employee misconduct could also involve the improper use of information obtained in the course of clinical
trials, which could result in regulatory sanctions and serious harm to our reputation. We have a Code of Business Conduct and Ethics,
but it is not always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent this
activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations
or other actions or lawsuits stemming from a failure to comply with these laws or regulations. If any actions are instituted against
us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on
our business, including the imposition of significant fines or other sanctions.